The bad boy banker Fernando Ulrich, president of BPI, one of the larger Portuguese Banks, makes an interesting statement:
Public entities local or central will never ever get credit (from the banks) again - unless they can show the same credit rating and cash flow as similar entities in Germany or Schwitzerland.
The reason I call him bad boy banker, is the he has been the most vocal of the bankers against the demand banks must raise their reserves to the levels demanded by the Troika. From him came the by now infamous question. It goes something like this (from my memory) "How can 5th or 7th level rank bureaucrats (of the Troika) be deciding issues of this kind of importance?"
His argumentation is that the money applied for further capital in the banks is less money available for financing companies and society in general. Also he argues, that banks forced to augment the capital by next year may have to borrow from the state's fund created for this reason. The state gets the money from the Troika - a by now infamous fund of 12 billion euros. He knows the state will demand influence (stocks?!) from the banks they lend money. And as he claims - this is a kind of nationalization.
His most weighty argument in my opinion is this: "Let the bankers take care of banking."
He has a point. The politicians obviously do not understand banking or much of anything. They should stay out of the private sector.
On the other hand this whole crisis has the financial sector as one of the culprits. But it must also be stated that the Portuguese banks have been some of the most responsible of all Europe.
Until now, BPI, Mr. Ulrich's bank, has been awarded by Fitch by receiving a junk rating together with the Portuguese state.
Perhaps the public sector not being able to borrow money in the future is positive. Then at least they can waste less and perhaps become responsible. Spending less than your income would be a nice rule for the next 100 years...
The public sector can foresee some horrific short term problems. If I were I bank I would not lend a cent to any public entity. Not even the Bank of Portugal. Not even if they handed in the gold reserves as a collateral. Because no matter what - you can only be sure of one thing: The public sector is untrustworthy.
Public entities local or central will never ever get credit (from the banks) again - unless they can show the same credit rating and cash flow as similar entities in Germany or Schwitzerland.
The reason I call him bad boy banker, is the he has been the most vocal of the bankers against the demand banks must raise their reserves to the levels demanded by the Troika. From him came the by now infamous question. It goes something like this (from my memory) "How can 5th or 7th level rank bureaucrats (of the Troika) be deciding issues of this kind of importance?"
His argumentation is that the money applied for further capital in the banks is less money available for financing companies and society in general. Also he argues, that banks forced to augment the capital by next year may have to borrow from the state's fund created for this reason. The state gets the money from the Troika - a by now infamous fund of 12 billion euros. He knows the state will demand influence (stocks?!) from the banks they lend money. And as he claims - this is a kind of nationalization.
His most weighty argument in my opinion is this: "Let the bankers take care of banking."
He has a point. The politicians obviously do not understand banking or much of anything. They should stay out of the private sector.
On the other hand this whole crisis has the financial sector as one of the culprits. But it must also be stated that the Portuguese banks have been some of the most responsible of all Europe.
Until now, BPI, Mr. Ulrich's bank, has been awarded by Fitch by receiving a junk rating together with the Portuguese state.
Perhaps the public sector not being able to borrow money in the future is positive. Then at least they can waste less and perhaps become responsible. Spending less than your income would be a nice rule for the next 100 years...
The public sector can foresee some horrific short term problems. If I were I bank I would not lend a cent to any public entity. Not even the Bank of Portugal. Not even if they handed in the gold reserves as a collateral. Because no matter what - you can only be sure of one thing: The public sector is untrustworthy.
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