The International Monetary Fund (IMF) cautioned a recent bail-in of retail investors in Italy, which since the Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term fallout has risen to the top of minds in Europe as a potential issue for the continent. The situation has become troublesome given the influx of non-performing loans (NPLs) and poor shape of balance sheets in the country, which underscored the need for financial industry reforms.
The IMF has championed reform issues on the continent before – just last year the Washington-based fund found itself at the center of a debate between Greece and EU lenders, which ultimately resulted in a default and further stained relations. According to a recent IMF report, NPLs have shown signs of stabilizing however, constituting upwards of 18% of total loans in Italy.
Still, the ongoing talks between the European Commission and Italy’s Banca Monte dei Paschi di Siena SpA, among others, has reached an impasse over potential losses, namely as to whether creditors should incur losses if taxpayer funds are used. In particular, a set of rules took effect earlier this year that required bondholders and shareholders to absorb losses in failing lenders in the event of a rescue – this mechanism was known as a bail-in.
Given the tenuous state of its finances, Italy has favored a precautionary recapitalization under the current EU’s bank-resolution rules. In doing so, this would allow governments to fortify lenders when capital gaps emerge in stress tests, per a recent Bloomberg report.
Lean Growth Projected
Presently, the Italian financial system is encumbered by approximately $398 billion in troubled loans, as stipulated by the European Central Bank (ECB). The ECB has ramped up pressure on Italian lenders however, specifically in regard to its balance sheets that have hurt lending.
For its part, the IMF has pushed measures such as acute debt restructuring mechanisms, strengthened supervision, as well as a systematic assessment of asset quality for banks. Even if these measures were taken, the IMF has warned that Italy’s economic recovery “is likely to be prolonged and subject to risks,” hampered by a projected growth of only 1.1% in 2016 and 1.3% in 2017.
The International Monetary Fund (IMF) cautioned a recent bail-in of retail investors in Italy, which since the Brexit
Brexit
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum.
In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.
The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019.
Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter.
While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal.
Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time.
Brexit Creating Ongoing Issues in with Europe
While the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner.
Terms of this trade agreement must be met by January 1st, 2021.
Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020.
Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U.
This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy.
For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent.
The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe.
Read this Term fallout has risen to the top of minds in Europe as a potential issue for the continent. The situation has become troublesome given the influx of non-performing loans (NPLs) and poor shape of balance sheets in the country, which underscored the need for financial industry reforms.
The IMF has championed reform issues on the continent before – just last year the Washington-based fund found itself at the center of a debate between Greece and EU lenders, which ultimately resulted in a default and further stained relations. According to a recent IMF report, NPLs have shown signs of stabilizing however, constituting upwards of 18% of total loans in Italy.
Still, the ongoing talks between the European Commission and Italy’s Banca Monte dei Paschi di Siena SpA, among others, has reached an impasse over potential losses, namely as to whether creditors should incur losses if taxpayer funds are used. In particular, a set of rules took effect earlier this year that required bondholders and shareholders to absorb losses in failing lenders in the event of a rescue – this mechanism was known as a bail-in.
Given the tenuous state of its finances, Italy has favored a precautionary recapitalization under the current EU’s bank-resolution rules. In doing so, this would allow governments to fortify lenders when capital gaps emerge in stress tests, per a recent Bloomberg report.
Lean Growth Projected
Presently, the Italian financial system is encumbered by approximately $398 billion in troubled loans, as stipulated by the European Central Bank (ECB). The ECB has ramped up pressure on Italian lenders however, specifically in regard to its balance sheets that have hurt lending.
For its part, the IMF has pushed measures such as acute debt restructuring mechanisms, strengthened supervision, as well as a systematic assessment of asset quality for banks. Even if these measures were taken, the IMF has warned that Italy’s economic recovery “is likely to be prolonged and subject to risks,” hampered by a projected growth of only 1.1% in 2016 and 1.3% in 2017.
