Deposits in peripheral European nations' ailing banks
recovered nicely in December as lessening concerns over the
health of the Eurozone increased confidence in the financial
sector. Since the onset of the crisis, capital has flowed out of
peripheral banks and into those of core nations, mainly
In December, this pattern reversed further as money flowed
from Germany to other nations. Greek bank deposits, which have
seen massive capital outflows since it revealed its debt woes in
2010, rose 4.1 percent in December alone, showing that savers are
starting to regain confidence in the health of the Greek banking
Normalizing capital flows within the eurozone will help in
internally devaluing the peripheral nations back to
competitiveness and also help to mitigate the Target II
imbalances. within the zone.
Elsewhere in the eurozone, Spanish bank deposits rose 0.3
percent and French bank deposits rose 2.2 percent as savers
returned to beleaguered French banks but still remained cautious
of those in Spain.
German deposits fell 1.5 percent in December, a positive sign
that flows may be beginning to normalize within the eurozone, and
deposits in Cyprus declined 0.6 percent as the country prepares
for a restructuring. Lastly, Italian deposits rose a massive 3.7
percent in the month as savers became more confident that the
upcoming elections will not be negative for the economy.
Other positive news for Italian banks was released over the
weekend, Banca Monte dei Paschi di Sienna, the world's oldest
bank, unexpectedly requested new bailout funds from the Italian
government last week.
Over the weekend, the government approved the new capital
plan, paving the way for the bank to receive more bailout funds.
Shares of the bank rallied 5 percent in Milan trading, leading
the financial sector higher as a whole in Italy.
Spanish financials were late to the proverbial party in early
trade, as the much more muted deposit growth data was offset
further by weak lending data. New data released Monday showed
that the number of mortgages created in November of 2012 and also
the total amount of mortgage capital declined strongly from the
same period a year before.
Spanish mortgages in November fell a whopping 31.6 percent
from November 2011 and total mortgage capital, the cash value of
these mortgages, fell 34.4 percent from November 2012.
Financial stocks were strong across the continent save for
Spain. Italian financials were strong in early trade led by Banca
Monte dei Paschi, Banco Popolare, and Intessa Sanpaolo. German
banks rallied nicely as well as Deutsche Bank (NYSE:
) shares rose 0.42 percent in Frankfurt trading.
French banks rose as well with Credit Agricole rallying nearly
two percent and BNP Paribas rising almost 1 percent. Spanish
banks were mixed as CaixaBank and Bankinter rallied with Banco de
Sabadell declining 0.46 percent.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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