Bond managers have largely dismissed Friday's highly-anticipated European bank stress tests as a 'non-event', with the markets also showing a muted response.
The major UK banks have seen a 2% share price rise this morning, while French giants are about 1% higher.
However, bond markets have remained muted, with both the iTraxx Euro Senior Financials and iTraxx Euro Subordinated Financials CDS indices largely flat.
Ignis' Chris Bowie:
"This is a total non-event as they were not stringent enough. I honestly believe they have told the market nothing. The names who failed were all ones people expected to fail anyway. I would cite two particular concerns - the 6% Tier 1 ratio which was chosen, and the fact they did not include what might happen on a sovereign default.
Our analysis revealed another 30 banks would have failed if the Tier 1 ratio had been 7%. We do not really own the European banks; the only one of any material importance is Santander. While I do not want to totally dismiss it, we have done a lot of work on this subject for a number of weeks and the outcome was a non-event."
Henderson's John Pattullo:
"The reaction to the stress tests so far has been fairly mixed. The real winner is greater disclosure. There is lots of talk on the 6% Tier 1 ratio number, there would have been about another 10 banks failing if the number would have been 6.5%. Even so, the fears of a black hole have been put to the side.
For us as investors, we only look at the major European names and they all fared well. Sure, there are things which could have been more stringent, but we are no worse off by having these tests done. Transparency is definitely the winner."
Axa's Nick Hayes:
"I would agree with the Morgan Stanley analysis, which was slightly positive. But I do accept it was a non-event. The positive is definitely the more disclosure. On the negatives, the 6% Tier 1 could have been more stringent. Also, the quality of the ‘core' Tier 1 was loosely defined, which not many people are focussing on right now.
At least it will bring the focus back on the economic data, which has been a little weaker in the US and a tad stronger in Europe recently."
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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