The risk is well known: if Portugal's sovereign debt is downgraded below investment grade by this last agency, it would no longer be eligible for the ECB's regular refinancing operations, QE would have to be halted in this country and, most importantly, Portuguese banks would have to seek financing through the national central bank's emergency liquidity assistance window. One cannot imagine a better way to reactivate the links between banking risks and sovereign risks, which the Banking Union is supposed to alleviate, one way and the other. At this stage, statu quo is still the most probable hypothesis based on the latest upward revisions and stable outlooks by all of the rating agencies, and the small but real improvements in the country's economic and fiscal situation. Yet, in case of a bad outcome, it is important to note that adequate tools are in place. The European Stability Mechanism can offer the country a so-called 'precautionary'programme, implying very light conditionality, which would allow Portuguese debt to benefit from a waiver and become eligible again for ECB operations. An emergency procedure even exists that would allow such a programme to be opened in record time, not taking into account though the political cost of such a decision, for Portugal, of course, but potentially for other countries as well. This brings us to the big question of whether it is acceptable that a rating agency's decisionscan have such a big impact on the smooth functioning of the monetary system.
BNP Paribas SA published this content on 21 October 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 21 October 2016 15:48:02 UTC.
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BNP Paribas is France's largest banking group. Net banking product (NBP) breaks down by activity as follows:
- retail banking (54%): retail banking activity in France (24.1% of NBP), in Belgium (14.6%), and Italy (10.2%). The remainder of the NBP (51.1%) is from international activities and specialized financial services activities (consumer loans, real estate credit, leasing credit, car fleet management, computer equipment leasing);
- finance and investment banking (34.4%): consulting and capital market activities (83.7% of NBP; merger-acquisition consulting, activities related to the stock, interest, and exchange markets, etc.) and financing (16.3%; financing for acquisitions, projects, raw material transactions, etc.);
- institutional and private management and insurance (11.6%): asset management, private banking activity (No. 1 in France), real estate and on-line brokerage services, insurance and securities services (No. 1 in Europe for retained securities).
At the end of 2023, BNP Paribas was managing EUR 988.5 billion in current deposits and EUR 859.2 billion in current loans.
Net banking product is distributed geographically as follows: Europe, Middle East and Africa (82.9%), America (9.8%) and Asia/Pacific (7.3%).