[Closed] Emergency Liquidity Assistance

Bonds

What are the Greek banks using as collateral to get this

carried forward tax allowances.

I am not shitting you! 🙂

Almost half the “capital” in the four largest Greek banks really consists of “deferred tax assets” or discounts on future tax bills. When banks make no profit, they won’t enjoy such discounts.

Moody's has estimated that at the end of April, 32% of total assets of Greek banks were derived from central bank funding. This was 12% in September and estimates put it at close to 50% today., with bank deposits at their lowest level in 11 years, below 130 billion euro. As Greeks withdraw deposits from their banks, using the money to buy hard assets like cars, whose sales have risen, the ECB still makes sure Greek banks enjoy sufficient liquidity, by allowing the Greek central bank to create euros itself through the system of “emergency liquidity assistance” (ELA), which should only be allowed to prop up solvent banks

Actually, I expect ELA has no collateral at all behind it....

http://www.zerohedge.com/news/2015-06-26/what-would-happen-case-grexit

I've just read that a load of it is Greek government bonds, but marked well down to reflect their interesting risk profile.

Halloumi ?

carried forward tax allowances.

There is a big difference between capital and what you can post as collateral - deferred tax assets like this are one of the madnesses of International Accounts Standards and most banks have them.

So what difference does the new haircut (since last night) make if they can just make up non existence assets?

Halloumi ?

At least that is a tangible asset!

You can't post a Deferred Tax Assets as collateral (they are capital but not collateral eligible) - that is wrong - you have to post Bonds or other eligible collateral - the haircut increases the amount of the collateral needed to be posted and this is marked to market everyday. That article posted by Stoner was written by a think tanker rather than a market participant, so I fear there may be some spin - that said, I haven't gone through the terms of the various programmes so this is a hunch.

that said, I haven't gone through the terms of the various programmes so this is a hunch.

Are these available online?

I would imagine so - if I was trying to find them I would look at the ECB website

Bonds and various asset-backed securities.

No deferred tax!

It's an odd one really as the ELA is the only thing keeping Greek banks afloat and yet technically it probably should be stopped as it is only meant to me short term and for banks that are solvent (in time). Hard to see how that is the case with Greek banks right now. But pulling the plug is ultimately wrapped in political issues that extend beyond the remit of the ECB

More fudges as per.....this is Europe with Les Francis playing the good cop today. Merci Hollande, j'aime les boîtes sur les rues