Fri, Jan 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

BlackRock’s Fink calls for restructuring of Europe’s banking system, warns crisis can extend beyond Greece

Tuesday, May 31, 2011

Laurence D. Fink
Opalesque Industry Update – Laurence D. Fink, Chief Executive Officer of BlackRock Inc., a provider of investment, advisory and risk management solutions with $3.65tln in assets under management, has warned that the current financial crisis in Europe is not confined to Greece but can spread in other parts of the continent.

In an interview with Bloomberg, Fink has also called for the immediate reorganization of the European banking system to mitigate the crisis.

Speaking from Hong Kong, Fink declared, “The European problem is way beyond Greece. Greece is the most immediate problem. I find it very difficult to restructure Greece without the understanding that we’re probably going to have to restructure Ireland and restructure Portugal.”

According to Fink, many small banks in Europe need recapitalization. However, the continent’s largest banks will also experience stress coming from the devaluation of some of the sovereign credit despite being well capitalized.

He added, “The banking system in Europe owns all this debt. If we restructure one country, we’re now basically putting huge capital stress on these banks. Before we restructure any country, we’re going to have to restructure the banking system in Europe.”

For Europe to survive this new round of financial crisis, it needs a “giant TARP”, Fink added. The U.S. government introduced the Troubled Asset Relief Program at the height of the global financial crisis in 2007 to bail out the local economy, particularly large financial institutions the Federal government deemed “too big to fail.”

Experts from the International Monetary Fund, the European Union and the European Central Bank are currently reviewing the progress made by Greece in meeting the terms of the $157bn bailout package given last year. After the review, the EU will draft a new plan to provide further aid to Greece.

In April, Citigroup defended its analysis which it emailed to several industry players, predicting that Greece would be forced to restructure its national debt as early as Easter.

"We are co-operating with the authorities and do not consider there to have been any wrongdoing by Citi or its employees," the bank said in a statement.

EU leaders agree to new anti-crisis package
Concerned with the financial crisis that have beset some of its members since last year, leaders from Europe have agreed to introduce a new anti-crisis package during a two-day summit in March. The comprehensive solution was unveiled after bailing out Greece and Ireland.

However, European leaders have acknowledged that the region is facing new threats from a possible collapse of Portugal.

Early this month, Portugal has accepted a three-year $116bn bailout package from the EU and the IMF. Portuguese caretaker Prime Minister Minister Jose Socrates was forced to accept the bailout after his government collapsed in April which saw a sharp rise in borrowing costs. Socrates, who now faces a snap parliamentary election on June 5, hailed the package as a victory, saying it included more lenient terms than those imposed on Greece and Ireland.
Komfie Manalo

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Ex-Citi trader launches 'sleep-at-night’ long/short equity fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: After working at Citi's proprietary trading desk, managing a large portfolio between 2008 and 2011, Joel S. Salomon founded SalauMor Management in New York

  2. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  3. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  4. Update: Prosecutors seek 12 years for hedge fund manager Francisco Illarramendi[more]

    Komfie Manalo, Opalesque Asia: Federal prosecutors have asked the court to sentence convicted hedge fund manager Francisco Illarramendi to 12 years imprisonment for running an elaborate Ponzi scheme that bilked investors hundreds of millions in dollars, including a Venezuelan pension fund, report

  5. Institutions - Ontario pension fund leader calls all asset classes ‘expensive’, Taiwan's BLF plans $2bn in alternative mandates[more]

    Ontario pension fund leader calls all asset classes ‘expensive’ From WSJ.com: The head of one of the world’s largest pension funds said that across asset classes, “everything is expensive.” Ron Mock, who leads Canada’s $141 billion Ontario Teachers’ Pension Plan, said that the plan would