Sat, Oct 25, 2014
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   |   

Banner

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. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t