BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Draghi: Eurozone will decline without vital productivity growth

It’s productivity, stupid. European Central Bank president Mario Draghi has become the latest major policymaker to warn of the long-term economic damage posed by chronically low productivity growth, as he urged eurozone governments to take action to lift growth and stoke innovation. Speaking in Madrid on Wednesday, Mr Draghi noted that productivity rises in the […]

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Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Barclays: life in the old dog yet

Barclays, a former basket case of British banking, is beginning to look inspiringly mediocre. The bank has failed Bank of England stress tests less resoundingly than Royal Bank of Scotland. Investors believe its assets are worth only 10 per cent less than their book value, judging from the share price. Although Barclays’s legal team have […]

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Categorized | Economy

Moody upgrades Greece’s debt rating

Posted on November 30, 2013

General Economy As Greek GDP Figures Released©Bloomberg

Moody’s, the international rating agency, has upgraded Greece by two notches, reflecting good progress with fiscal consolidation despite continued recession and fragile political stability.

The upgrade from Caa3 to single C with a stable rating still leaves Greek sovereign bonds deep in junk territory, but supports the coalition government’s forecast of a primary budget surplus this year before debt repayments, rising to 1.5 per cent of output in 2014.

    “Moody’s expects that the government will achieve (and possibly outperform) its target of a primary balance in 2013, and record a surplus in 2014 in accordance with the adjustment programme,” the agency said.

    A senior finance ministry official said on Friday that on the basis of 10-month revenue figures, Greece could achieve a primary surplus of close to €1bn this year.

    An improved medium-term outlook and lower interest payments following last year’s restructuring of privately held Greek debt also contributed to the upgrade, Moody’s said.

    The economy is bottoming out but will shrink by another 0.5 per cent in 2014 before growing by 1.0 per cent in 2015, it said. The EU and the Greek government both forecast an earlier recovery with growth of around 0.5 per cent next year after six straight years of recession.

    The finance ministry official said the “troika” of bailout monitors from the commission, the International Monetary Fund and the European Central Bank had postponed a planned visit to Athens until after December 9 because of continuing differences over “two or three structural reforms and a few small fiscal issues.”

    The government still hopes to wrap up a deal that would unlock another €1bn of bailout aid before the end of the year but must first overcome strong political opposition to the troika’s insistence on reforms of the real estate sector, which threaten to split the governing coalition of the centre-right New Democracy party and the PanHellenic Socialist Movement (Pasok).

    The socialists have rejected the troika’s proposal to lift a ban on home foreclosures that has encouraged “strategic” defaults on mortgages by solvent borrowers and blocked the possibility of a housing market recovery.

    Resistance by New Democracy lawmakers to a new unified real estate tax that will include agricultural land for the first time has already forced the finance ministry to reduce the amount to be paid by farmers, leaving a €400m gap in next year’s budget to be covered by additional spending cuts.

    Talks with the troika have dragged while the government seeks concessions that would ensure it can push both reforms through parliament. The coalition has seen its majority shrink to just four seats following a series of defections by lawmakers opposed to reform.