NEW YORK, NY -- (Marketwire) -- 09/29/11 -- Banks in the Eurozone and the UK have been struggling to sell debt at affordable prices to investors, who are wary of the banks' vulnerability to risky euro-zone government bonds and other loans. The Bedford Report examines the outlook for companies in the Foreign Banking Sector and provides stock analysis on National Bank of Greece SA (NYSE: NBG) and Lloyds Banking Group PLC (NYSE: LYG) (LSE: LLOY). Access to the full company reports can be found at:
According to data provider Dealogic, the amount of senior unsecured debt issued by the Continent's financial institutions this quarter is on track to be $34 billion -- the smallest amount in any quarter in more than ten years. As The Wall Street Journal documents, most of those were small deals of less than $500 million apiece. Traditionally, issuing such debt has been among the most popular ways for banks to finance themselves over the long term.
There are also liquidity concerns for these Foreign Banks. Traditional lenders such as US money-market funds and fellow banks, have become wary of lending outside of very short periods. European officials are being pressured to respond. The Wall Street Journal says one possibility is for euro-zone governments to issue a blanket guarantee of the industry's debts.
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Foreign Bank stocks have performed well this week, however. Despite denials from both banks and politicians, reports that European authorities were busy preparing a bank rescue package worth billions of euros sparked an upswing in bank share prices.
In the UK Lloyds Banking Group has taken significant measures of late to restore its bottom line. The company plans to cut 15,000 jobs in an effort to save 1.5 billion pounds ($2.4 billion) a year by 2014. Lloyds also said it would reduce its international presence from 30 countries to less than half that by 2014.
Greece's central bank has readied its emergency liquidity assistance to supply lenders with funds if the need arises, bankers said. However no bank appears to have asked for money yet despite a cash squeeze. Ireland has been using emergency liquidity assistance to assist banks for several months.
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