Funding worries hammer Europe’s banks

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By Simon Kennedy, MarketWatch


LONDON (MarketWatch) — As if Europe’s banks didn’t have enough to worry about with the sovereign debt crisis and stagnant economic growth, the sector has taken a further pounding over fears that funding could seize up again.

Shares in Barclays PLC UK have slumped nearly 19% since Tuesday’s close and Societe Generale FR has fallen 17% over the same period as investors fixated on several indications that banks are finding it harder to borrow.

The Wall Street Journal reported Thursday that U.S. regulators are stepping up their scrutiny of European banks’ liquidity and a Swedish regulator reportedly warned banks they should do more to prepare for a funding crisis. Data from the European Central Bank on Wednesday also showed an unnamed institution had borrowed $500 million from a dollar facility that hadn’t been tapped for months.

“A dollar drawdown at the ECB by one bank cannot be taken as a definitive sign of stress, but it sends a clear warning signal that merits close attention,” said analysts at Royal Bank of Scotland in a note to clients Friday. ...............(more)

The complete piece is at: http://www.marketwatch.com/story/funding-worries-hammer-europes-banks-2011-08-19?dist=beforebell

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