financial markets research - rabobank · eurozone credit remains key concern financial markets...

of 12 Please note the disclaimer on the last page of this document

Special Eurozone credit remains key concern

Financial Markets Research

www.rabotransact.com

Elwin de Groot

+31 30 216 9012

Senior Eurozone Strategist

Stefan Koopman

13 November 2013

Introduction Credit greases the wheels of the economy. Without sufficient credit, the eurozone economic recovery is likely to remain susceptible to setbacks in sentiment and may not be able to reach the escape velocity it needs to shake off its disinflationary spiral. Since the onset of the financial crisis, credit data show that the transmission of monetary policy is not properly functioning. This is particularly visible in the gap between interest rates that banks in the periphery are charging their customers (notably to small and medium-sized businesses) as compared to banks in the core member states. In this research note we look at recent trends in bank credit and what the ECB has done so far to unclog credit markets. We then look at the question whether the recent weakness in the flow of credit has been driven by demand or supply. In doing so, we also take a rather unconventional approach to help answer this question. Finally, we look at the various options the ECB has to improve the transmission process and – ultimately – the flow of credit to the economy.

Credit remains weak... Over the last three years, the amount of outstanding bank credit in the eurozone (as a percent of GDP) has declined. As Figure 1 shows, this is mainly due to a fall in credit in the periphery (defined here as Italy, Spain, Portugal, Greece and Ireland), where private sector deleveraging pressure has been the most intense. Although transactions data for September offer a ray of hope (net new loans to nonfinancial corporations as well as to households increased in September, Figure 2) it is still early days.

Figure 1 – Private sector de-leveraging has been concentrated in the periphery

Figure 2 – New loans to the private sector: small net positive in transactions in September

50

60

70

80

90

100

110

120

130

140

99 01 03 05 07 09 11 13

% o

f GD

P

Periphery Core

Households and Non-financial corporatesadjusted for securitisations

Sources: ECB, NCBs, Macrobond, Rabobank calculations Source: Macrobond

• Monetary policy transmission in the eurozone remains sluggish

• We argue that the recent weakness in the flow of credit may have been driven by soft demand rather than supply

• In this context, we look at the question what would be the best approach to improve transmission and the flow of credit


Credit remains a key concern

www.rabotransact.com 13 November

... due to sluggish monetary transmission Since the onset of the eurozone financial crisis, there have been clear signs that the transmission of monetary policy is not properly functioning. A significant rise in the Eurosystem’s balance sheet has not translated into higher broad money growth. In other words, the monetary easing by the ECB has not been fully passed on to the ‘end users’ of credit, the private sector. When we break down the counterparts of M3 (Figure 3), it can be seen that recent growth has been driven by long-term savings and a build-up of net foreign assets, not by credit to the private sector. Monetary transmission problems are also visible in the sizeable gap between interest rates that banks in the periphery charge their customers for new loans (notably smaller businesses) as compared to banks in the core member states. This is illustrated by Figures 5 and 6 on the next page. This divergence between core and periphery has been less prominent in the rates charged to households. On the one hand this could perhaps be explained by the fact that the bulk of these loans are secured against property. On the other should it be borne in mind that ‘credit rationing’ cannot be detected by simply looking at commercial rates. There has been ample anecdotal evidence that small and medium-sized enterprises have been constrained when applying for loans. This may have exacerbated the decline in credit and thus deepened the economic downturn.

Recent measures taken by the ECB The ECB has introduced several measures in recent years that were aimed to unclog credit markets. We classify these measures into three broad categories:

(1) Measures to strengthen banking liquidity

The most prominent measures to strengthen liquidity in the banking system were the introduction (2008) and recent extension of ‘full allotment’ in the ECB liquidity operations and, of course, the three-year LTRO’s, which flooded the financial system nearly two years ago. While a banking liquidity crisis was hereby probably averted, the ECB euphemistically described these measures as “supporting bank lending”. Although this statements’ null hypothesis will remain unknown, so far there are no indications that this has really kick-started lending activity. Anecdotal evidence rather suggests that a large number of banks set most of the liquidity aside for a rainy day (core banks) and/or invested it in their own sovereign paper, profiting from positive carry (banks in the periphery).

(2) Measures to fight fragmentation

The Outright Monetary Transactions (OMT) programme was announced in August 2012 and effectively replaced the Securities Market Programme. This time, just 462 words prevailed over EUR 212bn of bond purchases and the Governing Council decided to be very sparse with the OMT’s operational details. Although it has been made very clear that eventual purchases are conditional on the ESM program and focus on the short end of the curve, not much more is known.

Figure 3 – Sluggishness of monetary transmission is reflected in slow M3 growth and negative contribution of credit

Figure 4 – Banks increasingly operating along national demarcation lines

-15

-10

-5

0

5

10

15

20

25

07 08 09 10 11 12 13

%Yo

Y (c

ontr

ibut

oin

s)

net foreign assets credit to governmentscredit to private sector long-term savings/capital buildingM3 growth

0

1000

2000

3000

4000

5000

6000

05 06 07 08 09 10 11 12 13

USD

bill

ion

Core banks Periphery banks

cross-border claimson ultimate risk basis

Sources: Macrobond, Rabobank Source: BIS, Rabobank calculations




Hitherto the phrases “unlimited purchases” and “whatever it takes” seem to suffice in deterring investors to take up positions against the central bank. The rationale of the OMT is that – in a currency union – sovereign spreads should only reflect the credit- and liquidity risk of that specific state: not the redenomination risk that follows a euro exit. Precisely because of this, Draghi has argued1 that severe distortions in government bond markets threatened price stability and the principle of a single monetary policy. Although the OMT is widely praised for its success, there are still considerable cross-country differences in lending spreads. Of course this can be for the right reasons (i.e. reflecting ‘true’ credit risks), but it could just as well point to highly asymmetric monetary transmission across countries. As banks have pulled back from cross-border activities (Figure 4) and re-aligned their business models along national demarcation lines (i.e., Italian banks exclusively buying Italian government bonds, etc.), the transmission of monetary policy is likely to be further hampered in future. Figure 5 lends support to the view that a rising differential in funding levels (as proxied by the difference between 5-year bank CDS levels in the periphery and in the core member states2) did coincide with an increase in spreads between household and corporate rates charged by banks. However, since relative funding costs in the periphery have come down again (from 2012), the spread between corporate and household commercial rates has remained rather sticky.

(3) Measures to fuel loan supply to SMEs

Although Draghi has stated that the ECB’s task is just to remove those “stumbling blocks” (i.e. distortions that are a threat price stability and the principle of a single monetary policy), some of the central bank’s measures have indirectly served to stimulate lending. For instance, the ECB eased their collateral requirements multiple times, which in part helped to release the much-needed collateral for the refinancing operations but also were aimed to reignite the credit engine. Another example was the decision by seven NCBs3 in February 2012 to temporarily accept additional performing credit claims as collateral for official funding. These credit claims are direct loans from commercial banks to the public or private sector located in the euro area, including loans to SMEs. The relevant NCB is free to determine the minimum size of these loans and, depending on that decision, even a baker’s loan used to finance the purchase of a new oven could be pledged as collateral. This means that as long as the debtor is able to meet certain credit standards (loan not in arrears, etc.), banks get an entry ticket to ECB funding. Altogether, these measures should kill two birds with one stone: they ensure that banks have access to the necessary liquidity that isn’t available in the interbank market and at the same time they stimulate them to base their balance sheets on direct lending rather than investments in securities. Still, the euro area’s credit conditions remain fairly weak.

Figure 5 – Rate differential periphery -/- core has stabilised despite fall in relative funding costs

Figure 6 – Rate differentials are particularly visible in rates for SME’s

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

07 08 09 10 11 12 13 14

Perc

enta

ge p

oint

s

Perc

enta

ge p

oint

s

Households periphery-/-coreNon-financial corporates, periphery-/-coreCDS spreads (3m lagged, rhs)

Sources: ECB, NCBs, Macrobond, Rabobank Source: Macrobond




Mandate doesn’t inhibit further action According to those clamouring for more intervention, the ECB has some serious “shortcomings” in addressing the financing problems of households and businesses. Yet this highlights the eternal dilemma whether a central bank should stimulate credit markets or whether it should take a more prudent position and remove only those stumbling blocks that inhibit otherwise mutually beneficial transactions. As long as the supply side justifiably assesses and prices loan requests, unconventional measures shouldn’t be put in place to revive credit demand. In the end, that’s what rate cuts are for. Nonetheless, if the ECB does want to stimulate lending to households and businesses, the first thing then debated is whether these measures will be within the confines of its mandate. It’s not hard to see why these discussions are ever recurring, as the ECB’s statute has the reputation of being strict, but actually is formulated pretty vaguely: “The primary objective shall be to maintain price stability. Without prejudice to the objective of price stability, it shall support the general economic policies in the Community..”4 .. and these policies are described in the following way.. “.. balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment..”5 As long as price stability is safeguarded, this gives way to a variety of measures aimed at supporting economic growth and fostering employment in the euro area. But, with an economy operating far below potential, persistent upward price pressures due to wage-price spirals are one of the least issues the ECB currently worries about. Is it demand or is it supply? However, the questions as to whether (monetary) policy makers can and should do something about a weak flow of credit – and particularly how they should do it – depends to a large extent on whether it is driven by demand or supply. If it is driven by supply (which we would define as ‘banking sector specific’), policy makers would obviously have to focus on the banking sector, to ensure that obstructions to the supply of loans are removed. However, if it is driven by demand, the policy would have to focus on stimulating demand (via low rates) and removing the barriers to growth in the economy (which falls largely outside the scope of the central bank). The key problem in answering this question, however, is that supply and demand constantly interact. We only get to see the end result (the amount of new credit and at which rate), but not what the causes or drivers were behind these numbers. It is what economists call the identification problem: it is virtually impossible to disentangle these forces unless we have a model and avail ourselves of sophisticated econometric techniques. One of the frequently used solutions to this problem is to estimate a credit demand function and analyse the gap between the actual outcomes and the projection by the model. This, however, is nontrivial. There have been so many forces at work over the past several years. The fragmentation in the banking sector caused by the sovereign debt crisis has raised funding costs for banks in the periphery. Moreover, the ensuing deep economic contraction in several member states has raised unemployment, bankruptcies and associated credit risks. Meanwhile, banks have been under pressure to deleverage, to strengthen their capital base and hold more liquid assets. Another solution is to bring in new information – such as from surveys – to gain a deeper insight into the forces that are driving supply and demand. The best examples, of course, are the ECB’s own Bank Lending Survey and the Survey on the Access to Finance. We first look at these surveys, as they may help us gauge the results of the unconventional method that we will introduce later.



www.rabotransact.com 13 November Survey 1: Bank Lending Survey

The latest Bank Lending Survey seems to provide the ECB enough reason to do nothing. Although it confirmed that banks in the euro area are still tightening their credit standards6 on a net basis, it is to a lesser extent than during previous quarters. The net percentage of banks tightening their credit standards was 5%, the lowest level since the onset of the sovereign debt crisis. Although much better than several quarters ago, the costs related to the bank’s capital position (3%, down from 7% last year) as well as the general economic environment (4%, against 28% last year) were underlying this net tightening (Figure 7). However, banks even ascribed a net easing of standards to both improved access to market financing (1%) and a better liquidity position (7%). It is interesting to note that exactly the latter two factors are directly under the ECB’s influence – and thus adequately tackled by the LTROs. To stick to the vocabulary highlighted on page 3, both can’t be regarded as the stumbling blocks that Draghi was referring to. Obviously, weak economic conditions not only make suppliers of funds more cautious. However, according to the surveyed banks, it seems to take longer for demand to recover. The net percentage of banks that indicated a decrease in total loan demand from non-financial corporations still stood at 12%. It has been contracting for nine consecutive months. Particularly worrying, and at the same time actually not that surprising, is that it is mainly weak fixed capital formation that pulls down total loan demand. This is a clear signal that demand for final products is weak and businesses need fewer investments to accommodate this. In our opinion, it is one of the strongest determinants of the weak credit figures in the euro area: there is – at least for now – simply no demand for more debt.

Figure 7 – Economic conditions weigh heavily on credit supply to enterprises..

Figure 8 – .. and weak investment activity pulls down loan demand

Source: Macrobond Source: Macrobond

Figure 9 – Net tightening of standards for household credit close to zero..

Figure 10 – .. whilst demand gradually gathers steam

Source: Macrobond Source: Macrobond



www.rabotransact.com 13 November Consumer credit (Figure 9) shows a similar trend. Although the banking system is still tightening its credit standards on a net basis, it is certainly to a lesser extent than before the 3-year LTROs. What’s more, for the first time in more than five years, lending standards for consumer credit were even eased a bit in 13Q3. It is too early to say that this will be a true game changer going forward, as standards have tightened a little again in 13Q4, but it is nevertheless a positive development. Moreover, for households, banks see demand for both consumer credit and house purchases picking up (Figure 10). This is also for the first time since the onset of the sovereign debt crisis in 2011.

Survey 2: Survey on the Access to Finance The second ECB survey we bring forward is the Survey on the Access to Finance (SAFE), that is published twice a year. The reference period of the latest survey is the period from October 2012 to March 2013 (so it is slightly outdated, although a new survey is in the making). The SAFE questions a sample of approximately 7,500 euro area firms and provides survey data on the change in the financial situation, financing needs and access to external finance of the euro area’s small- and medium-sized enterprises. Over the reference period, 24% of the euro area’s SMEs applied for a bank loan (Figure 11) – this is not too distant from the average of 25.1% over the last four years. A small share of the firms (6%) didn’t apply because of fear of rejection – again this hasn’t fluctuated much since the ECB started surveying in 2009. Nearly 50% of those firms didn’t need to apply for funds because they had sufficient internal funds to finance their ongoing or new projects. Although the picture is rather homogenous, there are some notable differences between the eight selected euro area economies: the application rate is the highest in France (28%) and Spain (27%) and by far the lowest in the Netherlands (12%). However, for instance 75% and 72% of respectively Dutch and German SMEs indicated that they either had sufficient internal funds at their disposal or didn’t apply for other reasons – a category the ECB doesn’t exactly specify, but what we think reflects the relatively weak consumer demand.

Those firms that did apply for a loan (i.e. the orange subset in Figure 11) were asked a follow-up question: was the loan request satisfied in full and if not, what were the main limitations? The studied firms reported on average that 65% of their loan applications were accepted fully, whilst another 17% of those requests were satisfied in part. So, around 82% of euro area SMEs that needed financing got at least part of what they requested and only 11% of applications were rejected. That seems a high acceptance rate, however, Figure 11 suggested that there’s now some bias in the sample. After all, only firms that saw continued demand and deemed themselves creditworthy enough applied. For that reason, there is now much more heterogeneity across the selected member states, suggesting that there are strong differences in bank lending conditions in the euro area. Acceptance rates are on balance higher in core member states, just like rejection rates in the periphery. We see this reflecting a) the asymmetric monetary transmission mechanism and b) weak domestic demand.

Figure 11 – Economic conditions weigh heavily on credit supply to enterprises..

Figure 12 – .. of which 65% was accepted fully.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EA DE FR IT NL SP BE GR PT

Yes No, fear rejection No, suf funding No, other Don't know

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EA DE FR IT NL SP BE GR PT

Got everything Got only part Cost too high Rejected Don't know

Source: ECB, Rabobank Source: ECB, Rabobank



www.rabotransact.com 13 November An unconventional way to break down supply and demand We now introduce a somewhat unconventional approach to gauge whether recent credit dynamics have been driven by ‘supply’ or ‘demand’. We start from the premise that at any point in time there is an upward sloping credit supply curve (banks willing to supply more credit only when they are paid higher rates or margins – ceteris paribus) and a downward sloping demand curve (private sector only willing to take up more loans at a lower interest rate – ceteris paribus). We also assume that there is sufficient competition so that the interaction of demand and supply leads to an outcome where the interest rate and volume of credit are established at the intersection point of the supply and demand curve. This is illustrated by Figure 13. Although this is a very theoretical exercise, these assumptions may help us to distinguish whether a rise in commercial bank rates or a fall in the amount of credit has been driven by weak demand or weak supply. The way we do this is to look at the correlation between (the change) in interest rates and (the change) in credit. We need one more assumption to make our case: we assume that over a certain period it is either supply or demand that dominates credit dynamics7. Now we can state that if demand shocks dominate (demand curve shifts inward or outward, as illustrated by AD- and AD+ in Figure 13) we expect a positive correlation between interest rates and credit volumes. If supply shocks dominate (supply curve shifts inward or outward, as illustrated by AS- and AS+ in Figure 13) we expect a negative correlation between interest rates and credit volumes8. Hence, by plotting the correlation between the change in bank rates and the change in the net credit transactions volume over time, we may gain insight into whether it was demand or supply shifts that dominated. Bringing the theory into practice Figure 14 brings our theory into practice. It shows the 12-month rolling correlation between the year-on-year change in bank interest rates (households and corporates combined) and the year-on-year change in the credit transactions volume (adjusted for securitisations). Doing this exercise for the group of core as well as peripheral member states allows us to make the interesting observation that before the onset of the sovereign debt crisis, there was a significant co-movement in both series (the orange and blue lines in Figure 14), whereas between mid-2011 and mid-2013 these series significantly departed with (negative) supply shocks strongly dominating credit dynamics in the periphery as compared to (negative) demand shocks dominating in the core member states. Interestingly, when we now subtract the core states’ demand-supply indicator from the periphery’s (the blue minus orange line from Figure 14), we can see that it coincides with the YoY change in the rate spread between the regions. This is shown in Figure 15. In other words, the rise (and stabilisation thereafter) of periphery-core rate spreads appears to have been driven by negative supply shocks stemming from the periphery (which, may include higher funding costs).

Figure 13 – How we identify demand and supply shocks?

Table 1 – How shocks and correlation are related

Scenario Correlation Δr Δq

Four possible shocks

1 Negat ive supply shock - Up Down

Up

2 Negat ive demand shock + Down Down

3 Posit ive supply shock - Down

4 Posit ive demand shock + Up Up

Source: Rabobank Source: Rabobank




More than just a gimmick? Whilst this is perhaps not such a stunning conclusion after all, it may be seen as support for our unconventional method. Interesting also is that in recent months the demand-supply indicator has decidedly shifted back into demand territory in the core member states and has returned to neutral territory in the peripheral member states. In our view this should be interpreted as signalling that supply factors are no longer contributing to upward rate pressures (or downward volume pressures), but that weak demand is still weighing on growth of credit volumes. We must warn that because we are using changes here, it cannot be concluded that “everything has returned to normal”. However, we do think that this analysis corroborates the recent outcomes of the Bank Lending Survey, namely that supply factors are no longer contributing to a deterioration in credit dynamics. Is this just a gimmick? We do warn that the proverbial pinch of salt is probably in order here. On the one hand, our approach is rather out-of-the box and based on several crucial assumptions – even as some of these can be theoretically justified. Anyone who doesn’t believe in “neoclassical” theory would be advised to skip this paragraph. On the other, we would argue that our method is ‘non-parametric’ (no specific estimates for demand or supply functions) and time-varying, which may have some appeal compared to a traditional way of estimating a demand function. We leave the answer to this question for further research.

Figure 14 – Credit development much more supply-driven in periphery (12m rolling correlation between change in rates and change in volumes)

Figure 15 – YoY change in rate spreads coincides with dominance of supply shocks in periphery

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

05 06 07 08 09 10 11 12 13

Cor

rela

tion

Periphery Core

demand shocks dominate

supply shocks dominate

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8-0.7

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

05 06 07 08 09 10 11 12 13

YoY

Cha

ange

rat

e sp

read

per

iphe

ry-/

-cor

e

Cor

rela

tion

perip

hery

-/-c

ore

Net demand-supply shocks periphery-/-coreChange in rate spread periphery-/-core

demand shocks dominate

supply shocks dominate

Source: Rabobank Source: Macrobond



www.rabotransact.com 13 November What is the best response? The key message from the analysis above is that recent weak loan dynamics may have been driven by weak demand rather than supply. Obviously this doesn’t mean that supply factors don’t matter. The still significant gap that has opened up between peripheral and core rates (which, as we argue, has been brought about by negative supply shocks stemming from the periphery) has only just started to narrow. Risk premiums may have come down sharply but the fragmentation in the eurozone banking sector is still considerable compared to the situation before the crisis. Indeed, there is little hope that it will ever return to that. As such, we would be extremely careful to draw the conclusion that supply side support is no longer necessary. The challenges for 2014 Indeed, in terms of monetary policy options for 2014, we could still envisage measures that allow for a controlled reduction in bank assets (i.e., measures that would stimulate securitization, such as the ABS initiative tinkered with in May 20139) or funding for lending type of measures, which tie central bank funding to increases in commercial banks’ net lending to the real economy. This differs considerably from the ECB’s unconditional refinancing operations and may have ramifications for the way the ECB provides liquidity to the system. In its November 2013 policy meeting the ECB has reassured the market that unlimited unconditional liquidity provision will be maintained until, at least, mid-2015. In combination with the Additional Credit Claims (ACC) scheme that is operational in 7 member states, a funding for lending scheme may prove unsuccessful, unless it would come with regulatory relaxations. All these proposals have one overarching drawback: they focus on encouraging banks to increase their lending book. However, both the Survey on the Access to Finance and the Bank Lending Survey highlighted difficulties regarding the general economic outlook, the associated weak demand for credit and heightened risk aversion among banks. As such, a stronger case can be made for stimulating demand rather than supply. The most logical monetary policy options under this header would be ‘keeping rates low for as long as possible’ (combined forward guidance on rates and liquidity) or more aggressive types of measures that are likely to be seen as inconsistent with the ECB’s mandate (i.e., quantitative easing). However, to the extent that economic weakness is the result of weak structural growth or weak fiscal policy, the bal lies squarely in the court of European heads of state, as the only way confidence - and ultimately lending activity - can be restored is through a decisive implementation of the necessary structural reforms. A point that, we think, can’t be stressed enough.




Notes and sources 1) Draghi, M., ECB - Technical Features of Outright Monetary Transactions, 06-09-12,

http://www.ecb.int/press/pr/date/2012/html/pr120906_1.en.html

2) To calculate the bank CDS spread indicator we first calculated bank 5-year CDS spreads for individual member states (taking a sample of the biggest banks in these countries for which CDS spreads were available) and then weighed them with the GDP of the respective member states. We did this both for peripheral (Spain, Italy, Portugal, Ireland and Greece) as well as core (Germany, France, Belgium, Netherlands, Austria) member states. We then subtracted the core CDS spreads from the peripheral CDS spreads. We should add that for some countries there were only a few banks with sufficiently reliable CDS spreads. Nevertheless, we feel this indicator provides a fairly decent reflection of diverging credit risk premiums (the correlation between a similar index based on sovereign CDS differences is quite strong and consistent).

3) The seven national central banks are: Central Bank of Ireland, Banco de España, Banque de France, Banca d’Italia, Central Bank

of Cyprus, Oesterreichische Nationalbank and Banco de Portugal. Two national central banks have put forward their proposals later in 2012: the Bank of Greece and the Banka Slovenije.

4) ECB Statute

5) Treaty on the Functioning of the European Union

6) ECB, Bank Lending Survey

7) After all, if both moved together at the same time we would not be able to distinguish a demand from a supply shock

8) This method cannot distinguish ex-ante whether a demand or supply shock is negative or positive, it can only establish whether demand or supply dominates.

9) The announcement ECB President Draghi made at May’s press conference that the “Governing Council started consultations

with other European institutions on initiatives to promote a functioning market for asset-backed securities (ABS) collateralised by loans to non-financial corporations” looked promising. Attention for this initiative waned shortly thereafter though and so far, the ECB hasn’t come forward with a concrete proposal. Unless market pressure rebuilds, we expect Draghi to keep his cards close to his chest.




Financial Markets Research

Head

Jan Lambregts +44 20 7664 9669 [email protected]

Macro

Elwin de Groot EMU +31 30 216 9012 [email protected] Emile Cardon EMU, Switzerland +31 30 216 9013 [email protected] Bas van Geffen EMU +31 30 216 9722 [email protected] Philip Marey US +31 30 216 9721 [email protected] Michael Every Asia +852 2103 2612 [email protected] Jane Foley UK +44 20 7809 4776 [email protected] Robério Costa Brazil +55 11 5503 7315 [email protected]

Foreign exchange

Jane Foley G10 +44 20 7809 4776 [email protected] Christian Lawrence Emerging Markets +44 20 7664 9774 [email protected]

Fixed income

Richard McGuire +44 20 7664 9730 [email protected] Lyn Graham-Taylor +44 20 7664 9732 [email protected]

Credit markets

Eddie Clarke Corporates +44 20 7664 9842 [email protected] Stephen Queah Corporates +44 20 7664 9895 [email protected] Oliver Burrows Financials +44 20 7664 9874 [email protected] Ruben van Leeuwen ABS +31 30 216 9724 [email protected]

Agri Commodity markets – Food & Agribusiness Research and Advisory (FAR)

Luke Chandler Global Head +61 2 8115 2217 [email protected] Tracey Allen +44 20 7664 9514 [email protected]

Client coverage

Wholesale Corporate Clients

Martijn Sorber Global Head +31 30 216 9447 [email protected] Hans Deusing Netherlands +31 30 216 90 45 [email protected] David Kane Europe +44 20 7664 9744 [email protected] Brandon Ma Asia +852 2103 2688 [email protected] Andrew Millett Australia +61 2 8115 3101 [email protected] Neil Williamson North America +1 212 808 6966 [email protected] Marco Garcia Mexico +52 55 52610029 [email protected] Gaston Iroume South America +56 2449 8536 [email protected] Sergio Nakashima Brazil +55 11 55037150 [email protected]

Financial Institutions

Eddie Villiers Global Head +44 20 7664 9834 [email protected] Arjan Brons Benelux +31 30 216 9070 [email protected] Bill Cole UK, Eire, Scandinavia, M. East +44 20 7664 9885 [email protected] Krishna Nayak Germany, Austria, CEE +44 20 7664 9883 [email protected] Emmanuel Rodriguez Iberia +44 20 7664 9734 [email protected] Philippe Macart France, Italy +44 20 7664 9893 [email protected] Mark Melvin Switzerland +44 20 7809 9828 [email protected] Edwin Bernard Asia +852 2103 2639 [email protected] Sarah Lee USA +1 212 916 7875 [email protected] Simon Jansen Treasury Sales – Europe +31 30 216 9782 [email protected]

Capital Markets

Rob Eilering ECM +31 30 7122162 Rob. [email protected] Mark van Binsbergen DCM +31 30 2169771 [email protected] Herald Top DCM +31 30 2169501 [email protected] Othmar ter Waarbeek DCM +31 30 2169022 [email protected]




Disclaimer

Non Independent Research This document is issued by Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. incorporated in the Netherlands, trading as Rabobank International (“RI”). The liability of its members is limited. RI is authorised by De Nederlandsche Bank, Netherlands and the Prudential Regulation Authority (PRA) and subject to limited regulation by the Financial Conduct Authority (FCA) and PRA. Details about the extent of our authorisation and regulation by the PRA, and regulation by the FCA are available from us on request. Registered in England and Wales No. BR002630. This document is directed exclusively to Eligible Counterparties and Professional Clients. It is not directed at Retail Clients. This document does not purport to be impartial research and has not been prepared in accordance with legal requirements designed to promote the independence of Investment Research and is not subject to any prohibition on dealing ahead of the dissemination of Investment Research. This document does NOT purport to be an impartial assessment of the value or prospects of its subject matter and it must not be relied upon by any recipient as an impartial assessment of the value or prospects of its subject matter. No reliance may be placed by a recipient on any representations or statements made outside this document (oral or written) by any person which state or imply (or may be reasonably viewed as stating or implying) any such impartiality. This document is for information purposes only and is not, and should not be construed as, an offer or a commitment by RI or any of its affiliates to enter into a transaction. This document does not constitute investment advice and nor is any information provided intended to offer sufficient information such that is should be relied upon for the purposes of making a decision in relation to whether to acquire any financial products. The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The information contained in this document is not to be relied upon by the recipient as authoritative or taken in substitution for the exercise of judgement by any recipient. Any opinions, forecasts or estimates herein constitute a judgement of RI as at the date of this document, and there can be no assurance that future results or events will be consistent with any such opinions, forecasts or estimates. All opinions expressed in this document are subject to change without notice. To the extent permitted by law, neither RI, nor other legal entities in the group to which it belongs accept any liability whatsoever for any direct or consequential loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. Insofar as permitted by applicable laws and regulations, RI or other legal entities in the group to which it belongs, their directors, officers and/or employees may have had or have a long or short position or act as a market maker and may have traded or acted as principal in the securities described within this document (or related investments) or may otherwise have conflicting interests. This may include hedging transactions carried out by RI or other legal entities in the group, and such hedging transactions may affect the value and/or liquidity of the securities described in this document. Further it may have or have had a relationship with or may provide or have provided corporate finance or other services to companies whose securities (or related investments) are described in this document. Further, internal and external publications may have been issued prior to this publication where strategies may conflict according to market conditions at the time of each publication. This document may not be reproduced, distributed or published, in whole or in part, for any purpose, except with the prior written consent of RI. By accepting this document you agree to be bound by the foregoing restrictions. © Rabobank International, Croeselaan 18, 3521 CB Utrecht, The Netherlands

financial markets research - rabobank · eurozone credit remains key concern financial markets...

Documents