There has been an informational overload this morning, when as we reported previously, one after another bank scrambled to issue reports, some full of typos and clearly unvetted by compliance, calming the market and desperate to see all important confidence return to the peripheral market. Most of these notes have been nothing short of outright propaganda and disinformation, or a confirmation the analysts had zero idea what they were doing (case in point Goldman which had the stock at a Buy rating until this morning, even as the stock was virtually wiped out in recent weeks).
Some, surprisingly, have done the work. Below we provide some of the less then insightful reports, as conveniently summarized by Bloomberg, and we conclude with perhaps the best piece so far – one written by Bank of America’s Richard Thomas who alone among the sell-side penguin circus, was as close as he could be, to predicting this week’s outcome.
First, the penguins, via Bloomberg, all of which are prayingf that the powers that be will simply step in and bail out the bank in case they are, as usual, wrong:
SocGen
- BES is “money-good†at senior and LT2 level, but confidence on T2 has to be lower than senior
- Expect the authorities to concentrate hard on avoiding the failure of a systemic bank
- Base case, with 70% probability, is BES writes down EU1.2b worth of loans and intra-group exposures, leading to a fully loaded CET1 dropping to 8.75% from 10.5%; manageable
- Investors who are long BES and concurring with our base case shouldn’t sell [ZH: and hence, those who don’t concur, should sell]
- Investors seeking a buying opportunity should take a closer look; don’t expect a quick snap back
Henderson
- Expect Portuguese authorities to intervene and protect senior BES bondholders if bank’s situation becomes systemic
- Situation at Banco Espirito Santo isn’t comparable with SNS in the Netherlands, or Austria’s Hypo Alpe
