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Banking & finance briefs: SBS eyes Nelson, Wairarapa building socieities, Greek banking woes

Banking & finance briefs: SBS eyes Nelson, Wairarapa building socieities, Greek banking woes

1. SBS's favoured merger partners - SBS Bank has anointed the Nelson Building Society and the Wairarapa Building Society as among the other mutually owned organisations it would like to team up with to create a national community bank. However, SBS’s chief executive Ross Smith told the Otago Daily Times nothing was on the table yet.

“But we are confident that by the end of the year we will have someone interested," he said.

2. Aussie banks forcing property sales - Australian banks will force property companies to sell billions of dollars worth of commercial buildings in the next six months as they strive to clean up underperforming assets on their books, the Australian Financial Review reports. Although the bigger property companies have cut their debts significantly, middle sized and smaller firms remain highly leveraged, the AFR noted, and the banks are looking to reduce their exposure to the sector. Banks are also offloading properties they ended up owning as a result of the global financial crisis.

3. Greek banking woes - Research by Citigroup analyst Giada Giani shows deposit outflows from Greek banks totaled €15.6 billion, or 6.4%,  between December last year and April this year with €5.7 billion flowing out in April alone.

"The largest drop in absolute terms was registered by households’ deposits (-€10.5bn since Dec 09), but the percentage change was largest for corporate deposits (-14% since Dec 09). We reckon such negative developments have played a significant role in finally convincing the Greek authorities to ask for and accept an EU/IMF rescue package," Giani said.

Furthermore a shrinking deposit base has forced Greek banks to search for other sources of funding. Debt issuance more than doubled over just one month in April, from €2.9 billion to €5.8 billion, albeit remaining a small share of total assets at just 1.2%.

"More strikingly, the reliance on the European Central Bank has surged again to a new record high level of €84.8 billion (a vast 16.8% of banks’ total assets), up from €67 billion in March, and more than double the level of last November. This occurred at a time when the rest of the banking system in the euro area was progressively stabilising or reducing its reliance on the central bank’s liquidity," added Giani.

Meanwhile Greek banks significantly increased their Greek government bond holdings in April, to €44 billion, or 8.7% of total assets, from €38.6 billion in March. Giani noted this reflectied the difficulties of the Greek government in raising funds on international capital markets.

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