Breakingviews - Cheery bank CEOs have the edge on gloomy investors

bad-debt impairment charges in 2022 would be lower than his previous estimate of 0.2% of total loans. BNP Paribas on Friday took a smaller credit-loss charge for the second quarter than it did last year.

Bank shareholders don’t share their optimism. Take the decline in their market value as a crude proxy for the magnitude of loan losses that investors are bracing for, since any credit impairments will erode shareholders’ equity once they have eaten through earnings. The fall in valuation since Feb. 18 for the five lenders is on average equivalent to 1.9% of their outstanding loans. That’s more than twice the amount that the same lenders set aside in 2020 to cover lockdown-induced defaults.

It’s unlikely that a recession this year or next would be twice as painful as the pandemic. For starters, interest rates are rising, which boosts lending margins and gives banks extra revenue to absorb writedowns. Second, European unemployment surged by more than a percentage point in 2020, but economistsby the ECB expect it to keep falling over the next two years. It’s hard to see a big surge in defaults so long as borrowers hang onto their jobs.

Russia-backed separatists alleged that 40 prisoners-of-war had been killed and injured 75 others, in a rocket strike on the prison camp in Olenivka. This prison has been used to house many of the Ukrainian soldiers who surrendered at the Azovstal plant in Mariupol two months ago

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Breakingviews - Breakingviews: Cerberus, J.C. Flowers put Indian bad debt on mapIndia’s struggle to work through bad corporate loans is on the verge of shifting from overburdened bank boardrooms to where it ought to be: in the hands of experts. Investment firms J.C. Flowers, Apollo Global Management and Cerberus are leading a fight to take charge.
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