Political pressure is rising for Polish bank mergers

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Bank Lending ◽  
Political Debate ◽  
Content Type ◽  
Debt Burden ◽  
Low Interest Rates ◽  
President Elect ◽  
Near Term ◽  
Law And Justice ◽  
Privately Owned

Significance State-controlled PZU Group, Poland's largest insurer, was already bidding for a 25% stake in Italian-controlled mid-tier lender Alior Bank, and now wants to acquire Austrian-owned Raiffeisen Polbank and US General Electric (GE) group's local unit BPH. As the sector struggles with the consequences for borrowers in foreign exchange (forex) of the Swiss central bank's decision to scrap its currency ceiling against the euro, consolidation and foreign ownership are returning to the forefront of political debate. In the presidential election, the president-elect from opposition Law and Justice, Andrzej Duda, announced his preference for greater domestic ownership in a sector that is otherwise mostly privately owned. Impacts The household loan/GDP ratio will continue growing, but an upturn in demand for corporate loans in 2016 will reshape bank lending dynamics. Profitability margins will remain under pressure in the short term, owing to the Swiss franc debt burden and low interest rates. Solid growth in deposit and equity levels will nevertheless underpin financial sector stability in the near term.

Year of elections will not shift Spain's economic woes

2015 ◽  
Keyword(s):  
Interest Rates ◽  
House Prices ◽  
Bank Lending ◽  
Federal State ◽  
The Political ◽  
Energy Prices ◽  
Tax Reforms ◽  
National Elections ◽  
Content Type ◽  
Low Interest Rates

Subject Economic backdrop to the election cycle. Significance Incumbent administrations will be helped in this year's local, regional and national elections by a number of factors that will contribute to economic growth: lower energy prices, low interest rates, easier bank lending, income tax reforms, a stabilisation in house prices and the stimulus to exports of a weak euro. Nevertheless, widespread disillusion with the political system is likely to result in significant changes in the political landscape, with repercussions for the direction of policy both within Spain and at the European level. Impacts A coalition of the left would push for an easing of austerity measures and more public spending paid for by more progressive taxation. It is also likely to be supportive of a move towards a federal state. Domestic demand should rise, unemployment continue to fall and property prices to stabilise and start to move upwards in some locations. Challenging political and economic conditions will make it difficult to sustain fragile coalitions.

Japan's economic outlook brightens as growth continues

2017 ◽  
Keyword(s):  
Interest Rates ◽  
Raw Materials ◽  
Bank Lending ◽  
Labour Markets ◽  
Business Failure ◽  
Content Type ◽  
Bank Of Japan ◽  
Low Interest Rates ◽  
Low Levels ◽  
Economic Outlook

Subject The economic outlook for Japan. Significance Japan’s GDP rose 1.0% for the calendar year 2016 and the fourth quarter (annualised). Although the latest quarter decelerated from the pace of the earlier part of the year, the economy has now experienced four straight quarters of growth, the longest stretch since 2013. Impacts Higher wages arising from tighter labour markets will eventually push up prices, the four-year goal of the Bank of Japan. Low interest rates, rising investment and historically low levels of business failure support bank lending and demand for loans. The apparent end of a raw materials glut is bringing foreign demand back to Japan’s exporters; this should continue.

Rate policy may diverge in Central Europe in near term

2016 ◽  
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Central Europe ◽  
The Czech Republic ◽  
Content Type ◽  
Low Interest Rates ◽  
National Bank ◽  
Rate Policy ◽  
Near Term ◽  
Fx Market

Subject Monetary policy divergence in Central Europe in 2016. Significance At its March meeting, Hungary's National Bank (MNB) cut its benchmark interest rate to a record low of 1.2%, from 1.35%. Hungary's first interest rate cut since July 2015 came days after the ECB announced significant monetary easing measures. Deflationary conditions in much of Central Europe (CE) are heightening the likelihood of more monetary easing. Impacts Whereas Hungary will embark on a monetary easing cycle, the Czech Republic and Poland will hold rates unchanged in the short term. CPI is not expected to return within target before late 2017 or early 2018, necessitating a prolonged period of ultra-low interest rates. The return to monetary normalisation (the CNB is expected to exit the FX market during 2017) will be slow and gradual.

Poland's economic outlook will be uncertain under PiS

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Interest Rates ◽  
Short Term ◽  
Content Type ◽  
Welfare Spending ◽  
The Us ◽  
Near Term ◽  
Law And Justice ◽  
Political Backlash ◽  
Economic Outlook

Significance Amid an ongoing constitutional crisis, the Law and Justice (PiS) government, which was sworn into office on November 16, has been busy revising fiscal targets and agreeing draft laws in a bid to boost expenditure and revenue levels in 2016. Impacts Growth may slow in 2016, followed by gradual stabilisation as financial markets and investors grow accustomed to Poland's new government. An ambitious welfare spending programme will result in fiscal deterioration in the short term, incurring European Commission sanctions. On the upside, greater social benefits, competitive VAT rates and monetary easing could boost domestic demand, supporting growth after 2017. Ahead of new NBP appointments in early 2016, the risk of more institutional deadlock and political backlash remains high. The zloty will remain under pressure in the near term, particularly following the US interest rates hike, and debt-service costs could rise.

Interest in alternative investment classes is growing

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Asset Allocation ◽  
The United States ◽  
Content Type ◽  
Alternative Investments ◽  
Low Interest Rates ◽  
Near Term ◽  
Investment Portfolios ◽  
Standard Risk ◽  
Alternative Investment

Subject The increasing popularity of alternative investment asset classes in the global search for yield. Significance The prolonged period of low interest rates has negatively affected insurers, making it harder for them to meet the guarantees that are attached to life products. The challenges faced by insurers have increased attention on alternative investments. Led by the United States, global investment in infrastructure is expected to increase next year. Against this backdrop, it is useful to examine alternative investment classes and the role national regulatory regimes are likely to play in the allocation of assets to alternative investments. Impacts Increased asset allocation towards alternative investments will gradually lead to more efficient investment portfolios. Under standard risk models, capital charges for alternative investments may remain prohibitive in the near term. There is likely to be an increasing role for institutional investors such as insurers and pension funds in infrastructure investment.

Brazil's bank lending will pick up after sharp decline

2018 ◽  
Keyword(s):  
Interest Rates ◽  
Banking Sector ◽  
Bank Lending ◽  
Single Digit ◽  
Content Type ◽  
Fiscal Constraints ◽  
Loan Demand ◽  
Low Interest Rates ◽  
Will Force ◽  
Loan Growth

Subject Outlook for the banking sector. Significance Following a deep two-year recession that started in 2015, Brazil’s financial system will see loan growth returning to positive territory. This will be slow and gradual, with lending set to expand at single-digit rates during the next few years. Banks saw improving profitability in 2017 due to a reduction in expenses related to bad loans, but this will come under pressure because of record-low interest rates. Impacts Rising bank lending will support economic recovery but will not be the same engine of GDP growth as in past years. Large state-owned banks will be somewhat less dominant due to capital and fiscal constraints. Lower interest rates and weak loan demand will force banks to focus on increased efficiency and fee-generating products and services.

Australia budget keeps defence spending commitments

2021 ◽  
Keyword(s):  
South China Sea ◽  
Interest Rates ◽  
Fiscal Year ◽  
National Politics ◽  
Content Type ◽  
Defence Spending ◽  
Low Interest Rates ◽  
Defence Expenditure ◽  
Conducive Environment ◽  
Made In

Significance With an election due soon, the governing Liberal-National Coalition’s pledge to ring-fence the defence spending commitments made in 2016 was under some pressure. However, defence spending in fiscal year 2021/22 will grow by over 4% in real terms and stay above the symbolic level of 2% of GDP. Impacts Growing popular and bipartisan concern with Chinese aggression is a conducive environment for increased defence spending. Low interest rates and a stronger Australian dollar are also supporting sustained levels of defence expenditure. Washington may increase pressure on Australia to conduct freedom of navigation exercises in the South China Sea. Major business groups are concerned that increased criticism of China in national politics will produce yet more punitive backlash.

Low interest rate environment: inventory management in Finland and Baltic states

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olli-Pekka Hilmola ◽  
Weidong Li ◽  
Andres Tolli
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Customer Service ◽  
Inventory Management ◽  
Global Financial Crisis ◽  
Recent Decade ◽  
Baltic States ◽  
Content Type ◽  
Low Interest Rates ◽  
Rate Environment

PurposeFor decades, it was emphasized that manufacturing and trading companies should aim to be lean with very small inventories. However, in the recent decade, time-significant change has taken place as nearly all of the “old west” countries have now low interest rates. Holding inventories have been beneficial for the sake of customer service and for achieving savings in transportation and fixed ordering costs.Design/methodology/approachIn this study, inventory management change is examined in publicly traded manufacturing and trade companies of Finland and three Baltic states (Estonia, Latvia and Lithuania) during the years 2010–2018.FindingsInventory efficiency has been leveled off or falling in these countries and mostly declining development has concerned small- and medium-sized enterprises (SMEs). It is also found that inventory efficiency is in general lower in SMEs than in larger companies. Two companies sustaining in inventory efficiency are used as an example that lean has still significance, and higher inventories as well as lower inventory efficiency should not be the objective. Two companies show exemplary financial performance as well as shareholder value creation.Research limitations/implicationsWork concerns only four smaller countries, and this limits its generalization power. Research is one illustration what happens to private sector companies under low interest rate policies.Practical implicationsContinuous improvement of inventory efficiency becomes questionable in the light of current research and the low interest rate environment.Originality/valueThis is one of the seminal studies from inventory efficiency as the global financial crisis taken place in 2008–2009 and there is the implementation of low interest rates.

The current farm downturn vs the 1920s and 1980s farm crises

2018 ◽  
Vol 78 (4) ◽  
pp. 396-411 ◽  
Author(s):  
Wendong Zhang ◽  
Kristine Tidgren
Keyword(s):  
Interest Rates ◽  
Agricultural Sector ◽  
Balance Sheet ◽  
Real Income ◽  
Economic Downturn ◽  
Agricultural Credit ◽  
Content Type ◽  
Farm Crisis ◽  
Low Interest Rates ◽  
Sudden Collapse

Purpose The purpose of this paper is to examine the current farm economic downturn and credit restructuring by comparing it with the 1920s and 1980s farm crises from both economic and regulatory perspectives. Design/methodology/approach This paper closely compares critical economic and regulatory aspects of the current farm downturn with two previous farm crises in the 1920s and 1980s, and equally importantly, the golden eras that occurred before them. This study compares key aggregate statistics in land value, agricultural credit, lending regulations, and also evaluates the situations and impacts on individual farmer households by using three representative case studies. Findings The authors argue that there are at least three economic and regulatory reasons why the current farm downturn is unlikely to slide into a sudden collapse of the agricultural markets: strong, real income; growth in the 2000s, historically low interest rates; and more prudent agricultural lending practices. The current farm downturn is more likely a liquidity and working capital problem, as opposed to a solvency and balance sheet problem for the overall agricultural sector. The authors argue that the trajectory of the current farm downturn will likely be a gradual, drawn-out one like that of the 1920s farm crisis, as opposed to a sudden collapse as in the 1980s farm crisis. Originality/value The review provides empirical evidence for cautious optimism of the future trajectory of the current downturn, and argues that the current downturn is much more similar to the 1920s pattern than the 1980s crisis.

US energy high-yield bonds spur default risk

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Oil Price ◽  
High Yield ◽  
Content Type ◽  
The Past ◽  
The Us ◽  
Low Interest Rates ◽  
Investment Grade ◽  
Energy Companies

Subject Impact of the oil price drop on energy high-yield bonds. Significance The over 50% oil price drop since June 2014 is hitting bonds issued by energy companies, particularly those issued by sub-investment grade corporates. The US high-yield bond market has been growing rapidly over the past five years. The shale boom has generated considerable investment, mainly funded through the issuance of these bonds which benefit from historically low interest rates. As the oil price has plunged, the spread over Treasury yields paid by the average issuer in the energy subsector has more than doubled between July and the December 2014 peak. Impacts Yields currently offered by the energy subsector are not far from pricing in a default scenario. Persistently low oil prices will further darken the outlook for the energy subsector and the high-yield market generally. A possible default cycle in the energy sector could accelerate outflows, overstretching the sector further.

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