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Feature: Ripple Effect
23 November 2011
Patrick Winters investigates how far aviation's liquidity crisis has spread outside of France.
Aviation's credit supply has been hit as the cost of funding
at European banks has skyrocketed. The funding problems started
in 2008 and got worse over time. Bertrand Grabowski, managing
director, DVB Bank, says funding costs for European banks have
risen five, six or seven times since 2008.
Banks that relied on cheap short-term dollar funding are
finding it difficult to raise long-term funds to finance
According to a September 21 report by Barclays Capital
Equity Research - Societe General and BNP Paribas used
short-term loans with a tenor of three months or less for 55%
to 60% of their wholesale funding in 2010. Those at the less
risky end of the scale - Deutsche Bank, JP Morgan and
Intesa Sao Paolo secured between 30% and 40% of their wholesale
funding with loans of under three months.
But banks with minimal long-term funding to fall back on are
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