In order to stop government bailouts, the stockholders and bond holders of a bankrupt bank need to pay of the debts of the bank. If there is money left over, the bond holders have priorities before stockholders. I do not agree that the bank depositors should be charged for the bankruptcy like in Cypress. This goes beyond fair. DLS

Net, net. There will always be bank defaults and government bailouts. Willie Sutton rob banks because that is where the money is. The robbers inside the banks know this as well. DLS

AT1 - "You need to look at the distance to the trigger". AT1 are known unknowns, and are American options like short gamma trades, who really cares about the capital threshold trigger aka the strike price seriously? When you are long AT1 you are selling the insurance to the bank. You are the one holding nonlinearity to the downside with limited upside. Sure the coupon is enticing like Banco Popular AT1 at 8.25%. About a comment I read about him nailing the takeover of the bank, in Banco Popular's case the short end of the CDS curve was already inverted way before the takeover for €1 was announced. Banks in Europe are not a good investment in equities, that might be fun tactically to play the beta trade but if you want to sleep at night and don't do serious credit analysis, stick with Senior Financials. Oh by the way Commerzbank has had 5 capital raises since it was bail-out by the German government, must be great to be continously diluted...

Informative.

A good indication of the environment we live in; European banks are a buy because there won't be any bail-ins. Let's overlook $1trn NPLs, negative interest rates, sclerotic growth in the real economy combined with deflationary effects on business investment, high debt levels, non-existent velocity of money, and a complete lack of price discovery in the credit markets - amongst other things.

Great interview. Really like Ian's style moderating. Keith a very smart guy and good high-level commentator been reading him for years. He nailed the Banco Popular saga ('not sure anyone would want to buy these banks'.). Nobody did and the regulators in Spain seem to have forced it onto Santander. With the Coco meltdown there is has to be true that funding going forward will be pinched. As a RealVision research subscriber it's hard to combine Keith's bearishness with JD Research's latest piece on "Time to rethink your views on Europe" and Europe as a 'safe haven'. They haven't even tackled the massive NPLs in their banking system let alone slow growth, low rates, high unemployment, EU bureaucracy, etc. So I disagree with Coaxey and see European bank prices headed to very low levels before they inevitably get recapitalized and bounce back (as happened in the US).

Fundamentally, Buy low, Sell high ! The banks (in general) won't be allowed to go bust, ergo they will survive, ergo their stock price will be higher in the future. Two years, five years? Dunno, but European bank EFTs seem reasonably attractive. I am curious on the ratio of traders (short-term, <2years) to investors (5-10years) on RVTV.

The new music for the video's is much more fitting for this website I must say. Really sells this site as a place for professionals to congregate

The stuttering + lisp drives me crazy.

A trillion of bad loans and a buyer of banks?

:)

The guest nailed the Banco Popular deal. And the role banks have in fintech is a must discuss idea. Congrats.

"I suspect a lot of it-- has been found to be fraudulent. But that that's not the issue. It's not about fraud. This is about incompetence and ineptitude ..." Hot iron avoided. It clearly is about fraud, the two I´s notwithstanding.

This is wearing me out!

Not sure I agree about the political will for bailouts remaining high, but admit I am no expert. However, I suspect further bank bailouts in the UK would have gone down like a lead balloon with the army of Gen Y idealists who voted for Comrade Corbyn in the UK a few weeks ago, and given the divided political climate in Europe (MSM rhetoric of a Macron triumph aside - I read of record abstained votes and spoiled ballot papers), I suspect bank bailouts on the continent would be a tough political sell if the majority of people suffer as a consequence. Will cause further division and support the continued rise of populist politicians.

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