The ECB releases funds from the pandemic program for Italy.
(Bloomberg) The European Central Bank has appeared to be buying billions of dollars in bonds to shield Italy and other southern euro members from unwelcome market developments since activating its first line of defense against speculation a month ago.
Data released on Tuesday shows a significant use of funds freed up by maturing bonds in the pandemic program portfolio. This suggests that the instrument that the central bank intended as the first reaction to market turbulence was used.
The statistics, which are only available on a two-month basis, show that net holdings of German, French and Dutch bonds fell by 18.9 billion euros through July. Net purchases of bonds from Italy, Spain, Portugal and Greece totaled 17.3 billion euros.
The numbers are the first hard data to show the ECB’s intervention in bond markets after a surge in bond yields in June forced President Christine Lagarde to call an emergency meeting where officials agreed on the need for a response.
“It appears that the ECB has already activated its first line of defense,” said Christoph Rieger, Head of Rates at Commerzbank AG. “This is by far the largest reduction in German holdings since the ECB began quantitative easing, and more than we anticipated.” As a first step, Council members agreed to flexibly reinvest the repayments due on their €1.66 trillion asset purchase program.
To organize the bond purchases, they divided the euro area into three categories: donors, including Germany, France and the Netherlands, recipients, consisting of Italy, Greece, Spain and Portugal, and so-called neutrals.
Lagarde described this flexibility as the ECB’s first line of defense against market volatility that threatens the transmission of monetary policy. In addition, a newly created instrument for the purchase of debt securities is available in the background if stronger interventions should become necessary.
Italy has been the focus of investors since Prime Minister Mario Draghi’s government fell last month and snap elections were put on the agenda for late September.
Oerlikon increases strongly
tsf. The industrial group Oerlikon is making rapid progress. After an already good first quarter, it continued to grow in the months of April to June. In the first half of the year, he increased sales by 19.7 percent to CHF 1.43 billion compared to the same period last year. As the group further announced on Wednesday, new orders increased by 21.2 percent to a value of CHF 1.56 billion.
Operating profit before depreciation and amortization (Ebitda) rose by 22.2 percent to CHF 247 million. The corresponding Ebitda margin improved from 16.9 to 17.2 percent.
The bottom line was a net profit of 88 million francs, which corresponds to an increase of 23.4 percent compared to the same period last year.
Chairman of the Board of Directors Michael Süss, who took over the operational management of the group from July 1, 2022 from the retiring CEO Roland Fischer, speaks of “strong” growth in the announcement. In the Surface Solutions Division, Oerlikon has seen increased demand, although many end markets are still suffering from supply chain problems.
Commerzbank earns a surprising amount
(dpa) Germany’s Commerzbank posted a surprisingly high profit in the second quarter thanks to significantly higher earnings. The bottom line was a surplus of 470 million euros, as the company announced on Wednesday. That was 100 million more than what analysts had expected on average.
A year earlier, costs for job cuts and branch closures had torn Commerzbank deep into the red with 527 million euros. For 2022, CEO Manfred Knof is still aiming for a surplus of more than one billion euros and wants to distribute 30 percent of the profit attributable to shareholders as a dividend.
In the second quarter, revenues – the bank’s total income – jumped 30 percent year-on-year to 2.4 billion euros. At the same time, the bank put aside 106 million euros for possible loan defaults, a good fifth more than in the previous year. For the year as a whole, the Management Board assumes risk provisions for impaired loans of around EUR 700 million.