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Europe Banks

Exhibit 9: ECB funding usage driven by TLTRO 2...	Exhibit 10: ...with Italian and Spanish banks making up over half of the total take-up...
ECB facility use (MRO+LTRO), € bn	ECB funding € bn

1,400

1,260

450

Greece

Ireland

Portugal

Spain

Italy

MRO

400

1,200

LTRO

350

MRO + LTRO

1,000

300

800

733

250

245

600

200

168

150

400

100

200

50

0

8

0

20

5

08-Jan

08-Jul

09-Jul 09-Jan

10-Jul 10-Jan

11-Jan

11-Jul

12-Jul 12-Jan

13-Jan

13-Jul

14-Jan

14-Jul

15-Jan

15-Jul

16-Jan

16-Jul

17-Jan

17-Jul

18-Jan

18-Jul

Jun-10

Dec-10

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Source: Datastream

Exhibit 11: ...while Greek banks have reduced reliance on ECB funding

ECB funding as a % of banking assets

40%

Ireland

Portugal

Greece

Spain

Italy

35%

32%

30%

25%

20%

15%

10%

5%

7%

4%

0%

1%

Mar-09

Sep-09

Mar-10

Sep-10 Mar-11

Sep-11

Mar-12

Sep-12 Mar-13

Sep-13

Mar-14

Sep-14 Mar-15

Sep-15

Mar-16

Sep-16 Mar-17

Sep-17

Mar-18

Source: ECB, NCBs, Goldman Sachs Global Investment Research

Exhibit 12: No material change in the take-up of MRO in 2018

MRO (€bn)

MRO

34			34						33
		32		32		31
32					30
					28		25	27
							24															21
									15		15		14		16
										13					14	12		12 12
									13			14		14		12	11
																		8	7	7
																		7																																						6
																		7		5 6 5			5					5																												5
																			5		4	4	4	3			3			33		3					2		3							3						3		3		4
																																	2									2
																										3			2					2	2 2		2	2		3			2		2		2		2		3
																			4		4	3			3				2		3			1		1 1		2			22			11				2		2			3		3
6-Jan-17			27-Jan-17		17-Feb-17		10-Mar-17		31-Mar-17		21-Apr-17			12-May-17		2-Jun-17		23-Jun-17 14-Jul-17	4-Aug-17	25-Aug-17	15-Sep-17	6-Oct-17	27-Oct-17			17-Nov-17			8-Dec-17		29-Dec-17 19-Jan-18			9-Feb-18		2-Mar-18	23-Mar-18	13-Apr-18		4-May-18		25-May-18			15-Jun-18		6-Jul-18			27-Jul-18			17-Aug-18			7-Sep-18 28-Sep-18

Source: ECB, NCBs, Goldman Sachs Global Investment Research

Source: DataStream

16 November 2018

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Goldman Sachs

Europe Banks

Exhibit 13: The ECB US$ facility is still in place though currently unused

US$bn

300

250

200

150

100

50

0

07-Dec

08-Mar

08-Jun

08-Sep

08-Dec

09-Mar

09-Jun

09-Sep

09-Dec

10-Mar

10-Jun

10-Sep

10-Dec

11-Mar

11-Jun

11-Sep

11-Dec

12-Mar

12-Jun

12-Sep

12-Dec

13-Mar

13-Jun

13-Sep

13-Dec

14-Mar

14-Jun

14-Sep

14-Dec

15-Mar

15-Jun

15-Sep

15-Dec

16-Mar

16-Jun

16-Sep

16-Dec

17-Mar

17-Jun

17-Sep

17-Dec

18-Mar

18-Jun

18-Sep

Source: European Central Bank, Goldman Sachs Global Investment Research

Rating and pricing information

Lloyds Banking Group (S/N, 55.45p) and Standard Chartered (B/N, 596.60p)

16 November 2018

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Goldman Sachs

Appendix: Our economists’ views on Brexit

Europe Banks

In this section, we highlight the views of our economists on Brexit published in their recent note. For more details,

please see Brexit — Withdrawal Disagreement.

Our economists maintain their base case that the Withdrawal Agreement struck between the EU and the UK will be ratified by the House of Commons by the end of the year, and ratified by the European Parliament before the end of March 2019, although the risks to that view have clearly intensified.

If, at first pass, the Withdrawal Agreement does not garner a majority in the House of Commons, our economists see three viable destinations :

nDestination 1: A successful, second attempt in Parliament. Presumably, this would require some amendments to the current Withdrawal Agreement. The response of companies, households and financial markets to a fraught political environment may also affect the stance taken by those MPs who vote down the initial deal.

nDestination 2: A second referendum. This would require a more fundamental change in policy stance, on the part of both major parties. Senior ministers in the Conservative Party have, thus far, ruled out the possibility of a second referendum, ostensibly as a matter of principle. Senior ministers in the Labour Party have prioritised a general election over a second referendum, arguing that a new government should come to power if PM May cannot deliver a workable deal.

nDestination 3: A “no deal” cliff-edge departure. Suppose that, irrespective of the government of the day, Article 50 is not extended. The UK would move directly to WTO tariffs in its trade with the EU. Non-tariff barriers would come into force.

16 November 2018

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