July 20 (Reuters) – South African residents have attacked migrants from African countries in a Johannesburg township, injuring at least five people and increasing concerns of a wave of xenophobia after the soccer World Cup.
Local media said four of those injured at Kya Sands were from Zimbabwe and Mozambique. The fifth was a South African who said his attackers refused to believe he was a local.
Tensions have long been building between South Africans and millions of foreign migrants they accuse of taking jobs and homes, but open animosity appeared to be put on hold during the World Cup as South Africa showed its best face to the world.
A spate of attacks on foreign workers in 2008 killed 62 people and damaged investor confidence. Another wave could wreck the positive image that Africa’s biggest economy was able to portray during the soccer tournament.
Running battles erupted late on Monday at Kya Sands after a robbery inside the township sparked anger between locals and foreigners, the Eye Witness News website said. It took police several hours to quell the unrest.
Eye Witness News said two men had deep cuts to their heads. One said he had been attacked with an axe. A woman was carried out on her husband’s back, saying she had failed to outrun a mob and had been kicked in the chest.
Foreign migrants are estimated to make up more than 10 percent of South Africa’s population of about 49 million. Many are Zimbabweans who fled economic collapse at home.
EU bank stress tests face their own test in markets
(Reuters) – EU tests of banks’ ability to withstand financial shocks, criticized as too easy after only 7 out of 91 failed, face their own stress test in the markets on Monday with early signs pointing to a more positive response.
European Union policymakers and regulators voiced relief at Friday’s results but some market analysts and many media commentators derided an exercise in which all listed banks passed as lacking in credibility.
“I see nothing stressful about this test. It’s like sending the banks away for a weekend of R&R,” said Stephen Pope, chief global equity strategist at brokers Cantor Fitzgerald.
There was skepticism about EU regulators’ conclusion that banks need only a total of 3.5 billion euros ($4.5 billion) in extra capital. Market expectations had ranged from 30 to 100 billion euros, although many European banks have already raised capital during the financial crisis.
Only five small Spanish banks, Germany’s state-rescued Hypo Real Estate and Greece’s Atebank failed outright. More than a dozen others scraped through with just over the required 6 percent of Tier 1 capital in the most stressful scenario and are likely to come under market scrutiny.
However, the wealth of data disclosed by banks representing 65 percent of assets, and the commitment of banks, regulators and governments to follow-up action may well outweigh doubts about the stringency of the tests.
In a first market reaction in New York late on Friday, the cost of insuring the debt of large European banks fell further and the euro rose against the dollar despite worries about the tests’ credibility.
Better-than-expected economic data and business confidence surveys suggesting the euro zone will avoid a double-dip recession despite fiscal austerity measures are also helping revive investor confidence in Europe.
HAGGLING
Given the haggling among EU governments and regulators about the stress tests right up to the last moment, the degree of transparency was greater than had been expected a few weeks ago.
Sources familiar with the discussions said Germany fought hard behind closed doors to limit the extent of disclosure.
In the end, most banks — except Deutsche — issued a detailed breakdown of their exposure to the sovereign debt of EU countries, enabling investors to run their own risk simulations to gauge a counterparty’s solidity.
“We have all the sovereign exposure data, and we can go ahead and do our own tests,” said Nial O’Connor, a banking analyst at Credit Suisse.
That should help reopen the interbank lending market, which partially froze at the height of the euro zone debt crisis in May and has remained tight due to fears that banks have been hiding big exposures.
It also responds to one of the major criticisms of the exercise — that the scenario assumed a “haircut” on sovereign debt of countries such as Greece held in banks’ trading books, but not on a longer-term basis in their banking books.
The EU authorities were chastised for refusing to test the impact of a default by Greece.
But European Central Bank governing council member Christian Noyer said euro zone states “have put several hundreds of billions of euros on the table with the support of the IMF to make this hypothesis completely excluded.”
TRANSPARENCY
Spain, which spearheaded the drive for transparency, tested a larger part of its banking system and disclosed more data than any other country, hoping to clear away lingering market suspicion of its smaller banks’ solvency.
However economist Nicolas Veron of the Bruegel think-tank said Madrid had underplayed the recapitalization needs of the cajas, regional savings banks, although its bank resolution fund (FROBE) is well on the way to meeting those needs.
“The Spanish wanted to be seen as the most transparent and deserve praise for the catalyst role they played, but in the end they clearly understated what the cajas need,” he said in a telephone interview.
Veron said follow-up actions by governments and regulators should include pressing weaker banks to recapitalize, if necessary with state help and facilitating cross-border takeovers of weaker banks.
Even before the results were published, National Bank of Greece, Slovenia’s NLB and Civica in Spain announced plans to raise capital.
Italy said it would reopen an offer of government-backed bonds to support its banks, although none failed. Monte dei Paschi di Siena squeaked through with 6.2 percent of Tier 1 capital under the most stressful scenario, and UBI Banca with 6.8 percent.
Veron said the success of the exercise would depend partly on whether European regulators adopt a more cooperative approach after the stress tests than they did before them.
“If this is the start of a beautiful friendship among EU supervisors, then that’s not the same as if the united front crumbles next week and they start criticizing each other again,” he said.
(Editing by Andrew Roche)