This edition first published 2015
© 2015 Aldo Soprano
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Library of Congress Cataloging-in-Publication Data
Soprano, Aldo.
Liquidity management: a funding risk handbook / Aldo Soprano.
pages cm. – (The wiley finance series)
Includes bibliographical references and index.
ISBN 978-1-118-41399-9 (hardback) – ISBN 978-1-118-41396-8 (ebk) – ISBN 978-1-118-41398-2 (ebk) 1. Bank liquidity. 2. Risk management. I. Title.
HG1656.A3S66 2015
658.15′5–dc23
2015002039
A catalogue record for this book is available from the British Library.
ISBN 978-1-118-41399-9 (hbk) ISBN 978-1-118-41396-8 (ebk)
ISBN 978-1-118-41398-2 (ebk) ISBN 978-1-119-08794-6 (ebk)
Cover Design: Wiley
Cover Image: ©Getty Images/Steve Rawlings
In hoping this text is of interest and help in assessing and understanding liquidity risk, my first and greatest debt of gratitude goes to Werner Coetzee, Executive Commissioning Editor at Wiley, for suggesting and inspiring me to write it, but mostly for holding me to completing it when my first son's arrival kindly changed my private life and free time. A special mention is also owed to Carlo Magnani for his previous support and contribution. Lastly, I want to mention the many people over these difficult past years that have worked together with me on liquidity risk and deserve to be mentioned, without order or priority: Gianni Capezzuoli, Mario Prodi, Elena Conserva and Attilio Napoli.
The opinions and indications presented in this book are those of its author and do not represent that of UniCredit Group.
This book was first conceived of and begun two years ago, at the peak of what it is now commonly referred to as the Greek financial crisis. As many well remember, it was the nadir of the financial crisis, triggered by the chain of problems from Ireland, Portugal and then Greece, resulting in state rating downgrades and endless discussions in Brussels and Frankfurt about the way to solve the apparently unresolvable liquidity troubles. All this while the Lehman crisis was barely one year old. Then the contagion fear that affected the Republic of Italy, one the largest sovereign debt issuers in the world, spread and the troubles quickly also reached Spain, with the Bankia and Spanish banking sectors in dire straits and receiving European financial help. Many governments fell, dragged down by extremely high refinancing costs, unemployment rates and falling growth rates.
Things have changed since. Mario Draghi's appointment at the helm of the European Central Bank and the pledge to assure unlimited support by the ECB on CEE Euro state members in August 2012 have been turning points in the delicate and complex liquidity transmission mechanism. Though liquidity market normalization is still distant, significant steps forward in recent months, including ECB Long Term Repurchasing Operations, have ensured liquidity to banks and cooled concerns. At least for the time being.
