Graphic detail: European banks five-year subordinated CDS

Since the ECB’s three-year LTRO in December we have seen European banking stocks rally by over 20%.

The LTRO has thrown banks a lifeline helping them to manage the liability side of their balance sheets and this has also fed through into lower risk perceptions of financials in general. This is evidenced in the sharp fall in European bank subordinated five-year CDS index since the ECB’s LTRO which has occurred despite a conclusion to the second bailout for Greece.