ECB to the markets: here comes the money!

Capital shortfalls at European banks, 2011 by nation

Its impossible to short sell Spanish or Italian banking stocks, and for good reason. As the chart above shows, Spanish and Italian banks have the largest need for capital, at 262 and 154 Billion Euros respectively.

Part of the reason while ECB is pumping money into the banking sector and driving rumours of a backdoor ECB bailout already underway.

Time to buy European banking stocks? Sure, there is almost certainly more bad economic news ahead, and part of it might involve dilution but on the other hand the Bloomberg Europe Banks and Financial Services Index is down some 70% from its pre crisis high. If you think a full ECB bailout of Spanish and Italian banks is in the cards some folks have ideas for a risk free trade.

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