A Direct Bailout of E.U. Banks, TARP-Lite (SAN, BBVA, NBG, IRE, DB, UBS, CS, BCS, GREK, EWP, EWI, FXE)

While Angela Merkel has maintained her pledge of no bonds (no direct debt sharing and assumption), today’s news is exceeding what the markets were hoping for yesterday,  Currently the DAX is up 2.6% in Germany, the CAC is up 3.1% in Paris, and even the FTSE in the United Kingdom is up 1.6%.

ADR trading in the banks is up in early New York trading, as you would guess.  Banco Santander, S.A. (NYSE: SAN) is up 5% at $6.46; Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is up 6.1% at $6.87; National Bank of Greece SA (NYSE: NBG) is up a whopping 13% at $1.73; The Bank of Ireland (NYSE: IRE) is up 4.6% at $5.60.

The large developed nation banks are on the mend too. Deutsche Bank AG (NYSE: DB) from Germany is up 6.5% at $36.10.

Swiss banks are on the rise too as this solidifies their counterparties.  Credit Suisse Group (NYSE: CS) is up 4% at $18.13 and UBS AG (NYSE: UBS) is up over 2% at $11.48.

Due to the overhang of the price fixing of LIBOR and the potential criminal implications of that effort, Barclays PLC (NYSE: BCS) is going against the grain and is down yet again by over 1.5% at $10.67.

The ETFs are on the med as well: iShares MSCI Spain Index (NYSEMKT: EWP) is up 4.8% at $24.23; Global X FTSE Greece 20 ETF (NYSEMKT: GREK) has not traded but is indicated higher; iShares MSCI Italy Index (NYSEMKT: EWI) is indicated up 5% at $10.96.

Today’s move allows banks to get aid without sovereign nations taking on the direct obligations on top of their stretched books and adding to their high rates of borrowing.  In some ways, this may be like a TARP program but perhaps without as many strings attached.

The Euro currency was trading at $1.2573 on last look, up from $1.2431 yesterday, and this has the CurrencyShares Euro Trust (NYSEMKT: FXE) is up 1.5% at $125.70 so far this morning.

JON C. OGG