Jun 06

- Moody’s Downgrades Six German Bank Groups, And Their Subsidiaries, By Up To Three Notches (ZeroHedge, June 5, 2012):

First Moody’s cut the most prominent Austrian banks, and now it is Germany’s turn, if not that of the most undercapitalized German bank yet: “The ongoing rating review for Deutsche Bank AG and its subsidiaries will be concluded together with the reviews for other global firms with large capital markets operations.

The full downgrade Matrix:

From Moody’s

Moody’s takes multiple actions on German banks’ ratings; most outlooks now stable

Frankfurt am Main, June 06, 2012 — Moody’s Investors Service has today taken various rating actions on seven German banks and their subsidiaries, as well as one German subsidiary of a foreign group. As a result, the long-term debt and deposit ratings for six groups and one German subsidiary of a foreign group have declined by one notch, while the ratings for one group were confirmed. Moody’s also downgraded the long-term debt and deposit ratings for several subsidiaries of these groups, by up to three notches. At the same time, the short-term ratings for three groups as well as one German subsidiary of a foreign group have been downgraded by one notch, triggered by the long-term rating downgrades.

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Jan 31

Message to the people of Greece:

Got physical gold and silver? Protect yourself from any devaluation threat NOW.

Flashback:

- Belarus Devalues Its Currency By 56% Overnight, Against Every Currency Out There:

Luckily for those who held their “money” in the form of gold and silver, they just got an instantaneous 56% value preservation and a relative boost in their purchasing power with just one central bank announcement.

- Belarus Hyperinflation Update: Food Runs Out As Friendly Foreigners Take Advantage Of The ‘Favorable’ Exchange Rate Arb


- Commerzbank’s Mueller Recommends Greece Exit Euro Zone – Report (FOX Business/Dow Jones Newswires, Jan. 31, 2012):

FRANKFURT – The Supervisory Board Chairman of Germany’s Commerzbank (CBK.XE) said he recommends that Greece leaves the euro zone, according to a pre-release of an interview by TV broadcaster Deutsches Anleger Fernsehen.

“I am strongly convinced that Greece needs a massive devaluation which it can’t carry out within the euro,” Mueller is quoted as saying, and “we can’t compensate for this with transfer payments.”

“Despite being a hurting process, I think Greece would be better advised to declare its exit,” as “Greece can’t be rescued within the euro,” Mueller said, according to the German broadcaster.

“Markets will understand, that, if Greece exits, this doesn’t mean who is next,” so he doesn’t expect contagion, Mueller is quoted as saying.

Banks could write down their entire exposure to Greece immediately, Mueller said, according to DAF.

“When you are at 70% or 80% and you’ll likely have to add to it, you can ask if you won’t stop it immediately, meaning write down entirely,” he is quoted as saying.

- Commerzbank CEO Says Greece Should Exit Eurozone (ZeroHedge, Jan. 30, 2012):

As if Merkel did not make it all too clear over the weekend that Germany no longer wishes Greece to be part of the Eurozone, and that the ball is now in Athens’ court to accept what is a glaringly unfeasible demand, i.e., to hand over fiscal sovereignty over to “Europe” with Merkel having the cover of saying it did everything in its power to keep Greece in the union, here comes Commerzbank’s CEO Mueller to pick up where Merkel left off:

  • COMMERZBANK’S MUELLER SAYS GREECE SHOULD EXIT EURO ZONE
  • COMMERZBANK’S MUELLER SPOKE TO DEUTSCHES ANLEGER FERNSEHEN

Presumably this means that German banks have sold off all their Greek bond exposure, and believe that the Eurozone would be better off without Greece in it. However, that Commerzbank, or one of the most insolvent banks in Europe, and only in line with Dexia, is confident that it can withstand the contagtion that would follow, only makes us even more skeptical that a Greek default and Eurozone departure will be contained, and in all likelihood will have scary implications for all European banks, not only German ones. Just ask DB’s Ackermann…

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Nov 01

See also:

- The European (Non-)Bailout Explained (Video) … And Why Europe ‘Is Screwed’: ‘Dumb Money’ Refuses To Play Along: China State Media Says It Won’t Rescue Europe

- Jim Rogers Says New Greece Deal Can’t Save Europe

- Nigel Farage On Freedom Watch: Eventually Events Will Be Too Big For Any Bailout (Video – Oct. 26, 2011)

- Bilderberg Merkel Warns Of War In Europe If Euro Fails – EU Summit Seals 1 Trillion Euro Deal – Banks Agree On 50% Write-Off Of Greek Debt


- Eurozone debt crisis: Markets dive on Greek referendum (BBC News,Nov. 1, 2011):

US and European markets have fallen following Monday’s announcement of a Greek referendum on the latest aid package to solve its debt crisis.

Eurozone leaders agreed a 50% debt write-off for Greece last week as well as strengthening Europe’s bailout fund.

But the Greek move has cast doubt on whether the deal can go ahead.

New York’s Dow Jones ended the day 2.5% lower, after a mid-afternoon rally on hope that Greek MPs may block the referendum proved short-lived.

One of Mr Papandreou’s MPs, Milena Apostolaki, resigned from the ruling Pasok parliamentary group on Tuesday, leaving the government with a two-seat majority in parliament.

Six other party members have called for Mr Papandreou to resign, according to the state news agency.

There are doubts whether the government will last long enough to hold the referendum, pencilled in for January.

A confidence vote is due to take place in the Greek parliament on Friday.

Banks down

Earlier in the day, London’s FTSE 100 had ended trading down 2.2%, while the Frankfurt Dax fell 5% and the Paris Cac 40 some 5.4%.

Shares in French banks saw the biggest falls, with Societe Generale down 16.2%, BNP Paribas 13.1% and Credit Agricole 12.5%.

Other European banks also fared badly for the second day, with Germany’s Commerzbank and Deutsche Bank and the UK’s Barclays and Royal Bank of Scotland all 8% to 10% lower.

In the US, Bank of America fell 6.3%, while Morgan Stanley was down 8% at the close of trading.

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Oct 13

- Credit Suisse Buries European Banks, Sees Deutsche Bank And 65 Other Bank Failing Latest Stress Test, €400 Billion Capital Shortfall (ZeroHedge,Oct. 13, 2011):

A day after Credit Suisse killed the Chinese bank sector saying that the equity of virtually the entire space may be worthless if NPLs double, as they expect they will to about 10%, the Swiss bank proceeds to kill European banks next. Based on the latest farce out of Europe in the form of the third stress test, which is supposed to restore some confidence, it appears that what it will do is simply accelerate the flight out of everything bank related, but certainly out of anything RBS, Deutsche Bank, BNP, SocGen and Barclays related. To wit: “In our estimation of what could be the “new EBA stress test” there would be 66 failures, with RBS, Deutsche Bank, and BNP needing the most capital – at €19bn, €14bn and €14bn respectively. Among the banks with the highest capital shortfalls, SocGen and Barclays would need roughly €13bn with Unicredit and Commerzbank respectively at €12bn and €11bn. In the figure below we present the stated results. We note RBS appears to be the most vulnerable although the company has said that the methodology, especially the calculation of trading income, is especially harsh for them, negatively impacting the results by c.80bps.” Oops. Perhaps it is not too late for the EBA to back out of this latest process and say they were only kidding. And it gets even worse: “We present in this section an overview of the analysis which we published in our report ‘The lost decade’ – 15-Sep 2011. One of our conclusions was that the overall European banking sector is facing a €400bn capital shortfall which compares to a current market cap of €541bn.” Said otherwise, we can now see why the FT reported yesterday that banks will be forced to go ahead and proceed with asset firesales: the mere thought of European banks raising new cash amounting to 75% of the entire industry’s market cap, is beyond ridiculous. So good luck with those sales: just remember – he who sells first, sells best.

And the scary charts:

1. Capital Shortfalls under Stress Test part Trois (9% min. CET1 ratio)

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Apr 29

Back in March of 2009 Zero Hedge, once again a little conspiratorially ahead of its time, solicited reader feedback on a key topic: CDS pricing manipulation, involving in addition to key cartel banks, such “independent” pricing services as MarkIt. We said: “Zero Hedge has received some troubling info (like there isn’t enough) regarding major pricing discrepancies between certain securities pricing services.

The services include companies such as IDC, Advantage Data, Markit and others. While I will not disclose which one may be a culprit, the allegation is that one (or more) are providing substantially above market pricing levels, specifically as pertains to distressed securities.” Then back in August 2010, we followed up by explaining that it is the ongoing price manipulation scheme, in addition to other factors, that allows Goldman Sachs (and other CDS dealers to a much lesser extent) to constantly generate massive profits from trading an opaque off-exchange product like CDS. It took two years and a month for others to take notice of this inquiry, although naturally not in that slum of corruption and market manipulation, the United States of America, but in Europe. Bloomberg reports: “Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and other 14 other investment banks face a European Union antitrust probe into credit-default swaps for companies and sovereign debt, regulators said. …The European Commission said it opened two antitrust probes. It will check whether 16 bank dealers colluded by giving market information to Markit, a financial information provider.” So while some post flow charts explaining the hilarity behind conspiracy theories, others actually expose the facts that today are a conspiracy and tomorrow are a full blown criminal investigation.

From Bloomberg Apr 29, 2011:

“Lack of transparency in markets can lead to abusive behavior and facilitate violations of competition rules,” said the EU’s antitrust chief, Joaquin Almunia, in an e-mailed statement. “I hope our investigation will contribute to a better functioning of financial markets.”

Global regulators have sought to toughen regulation of credit-default swaps saying the trades helped fuel the financial crisis. Lawmakers in the EU plan to encourage the use of clearinghouses and transparent trading systems. CDS are derivatives that pay the buyer face value if a borrower defaults.
Possible Collusion

JPMorgan, Bank of America Corp. (BAC), Barclays Plc (BARC), BNP Paribas (BNP) SA, Citigroup Inc. (C), Commerzbank AG (CBK), Credit Suisse Group AG (CSGN), Deutsche Bank AG (DBK), Goldman Sachs, HSBC Holdings Plc (HSBA), Morgan Stanley, Royal Bank of Scotland Group Plc (RBS), UBS AG (UBSN), Wells Fargo & Co. (WFC), Credit Agricole SA (ACA) and Societe Generale (GLE) SA will be investigated for possible collusion in giving “most of the pricing, indices and other essential daily data only to Markit.”

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Feb 19


Josef Ackermann Bilderberg 2010 in Sitges (Click on image to enlarge.)

18 Feb. (Bloomberg) — German banks’ subordinated debt securities valued at 24 billion euros ($33 billion) were downgraded by Moody’s Investors Service on the prospect that new legislation will increase the risk of losses among debt holders.

Moody’s cut the ratings of lower Tier 2 notes, a layer of debt that’s subordinated by coming behind senior bonds in the queue for repayment after a bank collapses. Like other governments seeking to ensure creditors pay up before taxpayers have to contribute, German law now removes the protection Tier 2 bonds enjoyed from the authorities’ preference for saving lenders before they fail.

“The new legislation materially reduces the likelihood of government support for LT2 securities and therefore took out the state support uplift,” BNP Paribas SA analysts Olivia Frieser and Ivan Zubo wrote in a note to clients today. “The downgrades are as harsh as we had expected, which may weigh on sentiment.”

The cost of insuring German bank debt rose, according to CMA prices for credit-default swaps. Contracts on the subordinated debt of Deutsche Bank AG jumped 12 basis points to 160, the highest in five weeks. Swaps linked to Commerzbank AG’s junior debt climbed 25 basis points to 450 and senior contracts rose 10 to 190.
Toughening Rules

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Sep 09

Commerzbank-Logo in Frankfurt
Commerzbank-Logo in Frankfurt

Seventy-two City bankers are suing Dresdner Kleinwort and Commerzbank for €33m ($47.8m) worth of unpaid bonuses in the biggest case of its kind in the UK.

The lawsuit, filed on Tuesday in the High Court, is the latest sign that bankers are ready to fight for their pay packets in spite of public outrage over the size of the rewards on offer in an industry widely blamed for the financial crisis.

An additional 25-30 former employees at Dresdner, which was bought by Germany’s Commerzbank late last year, are expected to file a separate suit in the coming weeks.

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Mar 04

250 Dresdner Kleinwort bankers are preparing legal action to recover tens of millions of pounds of bonus payments

As many as 250 Dresdner Kleinwort bankers are preparing legal action to recover tens of millions of pounds after the German bank’s new owner reneged on bonus payments.

Several of the bankers, who worked for Dresdner Kleinwort in the City of London until it was sold to Commerzbank in September, are claiming bonuses in excess of £1 million with the disputed payments totalling around £50 million.

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Jan 17

FRANKFURT, Jan 17 (Reuters) – Major German banks have so far written off only around a quarter of the nearly 300 billion euros ($397.7 billion) in toxic U.S. assets on their books, Der Spiegel magazine reported, citing a survey of 20 big lenders.

That means banks face more huge losses as they mark down the value of U.S. assets backed by mortgages and student loans, the magazine said on Saturday, reporting on a study prepared for the government by the Bundesbank and markets regulator BaFin.

German article:
Deutsche Banken sitzen auf Giftpapieren in Milliardenhöhe
(Spiegel Online)

The finance ministry in Berlin assumes that the entire German banking sector is carrying around 1 trillion euros of risky assets on its books, the magazine said.

A spokeman for the Finance Ministry said it believed banks still had “significant amounts” of risky assets but declined to confirm the figures in the report.

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Jan 11

The taxpayer looting and unsustainable debt creating ‘Paulson-Bernanke-Brown’ virus spreads rapidly around the world. Even financially relatively sound countries are now affected. ‘Sound economics’ resistance is now at close to 100%.


Critic of UK’s ‘crass Keynesianism’ offers package of tax cuts and state spending

Angela Merkel will make her sharpest political U-turn since becoming German Chancellor this week when her government unveils a €50bn (£44bn) package of tax cuts and incentives to protect Europe’s biggest economy from deepening recession.

The “Pact for Germany” programme contains a battery of tax cuts, health insurance reductions and special government funds designed to stimulate an economy forecast to contract by 3 per cent this year.

The measures, expected to be agreed at a crisis cabinet meeting tomorrow, will be announced only weeks after Mrs Merkel’s grand coalition government heaped scorn on Britain for “tossing around billions” in its efforts to tackle the credit crunch.

Germany’s Finance Minister, Peer Steinbrück, went so far as to condemn Gordon Brown’s VAT cuts as “crass Keynesianism” and said that it would take Britain a “whole generation” to work off the debt. Mrs Merkel insisted that spending one’s way out of recession did not work. (Absolutely correct!)

Don’t Miss:
- Dennis Kucinich: Federal Reserve No More “Federal” Than Federal Express!

Yesterday, however, Mr Steinbrück announced plans to slash the basic tax rate from 15 to 12 per cent to persuade poorer families to keep spending.

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Jan 08

* Germany to take 25 pct stake in Commerzbank
* Commerzbank gets extra 10 bln euros of capital
* Allianz bolsters Dresdner capital by 1.45 bln euros
* Purchase of Dresdner to close within days

FRANKFURT, Jan 8 (Reuters) – Germany is taking a stake of 25 percent plus one share in Commerzbank (CBKG.DE) in return for an additional 10 billion euro ($13.6 billion) capital injection, the country’s second-biggest listed bank said on Thursday.

It is the first time Berlin has partially nationalised a major bank in response to the global financial crisis and follows similar moves by London and Washington. Commerzbank will get a total of 18.2 billion euros in state capital plus 15 billion in guarantees.

“We are weatherproofing our bank for an economically stormy environment,” Chief Executive Martin Blessing said in a statement.

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Nov 07

Nov. 8 (Bloomberg) — Allianz SE, Europe’s second-biggest insurer by market-value, posted a 2 billion-euro ($2.6 billion) loss and said it may miss operating profit forecasts for this year and next because of the turmoil in financial markets.

Allianz had a net loss including discontinued operations in the third quarter, compared with net income of 1.9 billion euros a year earlier, the Munich-based insurer said in a statement today. That was less than the 3.85 billion-euro estimate of 14 analysts surveyed by Bloomberg. Net income from continuing operations, which reflects the sale of Dresdner, was 545 million euros, the company said, missing analysts’ estimates of 782 million euros.

“Without a major equity market recovery, the operating profit outlook of 9 billion euros before banking for this year and next year cannot be reached,” Allianz Chief Financial Officer Helmut Perlet said in the statement.

Allianz, led by Chief Executive Officer Michael Diekmann, agreed on Aug. 31 to sell Dresdner Bank to Frankfurt-based Commerzbank AG for cash and stock. Commerzbank shares lost about 40 percent of their value in the month ended Sept. 30. Discontinued operations, which reflect the sale of Dresdner effective from Sept. 1, accounted for “transaction-based impairments according to IFRS 5” of 1.4 billion euros as well as for a net loss of 1.2 billion euros from Dresdner’s operations, Allianz said.

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Nov 05


NP Paribas Chief Executive Officer Baudouin Prot speaks during a news conference to announce the bank’s third-quarter results in Paris November 5, 2008.

PARIS (Reuters) – A raft of European bank results did little to lift gloom around the sector on Wednesday, with a recurring trend of falling profits and rising bad debts stemming from the global financial crisis.

France’s biggest bank BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) posted a 56 percent fall in third-quarter profits, Allied Irish Banks (ALBK.I: Quote, Profile, Research, Stock Buzz) cut its earnings forecast, and Greece’s Emporiki Bank (CBGr.AT: Quote, Profile, Research, Stock Buzz) swung to a loss.

Capital rebuilding continued in the face of a tough outlook as Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) looked to raise up to 3 billion pounds ($4.7 billion) from a government-backed bond, and Austria’s Raiffeisen Zentralbank said it may ask the government for 2 billion euros ($2.6 billion).

By 7:15 a.m. EST the DJ Stoxx banking index was down 0.7 percent, led by 4 percent falls for BNP and Allied Irish.

Profits have tumbled across the sector, and several banks have warned of more writedowns and rising bad debts this year, though there is optimism that government rescue packages have left balance sheets strong enough to withstand more losses.

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Nov 04

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need.

“The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.”

Speaking on French television, he warned: “Broadly speaking, we’ll be able to judge over the next 10 days whether they are playing the game as they should, or not.”

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Nov 03

Commerzbank, Germany’s second-largest bank, today said it would accept a €8.2bn (£6.44bn) capital injection from the state and a further €15bn in guaranteed funding.

Commerz, which is taking over Dresdner, its smaller rival, said it had agreed to pay no dividends for the next two years. It will also scrap all boardroom bonuses in 2009 and 2010 and cap its chief executive’s salary at €500,000.

The bank made its moves as it reported a net loss of €285m in the third quarter when it was heavily exposed to both Lehman Brothers, the bankrupt US investment bank, and Iceland, the virtually insolvent country.

It said it made a combined operating loss of almost €900m through these two events. In the first nine months its pre-tax earnings of €2.3bn a year ago shrank to €419m.

Germany’s private sector banks have been under considerable pressure from chancellor Angela Merkel to join her government’s €500bn stabilisation package, with the biggest, Deutsche, creating a storm by saying it would be “ashamed” to take part.

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Mar 30

Germany and other industrialized nations are desperately trying to brace themselves against the threat of a collapse of the global financial system. The crisis has now taken its toll on the German economy, where the weak dollar is putting jobs in jeopardy and the credit crunch is paralyzing many businesses.

trader1.jpgA trader reacts in front of the DAX board at the Frankfurt stock exchange.

The Bundesbank, Germany’s central bank, doesn’t like to see its employees working too late, and it expects even senior staff members to be headed home by 8 p.m. On weekends, employees seeking to escape the confines of their own homes are required to sign in at the front desk and are accompanied to their own desks by a security guard. Sensitive documents are kept in safes in many offices, and a portion of Germany’s gold reserves is stored behind meter-thick, reinforced concrete walls in the basement of a nearby building. In this environment, working overtime is considered a security risk.But the ordinary working day has been in disarray in recent weeks at the Bundesbank headquarters building, a gray, concrete box in Frankfurt’s Ginnheim neighborhood, where the crisis on international financial markets has many employees working late, even on weekends. Continue reading »

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