The dark secret of Europe's banks
There’s little wonder that Germany and France are desperately hoping to keep the results of the 'stress tests' being conducted on the major European banks shrouded in secrecy.
They suspect that some of their financial institutions are desperately undercapitalised and ill-equipped to deal with the likely losses from their massive exposures to the debt-laden PIGS (Portugal, Ireland, Greece and Spain). Berlin and Paris worry that publishing the results of the stress tests could trigger a run on some of their weaker banks, as anxious savers rush to withdraw their savings.
In contrast, the Spanish government is reasonably confident that the two main Spanish banks, Santander and BBVA, have comparatively robust balance sheets and are likely to perform well in the tests. As one Spanish government source confided to the Spanish daily newspaper, El Pais: “If the results of the tests were known there would be more than one surprise”.
But while the results of the EU’s stress tests are likely to remain Europe’s dark secret, the latest report from the Bank for International Settlements gives some indication of the size of the problems confronting the French and German banks.
The BIS report points out that European banks account for almost two-thirds of all lending to the PIGS, with total exposures of just under $US1.6 trillion.
The French and German banks were the dominant lenders, and their combined exposures to the PIGS amounted to $958 billion ($493 billion from French banks, and $465 billion from German banks).
Spain was the biggest borrower, with French banks lending $248 billion to Spanish residents, while German banks had total loans of $202 billion. But while the French banks were particularly exposed to the Spanish non-bank private sector, the German bank loans were more skewed towards the Spanish banks.
German banks were also heavily exposed to Ireland, with loans totalling $177 billion. And just over two-thirds of these loans were to borrowers in the non-bank private sector.
UK banks were the most enthusiastic lenders to Ireland, advancing $230 billion, with more than half of the lending directed to the non-bank private sector. UK banks also had reasonably large exposures ($140 billion) to Spanish borrowers.
European bank lending to the eurozone governments was much smaller than the banks’ exposure to the private sector. But again French and German banks were the dominant financiers.
According to the BIS report, “these two banking systems had sizeable exposures to the public sectors of Spain ($48 billion and $33 billion, respectively), Greece ($31 billion and $23 billion, respectively) and Portugal ($21 billion and $10 billion, respectively).”
The BIS also provided a comparison of the European banks’ exposure to the public sector debt of troubled eurozone countries relative to their capital bases.
It said that the combined exposures of the German, French and Belgian banks to the public sectors of Spain, Greece and Portugal amounted to 12.1 per cent, 8.3 per cent and 5.0 per cent respectively of their tier one capital.
In comparison, the combined exposure of Dutch and Swiss banks to the same public sector debt was considerably lower. For Dutch banks, the combined exposure amounted to only 2.7 per cent of tier one capital, while for Swiss banks the ratio was only 2.0 per cent.
And for US banks, the exposure was lower still, accounting for less than less than 1 per cent of their tier one capital.
The problem is that while some of the French and German banks have robust balance sheets, other financial institutions clearly lack the capital buffer to absorb the hefty losses that are likely to eventuate as the PIGS adopt punishing austerity programs that slash government spending and boost taxes.
The risk is that by refusing to release the stress tests, the French and German governments will allow the problems in their banking sectors to fester. Instead of forcing troubled banks to either raise additional capital, or be taken over by stronger financial institutions, they’ll be allowed to continue in existence, but with so little capital that they’ll be unable to make new loans, or to write-down the losses on their existing portfolios.
Ultimately, these 'zombie' banks could pose as great a risk to the eurozone’s stability as the massive deficits that the PIGS have managed to accumulate.
Published 4:13 PM, 16 Jun 2010 Last update 9:55 AM, 17 Jun 2010
businessspectator.com.au
In and Out of Each Other’s European Wallets
Despite the best efforts of the International Monetary Fund, the financial crisis in Europe seems full of suspense. Will Germany and the European Union actually cough up the money to help bail out Greece, which is on the edge of a financial meltdown? Will the contagion spread to other vulnerable countries, like Portugal and Spain?
But like some mystery novels where the ending is telegraphed in the opening pages, the denouement will probably be unsurprising. For all the handwringing, the reality is that the Germans, the French and the rest of Europe have little choice. In the decade since the introduction of the euro, the economies on the continent have become increasingly interwoven. With cross-border banking and borrowing, many countries on the periphery of Europe owe vast sums to one another, as well as to richer neighbors like Germany and France.
nytimes.com
Europe's Web of Debt
nytimes.com
The Inter-Alpha Banking Group: The Modern Day Successor To Rothschild's Five Arrows
The Inter-Alpha Group of Banks was created by the Rothschilds
in 1971, the same year that Richard Nixon closed the U.S. gold
window, and the Bretton Woods fixed rate currency system was
destroyed. A move which opened the door to currency warfare
and manipulation, as well as the creation of the petrodollar
mechanism.
Originally formed with 6 Rothschild controlled banks, it has
now grown in size to include 11 banks representing 15 countries.
inter-alpha.com
AIB Group, Eire
Bqnco Espirto Santo SA, Portugal
Santander, Spain
Soc Gen, France
ING Bank, the Netherlands
Intesa Sanpaolo
KBC Bank, Belgium
Nordea, Denmark, Finland and Sweden
National Bank of Greece, Greece
Commerzbank
The Royal Bank of Scotland Group, UK
Banco Espiritu Santo Group - Portugal is often described as
a "super secretive criminal banking and insurance giant,"
which maintains global offices in most of the money laundering
capitals of the world. One example being their impressive
hi-rise on Brickell Ave. in Miami, Florida, their US Headquarters.
(Remember BCCI?)
Of note to US taxpayers, The Royal Bank of Scotland and Soc Gen,
both received billions from US Taxpayers via TARP through the
backdoor AIG bailout.
And guess who you were bailing out besides the Rothschild cartel?
"Her Majesty's Treasury" which owns 84% of RBS.
Now you know why Bernanke refused to tell Alan Grayson,
where that $500 billion went...
From Wikipedia:
"The Royal Bank of Scotland Group (LSE: RBS) is a British
state owned banking and insurance holding company in which
HM Treasury holds an 84% controlling share (economic interest,
actual voting rights will not rise above 75% in order to retain
stock listing).
This stake is held and managed through UK Financial Investments
Limited. The group is based in Edinburgh, Scotland, and is the
world's largest company by assets.
The group controls the Royal Bank of Scotland Plc, founded in
1727 by a Royal Charter of King George I, the National
Westminster Bank, which can trace its lineage back to 1650,
and Ulster Bank in Ireland."
Most of you reading this are familiar with the British Royal
Family's 400 year old control of the Opium trade dating back
to the British East India Company established in 1609 (link).
And drug dealers always need a bank to launder that drug money,
and that bank has been RBS, which has continually fought money
laundering regulation...
-- August 27, 2007: On August 20, Royal Bank of Scotland told
the Federal Reserve that its anti-money laundering policy
should be withheld from ICP Fair Finance Watch.
-- September 12, 2005: RBS was in full denial mode last week
after reports that its target the Bank of China is under
investigation for laundering money from North Korea's
counterfeiting, drugs and weapons deals. RBS last month
proposed to acquire a 5% stake in Bank of China, “in spite of
concerns over human rights and corporate governance policies
in the Far East giant,” at the Scottish press put it.
-- March 21, 2005: The U.S. Senate’s report last week on
Pinochet’s funds identifies accounts at among others Coutts
& Co. (USA) while it was owned by the Royal Bank of Scotland.
-- January 3, 2005: In continuing Enron fall-out, the report
by Neil Batson, the examiner appointed by the Bankruptcy
Court, has concluded that Royal Bank of Scotland was fully
aware of Enron's accountancy juggling concerning the Teesside
plant. Batson’s report to the court concludes that "RBS aided
and abetted certain Enron officers in breaching their
fiduciary duties".
-----------
*US Taxpayers, including the 39 million on food stamps, the
200,000 per month that are losing their homes to the banks,
and the near 20% who are out of work or working part-time -
bailed out "Her Majesty's Treasury" which owns 84% of RBS.
....amazing how no one on CNBC, or MSNBC, CNN, or ABC ever
explained that to the American sheeple.
The bankers always get paid their interest.
The bankers principle is always guaranteed (by more sovereign
debt, higher taxes, and the infrastructure & natural resources
of the people).
And whenever their principle is threatened, their puppets at
the BIS, the IMF, or the World Bank simply move in and issue
more debt to bailout the old debt... while seizing natural
resources and key infrastructure owned by sovereign taxpayers,
while imposing higher taxes and austerity programs on the
populace, to pay for the newly issued debt.
A giant ponzi scheme where booms & busts are triggered through
manipulating the credit and money supply... which guarantees a
perpetual, slow, and steady transfer of wealth from the people
of every nation to the international banks, and the oligarch
families who control them.
Every child born in America today owes $41,893 on the $12.9
trillion dollar national debt. If you include the unfunded
liabilities to Social Security and Medicare, the debt
inherited at birth is $351,096.
Stats from: usdebtclock.org
Serfdom and debt bondage never went away.
There is no other way to describe a $351,096 debt owed at
birth to the international banks -- than slavery.
SOTB
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