Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Debtors’ Prism: Who Has Europe’S Loans?

Recommended Posts

http://www.nytimes.com/2010/06/06/business/global/06toxic.html?ref=business

IT’S a $2.6 trillion mystery.

That’s the amount that foreign banks and other financial companies have lent to public and private institutions in Greece, Spain and Portugal, three countries so mired in economic troubles that analysts and investors assume that a significant portion of that mountain of debt may never be repaid.

The problem is, alas, that no one — not investors, not regulators, not even bankers themselves — knows exactly which banks are sitting on the biggest stockpiles of rotting loans within that pile. And doubt, as it always does during economic crises, has made Europe’s already vulnerable financial system occasionally appear to seize up. Early last month, in an indication of just how dangerous the situation had become, European banks — which appear to hold more than half of that $2.6 trillion in debt — nearly stopped lending money to one another.

Now, with government resources strained and confidence in European economies eroding, some analysts say the Continent’s banks have to come clean with a transparent and rigorous accounting of their woes. Until then, they say, nobody will be able to wrestle effectively with Europe’s mounting problems.

“The marketplace knows very little about where the real risks are parked,” says Nicolas Véron, an economist at Bruegel, a research organization in Brussels. “That is exactly the problem. As long as there is no semblance of clarity, trust will not return to the banking system.”

Limited disclosure and possibly spotty accounting have been long-voiced concerns of analysts who follow European banks. Though most large publicly listed banks have offered information about their exposure — Deutsche Bank in Frankfurt says it holds 500 million euros in Greek government bonds and no Spanish or Portuguese sovereign debt — there has been little disclosure from the hundreds of smaller mortgage lenders, state-owned banks and thrift institutions that dominate banking in countries like Germany and Spain.

Depfa, a German bank that is now based in Dublin, is one of the few second-tier European banking institutions that have offered detailed disclosures about their financial wherewithal, and its stark troubles may be emblematic of those still hidden on other banks’ books.

Despite boasting as recently as two years ago of its “very conservative lending practices,” Depfa, which caters primarily to governments, has flirted with disaster. It narrowly avoided collapsing in late 2008 until the German government bailed it out, and today its books are still laden with risk.

DEPFA and its parent, Hypo Real Estate Holding, a property lender outside Munich, have 80.4 billion euros in public-sector debt from Greece, Spain, Portugal, Ireland and Italy. The amount was first disclosed in March but did not draw much attention outside Germany until last month, when investors decided to finally try to tally how much cross-border lending had gone on in Europe.

How about the banking system is interlinked that who holds the debt is irrelevant as all the banks have lent each other money. If there's a sovereign default the risk is systemic and all the banks will taken out, who's holding the turd won't matter?

A Mexican stand off?

Share this post


Link to post
Share on other sites

http://www.nytimes.com/2010/06/06/business/global/06toxic.html?ref=business

How about the banking system is interlinked that who holds the debt is irrelevant as all the banks have lent each other money. If there's a sovereign default the risk is systemic and all the banks will taken out, who's holding the turd won't matter?

A Mexican stand off?

No-one is going to own up and admit they bought the debt, they may as well put a un to their head and pull the trigger.

The management will just cover it up as long as possible and pay themselves as much as possible until someone offers a bailout or it all implodes.

Share this post


Link to post
Share on other sites

No-one is going to own up and admit they bought the debt, they may as well put a un to their head and pull the trigger.

The management will just cover it up as long as possible and pay themselves as much as possible until someone offers a bailout or it all implodes.

It's all a web of loan deceit sitting there like primed but unexploded domino bombs.

Share this post


Link to post
Share on other sites

http://www.nytimes.com/2010/06/06/business/global/06toxic.html?ref=business

How about the banking system is interlinked that who holds the debt is irrelevant as all the banks have lent each other money. If there's a sovereign default the risk is systemic and all the banks will taken out, who's holding the turd won't matter?

A Mexican stand off?

...do any of the UK High Street Banks run a Country Risk Management Department.....that will tell all if the answer is negative.... :rolleyes:

Share this post


Link to post
Share on other sites

...do any of the UK High Street Banks run a Country Risk Management Department.....that will tell all if the answer is negative.... :rolleyes:

Yes, it will be interesting to see which UK banks have the greatest exposure to 'the Euro' and 2hat their exposure is relative to other countries.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.