Posts Tagged ‘German language’

EU Stress Test May Trigger Capital Injection Of EUR 85 Billion

In Financial Markets, International Econnomic Politics, National Economic Politics on 16.07.10 at 14:10

European banks may need to raise more than €85bn to bolster their capital after stress tests, according to Barclays Capital.

“We view the upcoming release of the European banks stress tests as a potentially important inflexion point for the market.”

Barclay’s Capital

Spanish savings banks, or cajas, may require €36bn, German Landesbanks could need €34.5bn, while the Greek banks may have to raise €8.6bn, according to analysts led by Jeffrey Meli in New York.

Portuguese lenders may require €5.9bn, the Irish Independent reports.

“We view the upcoming release of the European banks stress tests as a potentially important inflexion point for the market,” the analysts writes.

Adding: “They may ease concerns by ensuring that the sovereign crisis and a likely slowdown in European growth will not result in widespread bank failures.”

Investors are concerned that soured loans to real estate developers and holdings of bonds issued by governments of nations on Europe‘s periphery mean some lenders may have burned through their capital.

The European regulators are running stress tests on a total of 91 of the biggest banks, representing 65% of the European financial industry.

The results are due for partial publication on July 23.


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German Banks With More Than 200 Billion Euro In Faul Credits

In Financial Markets, International Econnomic Politics, National Economic Politics on 29.06.10 at 13:05

You think  Greek and Spanish banks are in trouble? Well, that’s only peanuts compared to the trouble the German financial industry is facing; according to a new report from PriceWaterhouseCoopers the amount of non-performing loans in German banks increased by 50% in 2009, to over €200 billion, and is still rising.

“Investors and banks will need to work together to reach a compromise on pricing deals which adequately shares portfolio risks and rewards.”


The new report on European banks’ non-performing loans by Price WaterhouseCoopers is quite interesting reading. (Not to mention scary). Since the last report, nine months ago, the amount of NPL’s in European banks have rose to unprecedented levels. Ukrainian banks have an increase of nearly 2500%. However,  measured in euro the German banks are holding the most – 213 billion.

It is a well known fact that Germany would be the most affected country in the EU by the global financial crisis, given its persistent and large current account surpluses.

Recent estimates by PriceWaterhouseCooper suggest that German Banks are sitting on a portfolio of about 213 billion euro in non-performing loans – the highest amount in Europe.

The alarming estimate of the scale of the problem was released yesterday by PriceWaterhouseCoopers.

According to the report NPL Europe June 2010,  the amount of bad debt among German banks was €213 billion at end-2009 – a 50% increase from 2008.

It is natural to suspect that the figures have continued to rise since in 2010, and does not include what German banks have yet to expect from their exposure to southern Europe.

“Based on information contained in financial statements of the largest German banks, NPLs and write-downs grew significantly during 2009 and many expect this to peak mid 2010,” PriceWaterhouseCoopers writes in the report.

Deutsche Bundesbank indicated in its Financial Stability Review 2009 that additional write-downs on loans of €50 billion to €75 billion will be necessary as a result of both macro and micro economic factors in 2009.

I guess it will be closer to 75 than to 50 when the final numbers are on the table.

Between 200 And 220 Billions

“2009 NPL volumes are an estimate based on movement in the loan loss provision and gross NPL volumes for a sample of banks covering 75 per cent of total assets in Germany. Based on these estimates, NPLs in Germany could be as high as EUR200 billion (using a 34 per cent growth rate) to EUR220 billion (using a 50 per cent growth rate) at the end of 2009,” PWC points out

All the key banks in Germany experienced significant portfolio deterioration during 2009.

The chart below shows the development in the largest German banks non-performing loan portfolios:

Last year, the German bank regulator produced a worst-case scenario of some €800 billion in write-offs.

And while we are not there yet, it is quite alarming to see that by end 2009, we were already a quarter of way, and they’re expected to rise significantly over the next couple of years.

Europe’s 620 Billion Problem

An oversight of 16 European countries shows a stunning total of 619,7 billion euro in non-performing loans.

For some – unknown – reason, French banks are not included.

The increase in NPL’s varies from 28% (Spain) to unbelievable 2447,6% (Ukraine).


Will Need To Work Together

PriceWaterhouseCoopers conclude that the banks and investors will need to work together and reach some kind of compromise when it comes to the NPL’s, who in fact are illiquid assets at the moment.

“One major change observed is that investors claiming to have money and chasing NPL and non-core portfolios are back in force. The big question is how much this money costs and for how long can it be put to work. In most cases, NPL portfolios and to a lesser extent non-core portfolios are illiquid assets and require an investment horizon of at least three to four years. Experience over the last nine months suggests investors are pricing portfolios with the aim of getting their money back with a healthy IRR within two years,” PWC notes.

“On the bank side, in almost all countries the provision coverage of NPLs has decreased despite increasing levels of NPLs and non-core assets, indicating that banks may be underestimating their defaulted assets. In addition to this, there is evidence some banks are still using historical values for underlying collateral. Should updated appraisals be performed, collateral valuations will likely decrease, bringing further strain on loan to value covenants. The result is that the uncollateralised portion of the NPLs and sub-performing loans is being understated. The flow-on impact of this would be that the loan loss provision (LLP), which is applied to the uncollateralised portion of the loans, may also be understated.”

“Given the above, investors and banks will need to work together to reach a compromise on pricing deals which adequately shares portfolio risks and rewards. There are now 10 European markets with NPLs of over EUR5 billion, which means there are plenty of  opportunities to put this into effect. A key question over the next six to nine months is whether funding and collateral values will stabilize or even begin to increase enough to align the pricing of both buyers and sellers,” PriceWaterhouseCooper concludes.

For more shocking details; here’s a copy of the PWC report “NPL Europe June 2010”

Related by the Econotwist:

European Banks: “Leman Times Ten”

European Banks Loaded With Greek Debt

Investors Are Dumping Covered Bonds

G20: Another Meaningless Summit

Global Economy On Fast Track To Disaster

EU Officials Fears Second Depression And War

How To Create A 3 Trillion Dollar Bubble And Burst It

E.U. Parliament To Investigate Euro Zone Bailout

Bundesbank Suspects A French Conspiracy

Why Optimists Are Wrong About The Euro Zone

Transantlantic Bailout Buddys Agree To Disagree

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Merkel: The Euro Is At Risk, Could Have Global Consequences

In Financial Markets, International Econnomic Politics, National Economic Politics on 19.05.10 at 14:53

German Chancellor Angela Merkel keeps on spooking investors. Speaking in the Bundestag Wednesday she says the euro is in danger, urging speedy action to stop market “extortion” and says the E.U. need a process for “orderly” insolvency of members.

“In those areas where unilateral action by Germany won’t cause any harm, we will also act on our own.”

Angela Merkel

The German leader told the parliament in Berlin that she will recommend tough moves against “notorious deficit sinners” in the euro zone, such as withdrawing voting rights. “Above all, what’s necessary is to develop a process for an orderly state insolvency,” she says.

“With that we would create an important incentive for euro zone member states to keep their budgets in order,” Merkel says.

Germany shocked financial markets on Tuesday by taking an apparently unilateral initiative involving an immediate ban on naked short-selling of euro government bonds and on related transactions in credit default swaps (CDS).

The country’s financial regulator also banned naked short sales of shares in Germany’s 10 leading financial institutions.

European shares fell in response and German bunds soared as rattled investors sought refuge in safe-haven assets.

Short selling is a trade that bets the price of an asset will fall, while the naked variant of the practice involves a trader selling a financial instrument without first borrowing the asset or ensuring that it can be borrowed, as would be done in a conventional short sale.

“In those areas where unilateral action by Germany won’t cause any harm, we will also act on our own,” the German leader says.

This video report was released by Bloomberg Television about 45 minutes ago.

Jay Bryson, global economist at Wells Fargo Securities LLC, talks with Bloomberg’s Francine Lacqua about the outlook for the euro zone economies, saying both the German and French economies are on a “knifes edge”:

Fighting Back

The euro is fighting back at the moment, and have rebound from its four-year low earlier today.

If the move is caused by investors (speculators) or by central banks is anybody’s guess…


Europe: The War Is On

E.U. Ministers Fail To Agree On Bailout Details; Run On Euro?

Euro: $1,22 – Panic In Brussels

The Euro Is Going Down; Now Trading Below $ 1,24 (Update)

Killing My CDS Softly

Breeding New Watchdogs

Banks Protesters Storm Irish Parliament

ECB Announces Bailout Program

Europe Is Cracking Up

Bailout Euphoria Is Evaporating

Scandinavian Reactions To E.U. Measures: “We Are Not Safe”

Bank Funding Crunch Deepens as Swap Rates Soar

E.U. Prepared To Set Up Own Rating Agency

Europe To Fight Speculators With “Secret Plan”

Fitch Warns Of New Speculative Oil Spike

European Banks Loaded With Greek Debt

Gerald Celente: “The Great Crash Has Occurred”


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More Billions Lost In The Baltics

In Financial Markets on 27.11.09 at 18:38

The German bank holding company NORD LB reports increased losses related to their activity in the Baltic countries. In the nine first months of 2009 the losses totals amount to 549 millions euro.  158 millions is caused by the baltic operations in DnB NORD in third quater, after 110 millions in writedowns in Q2. In addition NORD LB has lost almost a billion euro on its shipping portfolio, and set aside another 130 millions to cover more potetial shipping losses.

“It is unclear whether the bank will end the year with a profit, especially since it also shows a 60%  increase in loans with very high risk in the third quarter.”

Stefan Best

(Article in Norwegian, link to original article in German, google translation in English)


DnB NORs partner i Baltikum – NORD LB – skriver ned ytterligere 1,4 milliarder kroner som følge av stadig større tap i den felles eide banken DnB NORD.


Det melder det tyske Handelsblatt.

Tyske NORD LB har et foreløpig resultat på 130 millioner euro i årets ni første måneder, opplyser banken.

I samme periode økte tapsavsetningene fra 225 millioner euro til 549 millioner.

DnB NORD har påførte NORD LB et proposjonalt tap på 158 millioner euro – om lag 1,4 milliarder kroner – hittil år. Det er en øknig på 46 millioner euro fra andre halvår.

– Det er på dette stadium ikke nødvendig å reise ny kapital i DnD NORD, sier styreleder Gunter Dunkel i NORD LB.

60% flere høyrisikolån

NORD LB vil ikke gi noen prognose for året som helhet, men sier at banken forventer at 2009-resultatet vil bli positivt.

Analysesjef Stefan Best i Standard & Poor’s sier til Handelsblatt at det er “uklart” om NORD/LB vil ende opp med overskudd i år, og viser til en økning i porteføljen av høyrisikolån på 60 prosent.

NORD LB består av sju regionale banker, og minst tre av dem kommer til å få milliardtap i 2009, mener Standard & Poor’s.

Den eneste grunnen til at den tyske bankgruppen kan bokføre overskudd i år, er West LB som eies separat for å kunne skjule avslørende risikable aktiva, som ” toxische Werpapiere”, (råtne verdipapirer), skriver Handelsblatt.

Kun to eller tre av bankene i NORD-gruppen vil oppnå et positivt resultat på egen hånd.

Pluss shippingsmell

NORD LB har i tillegg 18 milliarder euro i utestående kreditt i shippingbransjen, og har så langt bokført tap på 959 millioner euro.

Dessuten er det satt av ytterligere 130 millioner euro som “risikoavsetning” knyttet til shippingvirksomheten.

Her er lenke til originalartikkelen i Handelsblatt.

(And here’s the automated translation to English by Google)


Related Posts:

“The Baltic Lab Rat”

“Not Grounded in Reality”

Baltic Loan Losses Could Double