Germany hides its own banks’ problems

Press conference by Michel Barnier, Member of the European Commission, on taking action on shadow banking, 19/03/2012. (EC Audiovisual Services).

Press conference by Michel Barnier, Member of the European Commission, on taking action on shadow banking, 19/03/2012. (EC Audiovisual Services).

The insistence of the Brussels, Berlin and Paris authorities that Cyprus is a special case and the rest of the Eurozone banking system is safe, has only superficial value. Markets do not believe that. It’s not only that the Greek, Italian or even the Spanish banking systems are in deep trouble. The problems are not confined either only in Luxembourg or Maltese banks having accumulated deposits five or more times their Gross National Product.

The truly big problems of the Eurozone financial system have not been confronted and they are still out there, threatening a much deeper crisis than the small waves tiny Cyprus caused this week. It’s the risky real estate loans in Holland, Germany and elsewhere, the even riskier loans to the shipping industry granted by a handful of German banks and the still large and unknown real exposure of German and French banks to the sovereign debt of the weaker Eurozone countries. The Sting had raised the matter many weeks ago.

On 21 February the Sting writer Elias Lacon wrote: “Earlier this week, Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank (German national central bank), responsible for financial stability and risk controlling, delivered an open lecture in Hamburg, entitled “In the year 2013 – Challenges from a financial stability perspective” . Apart from the burning questions he posed for a number of Eurozone countries’ sovereign debt, he went as far as to question the stability of the commercial banking system of Germany”.

The total exposure of Germany’s banking system to the shipping industry was estimated by Dombret at €100 billion. Of course, this exposure is not restricted only to German operators and ship-owners. As a result, if the crisis continues engulfing the ocean-going fleet, the German financial system will be confronted with mounting problems. These loans are concentrated in a few banks, a fact that has already forced some of them to seek state aid. HSH Nordbank, with its major shareholders being northern German federal states, has already asked and given taxpayers’ support to the tune of €1.3 billion.

This is only the upper part of the iceberg, which don’t float only out in the oceans but some-times appear solidly pegged on lad in the form of real estate loans. If one adds to that also the exposure of German and French banks to Eurozone toxic sovereign debt the account takes unknown dimensions. Not to forget that mainly the German banks have already been favoured by the European Central Bank’s Securities Markets Programme in force until 6 September 2012, which helped the lenders unload around €210n in bad Greek, Italian, Irish, Spanish and Portuguese toxic sovereign bonds.

All in all, Germany cannot continue pretend that its own banking system is safer than the rest of Eurozone’s. The truth is that investors do favour German sovereign bond issues and accept near zero interest rates for their placement on them, but the German banks is another story as Rudyard Kipling would say.

 

 

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

Young people meet in Malta to shape the future of Europe

As human caravan moves through Mexico, ‘full respect’ needed for national control of borders: UN chief

‘Continue working together’ UN chief urges DR Congo, as country heads to polls

World Cancer Day: Early cervical cancer diagnosis could save lives of over 300,000 women

UN launches plan to promote peace, inclusive growth in Africa’s Sahel

UN chief calls for ‘increased commitment’ to resolution on 10th anniversary of Georgia conflict

Eurozone at risk of home-made deflation and recession

UN refugee agency ‘deeply shocked’ at stabbing death of ‘deeply courageous’ Polish mayor

Health Education, is it a necessity?

The Brussels bureaucracy blocks the Youth Guarantee scheme

A Sting Exclusive: “Leading by example! EU must push for UN deal to avoid dangerous climate change”, European Parliament Vice-President Ulrike Lunacek cries out from Brussels

10th ASEM in Milan and the importance of being one: EU’s big challenge on the way to China

How close is the new financial Armageddon? IMF gives some hints

The big five EU telecom operators in dire straights

The Brexit factor in the US-China trade war and other conflicts

Two States ‘side-by-side’ is the ‘peaceful and just solution’ for Israel-Palestine conflict: Guterres

Fresh airstrikes kill dozens in conflict-ravaged Syria

UN and partners appeal for $920 million to meet ‘dire needs’ of Rohingya refugees

Medical Education is #NotATarget

EU Ambassadors in the EP: a multilateral approach to global challenges needed

EU budget: Making the EU fit for its role as strong global actor

The movement of anti-vaccers: taking humanity back 200 years

EU Parliament: Deposit guarantee and trading platform transparency sought

Main results of Environment Council of 09 October 2018

10 cities are predicted to gain megacity status by 2030

Why Italy will not follow the Greek road; Eurozone to change or unravel

Black Panther’s ‘General Okoye’ joins the fight against gender-based violence

MEPs call on EU countries to end precarious employment practices

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

‘Leaders who sanction hate speech’ encourage citizens to do likewise, UN communications chief tells Holocaust remembrance event

This project in India helps people and tigers co-exist peacefully

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

It’s not summer holidays what lead to the bad August of the German economy

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

COP21 Breaking News_03 December: Europe’s children urge leaders to commit to climate action at UN Climate Summit in Paris

European Commissioner for Youth wants young people to be at heart of policy making

The global economy isn’t working for women. Here’s what world leaders must do

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

How the United States can win back its manufacturing mojo

EYE to kick off on Friday: 8000+ young people discussing the future of Europe 1 – 2 June

India’s economy is growing fast, but its poorest areas lag behind. Here’s why this could be about to change

EU Copyright Directive: Google News threatens to leave Europe while media startups increasingly worry

Ecofin: ‘The Friday battle’ for the banking union

How fungi could save the world

UN relief official in Yemen condemns ‘horrific’ attack on passenger buses

Nigeria: UN chief ‘appalled’ by killing of aid worker; calls for release of remaining hostages

Germany openly seeks more advantages for its banks

A young student discusses the determinants of migration in the European Union

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

Robots aren’t stealing all our jobs, says the World Bank’s chief economist

EU Budget 2019 deal: EP boosts support for researchers and the young

European Commission recommends to the European Council (Article 50) to find that decisive progress has been made in Brexit negotiations

European Semester Autumn Package: Bolstering inclusive and sustainable growth

Google prepares to final EU judgement over Android antitrust case

800,000 people commit suicide every year: WHO

A day in the life of a Rohingya refugee

‘Well-being of two million’ in Gaza at stake as emergency fuel runs dry: UN humanitarian coordinator

Eurozone slowly but surely builds its Banking Union

The economic cost of anti-vaccination movements in Italy

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

More Stings?

Comments

  1. interesting article

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s