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.

 

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

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

Key Brazilian border crossing for Venezuela refugees reopens as asylum numbers pass last year’s total

Is Eurozone heading for disinflation?

Combat against devastating effects of tobacco can only be won ‘if the UN stands united’ – UN health official

Mental health: privilege in coronavirus times

EU and Georgia sign Financing Agreements for COVID-19 Recovery worth €129 million

Cambodia’s schools are the new frontline in the battle against climate change

Our idea of what makes a company successful needs to change. And it starts with making waste expensive

State aid: Commission approves support for six offshore wind farms in France

DR Congo Ebola centre attacks could force retreat against the deadly disease, warns UN health chief

Mental health: simple ideas that can make a difference

Mental health at stake: A silent epidemic of 21st century

Why the ECB had to clarify it caters for the entire Eurozone not just Germany?

Facebook wins EU approval for WhatsApp acquisition; just a sign of the times

What Mary Poppins teaches us about behavioural economics

COP24: Paris agreement remained alive but fragile while the EU attempts to slow down CO2 emissions for new cars

How do we really feel about women leaders?

Norway initiates WTO dispute complaint against US steel, aluminium duties

Mali facing ‘alarming’ rise in rights violations, warns UN expert

How to change the world at Davos

Eurostat confirms a dangerously fast falling inflation in Eurozone

What cryptocurrencies will do to the integrity of politics

Europe is ready to engage, von der Leyen tells annual EU Ambassadors’ Conference

Climate change and health – can medical students be the solution?

Why Europe’s high productive performance is discredited?

On International Youth Day the European Youth Forum calls for true youth participation

French full-body veil ban, violated women’s freedom of religion: UN Human Rights Committee

What does leadership mean in an age of perpetual change?

Medical Front liners Need Not To Be Called Heroes; They Need Emotional Stability By Giving Them Proper Support

EU officially launches its first naval mission against migrant smugglers

5 things to know about African migration

European Commission increases support for the EU’s beekeeping sector

Huawei answers allegations about its selling prices

The influence of the multilateral agreement on migrant health

AI can be a game-changer for the world’s forests. Here’s how

The future looks bright for solar energy

Protecting Health Workers’ Safety Around the World

This billion-dollar campaign wants to protect 30% of the planet by 2030

‘Time is of the essence’ for refugees on Greek islands – UN agency

Terror attacks strike people ‘from all walks of life, the UN included’

Using CO2 as an industrial feedstock could change the world. Here’s how

Norway is known for its cold weather – but it’s been in the grip of a severe heatwave

Commission launches new tool to support digital teaching and learning in schools

Young people are not a nameless, faceless mass. So why do we treat them as such?

Victim-centred laws ‘paramount’ to combat online sexual abuse against children

Out with the old: Young People transforming Humanitarian Action

Asia’s plastic problem is choking the world’s oceans. Here’s how to fix it

How to describe chronic pain beyond numbers? A Brazilian measuring instrument

How oysters are cleaning New York’s polluted harbor

Is Germany’s political landscape becoming a breeding ground for extremism?

Workplace risks: Final vote on protection from carcinogens, including diesel fumes

Antitrust: Commission adopts guidance for national courts when handling disclosure of confidential information

Investing in new energy infrastructure: Green light for EU grants worth nearly €1 billion

These are the countries where most adults still don’t have a smartphone

What if Trump wins the November election and Renzi loses the December referendum?

Canada has the most comprehensive and elaborate migration system, but some challenges remain

How digital remittances can help drive sustainable development

Meeting of top scientists underway to slow coronavirus spread

Meet the man who drove from the Netherlands to Australia without visiting a gas station

Kenya wants to run entirely on green energy by 2020

‘Foreign children’ in overwhelmed Syrian camp need urgent international help, says top UN official

More Stings?

Advertising

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