http://globaleconomicanalysis.blogspot.com/2013/04/germanys-net-foreign-assets-exceed-1.html

Monday, April 08, 2013 12:18 PM

Germany’s Net Foreign Assets Exceed €1 Trillion; 10 Compete Failures of the Eurozone

The eurozone was supposed to equalize trade and interest rates. The Maastricht Treaty supposedly ensures the free movement of goods, capital, people and services. Tensions were supposed to drop. Instead, the eurozone has been a complete failure.

Eurozone Complete Failure

With Cyprus, there is no longer a free flow of capital. There are now Cypriot euros and other euros. Capital controls are in place.
There is one interest rate policy set by the ECB but it has been set on the basis of what is beneficial to Germany.
There are 17 different sovereign bond yield structures. In theory sovereign bonds of Greece, Spain, Italy, Portugal, Germany, (and all the other eurozone countries as well) should all trade at the same rate. In practice here are some 10-year sovereign bond rates: Spain:4.75% Portugal:6.42% Greece:11.71% Italy 4.34% Germany 1.24%.
Tensions were supposed to drop. Yet in Greece, a neo-Nazi party is now the third largest. Separatist movements are on the rise in Spain.
Greece and Italy have had technocrat governments forced on them by Brussels.
European banks are capital impaired and massively leveraged. In Southern Europe, banks are leveraged to their own sovereign bonds.
Manufacturing imbalances abound.
There is massive unemployment in peripheral Eurozone. Youth unemployment exceeds 55% in Spain and Greece, and 38% in Italy.
Property bubbles vary in strength and intensity, country to country.
Trade imbalances are totally out of control.

Germany’s Net Foreign Assets Exceed €1 Trillion

Let's take a closer look at point number 10. MarketWatch reports Germany’s account surplus jumps, no one is happy.

EMU was supposed to produce economic stability. Yet, five years after the financial crisis, Europe is a cauldron of uncertainty. The sobering truth about the large current account surpluses heaped up by Germany and EMU’s other prime creditor country, the Netherlands, is that Europe’s monetary set-up has consistently produced much larger imbalances than those that caused the collapse of the Bretton Woods fixed exchange rate system 40 years ago.

The record-breaking run of surpluses has propelled Germany’s net foreign assets to €1,000 billion for the first time, according to latest Bundesbank figures for end-September 2012. Not that Germany’s burgeoning foreign assets are generating any rejoicing in Germany. Quite the opposite.

In an astonishing turnaround in the balance sheet of Europe’s largest economy, nearly 90% of the country’s net foreign assets are held by the Bundesbank, in the form of its currency reserves (including gold) and, above all, the now-celebrated Target-2 loans to the European Central Bank (ECB), representing indirect claims on the weakest members of EMU.

The balance sheet transformation represents a reverse for the Bundesbank, which, after monetary union started in 1999, carried out a major effort, well out of the view of the German public, to reduce its foreign reserves (apart from gold) to make it less dependent on currency and capital market fluctuations. At end-2004, for example, the Bundesbank accounted for just €85 billion or 36% of Germany’s then total net foreign assets of €234 billion.

In the ensuing eight years, the country’s net foreign assets have quadrupled, but the Bundesbank’s total has risen tenfold to a third-quarter 2012 total of €878 billion.

This mirrors a massive reduction of German commercial banks’ exposure to foreign borrowers, led by the euro problem countries. German banks’ net foreign assets fell from a peak of €520 billion at end-2008 to just €8 billion in the third quarter of last year.

Commercial assets have been replaced by official assets: the difference has been made up by the Bundesbank—which accounts for the Target-2 concern. Even though the amounts have fallen from last summer’s peak, latest Target-2 figures for end-March show that the Bundesbank still is owed €589 billion under the ECB lending scheme.

What Cannot Be Paid Back, Won't

Notice the massive shrinkage of German exposure to foreign borrowers. Mario Draghi's widely hailed LTRO program provided the means for Northern Europe to unload peripheral Eurozone bonds.

Those bonds were snapped up by the likes of Spain and the result is Spanish banks are more leveraged than ever.

As politicians scramble from one panic to the next, promising that each panic is the last one, those 10 points show otherwise.

When the eurozone breaks up (and it will) a large piece of the €589 billion owed to the German central bank will blow up in smoke. What cannot be paid back, won't.

Mike "Mish" Shedlock

And while on Germany , don't underestimate the growing euroskeptic movement there.....

Monday, April 08, 2013

The UKIP factor and German politics: All eyes on Alternative für Deutschland

Germany's new anti-euro Alternative für Deutschland party is still in its infancy but it has already generated huge interest at home and abroad. While we are not expecting it to cross the 5% threshold in September's federal elections - not even close - with polls between the CDU/CSU and FDP vs the SPD and Greens as tight as they are (see here for latest figures), AfD's electoral result could have a huge bearing on the nature of any coalition government that emerges from the elections, a point also made by Thorsten Junghold in today's Welt. He cites the recent regional election in Lower Saxony, where the CDU incumbent David McAllister came up short by 335 votes while the Free Voters (a separate euro-critical movement) scored 39,000.

As such the AfD could mirror the UKIP factor in the UK (though note that AfD is a very different beast to UKIP), where a party unlikely to enter parliament can still have a decisive effect on the election by tipping vote shares one way or another (ironic given the different voting systems in both countries), and consequently being able to enjoy a disproportionate impact on the national debate and media agenda. For this reason it is very interesting to see where AfD's votes could come from - and this weekend saw the first (to our knowledge) breakdown of AfD's potential support measured at 24% of all voters:

Source: Infratest dipmap for Die Welt

So clearly the biggest share of AfD's potential support comes from the economically liberal FDP (46%) followed by the 'old left' and former communist Die Linke (29%), the SPD (21%), Angela Merkel's CDU/CSU (19%) and finally the Greens (14%).

This is interesting because it shows that despite AfD's ideological groundings and personnel make-up being more on the centre-right it could attract voters from all parties (also like UKIP). The strong support from Die Linke voters could be explained by the fact that the party has strongly campaigned against the eurozone bailouts, which AfD also opposes (albeit from a different ideological perspective), or even more simply purely as an alternative protest party now that the pirate party appears to have run out of steam.

Definitely a phenomenon we will be keeping a close eye on, meanwhile its worth reading the Sunday Telegraph's interview with party leader Bernd Lucke.

Greece has had several bailout rounds ( next round looming for their banks ? ) , Portugal slipping back down the slippery bailout slope and now Ireland looks shaky as well............

http://www.zerohedge.com/contributed/2013-04-08/eu-says-bank-moneys-safe-after-threats-take-it-ireland-still-looks-next-conta

EU Says Bank Money's Safe After Threats To Take It, Ireland Still Looks Next Up, Contagion Ready To Spread To Bigger Countries

Submitted by Reggie Middleton on 04/08/2013 14:20 -0400

Creditors

European Central Bank

European Union

Ireland

Reggie Middleton

Reuters

Sell Side Analysts

Over the weekend, EU's Olli Rehn said big depositors could suffer in future bank bailouts under new law:

Olli Rehn
Olli Rehn.jpg
European Commissioner for Economic and Monetary Affairs and the Euro
Incumbent
Assumed office 9 February 2010

(Reuters) - Big bank depositors could take a hit under planned European Union law if a bank fails, the EU's economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus's bailout model was exceptional.

Okay, I get it now. Cyprus was exceptional, it's just that we are preparing for exceptional to be codified into law to make it common place. Of course!

"Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland's national broadcaster YLE.

The only thing "special case" about Cyprus was that it was first!

"But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of 84,890 pounds is sacred, deposits smaller than that are always safe."

Your "so-called liquid deposits" are absolutely not safe! As explored in "Mainstream Media Says Cyprus Salvaged By…"

Well, this is the latest from Bloomberg:

The revised accord spares bank accounts below the insured limit of 100,000 euros.

I was curious to see how they could impose losses on insured accounts in the first place, after all the accounts were insured basically (through implied backstop) by the same entities (EU/EC/ECB) that were attempting to force the loss, no?

Yes, the powers that be were not only clearly considering the confiscation of so-called insured assets, they actually were moving forward to implement such until the backlash was perceived to be strong enough to consider 'alternative measures'! Mr. Rehn's comments are still quite suspect, after all... Exactly what is the definition of "SAFE"? Does this include the ability to access your money? Again, as excerpted from "Mainstream Media Says Cyprus Salvaged By…"

Last week I posed the question "Is The Cypriot Government Crazy Or Do They Really Fear Bankers That Much?" The country even considering imposing loses on bank depositors over creditors seemed absurd at best. Even the faux consolation of compensating holders of pure liquidity (or at least what was formerly believed to be pure liquidity - banks have been closed for a week now and ATM withdrawals have been limited to 100 euro per day due to the capital controls I clearly warned of last year) was a scheme born out of lunacy, and unlikely to compensate anyone for anything.

You see, once capital controls (the same capital controls I clearly warned of last year) are placed upon your money in such a fashion as to prevent you from accessing it, is it still really your money??? I guess one can consider it safe, as long as you don't want any of it!!!

Now, I've been warning for the past two weeks or so that more of the same will likely come the way of the Irishman, reference:

I consider these posts to be a tour de force in investigative journalism and forensic financial analysis. In them, I have named 4 of Ireland's biggest banks as not having properly disclosed charges, borrowings and encumbrances. I actually have significantly more to go - yes, that's right - more banks, and even in more countries. This begs the question, how is it that the Irish people have to hear that their largest banks (several of them, not just one or two) have concealed these issues after extreme austerity and billions upon billions of euros of bailouts

Hey, I have an even better question. Why is it that the Irish have to hear it and see the proof from a Blogger in NYC versus the (in no particular order):

audit firms that audited the banks;
the banks management;
the sell side analysts that follow these banks;
the politicians who create and oversee legislation regarding these banks;
or the regulatory agencies that oversee these banks!

One would think that the audit firms would really be on the hook, no? I must assume the legal firms in Ireland are in no way as aggressive as they are stateside....

We just had a changing of the guard at the SEC in that states, and this is a perfect opportunity for the new guard to show that they are worth their mettle and represent a significant departure from the less than totally effective bastion of the recent past. You have hundreds of thousands of readers and subscribers watching you guys. Do the right thing!

* * *

http://hat4uk.wordpress.com/2013/04/08/troika-lunacy-time-for-clubmed-to-grow-some-balls/

TROIKA LUNACY: Time for ClubMed to grow some balls

It’s been obvious today that the Troikanauts haven’t been remotely chastened by the global outcry in relation to Brussels-am-Berlin’s treatment of Cyprus. Rather, what’s happened since the Rape of Nicosia is the usual Tsunami of anti-Cypriot briefing against depositors and senior pols there, half-truths about the nature of the former Cyprus economy, pressing ahead with global looting via the Greek private pensions, and pushing austerity demands as if society was a collection of vehicles, shops, ports and buildings rather than human beings.

The Greek finance minister Stournaras was (I’m told) moved to ask one Troika negotiator this morning if he’d rather negotiate with Alexis Tsipras. It evoked the usual goldfish-faced blank response. Schäuble’s response to Portugal’s constitutional court throwing out the austerity programme there was to offer a statement suggesting he had full confidence on the Lisbon PM’s ability to ignore the verdict and find a way round it. (The little hobgoblin in the wheelchair gave a similar reaction when the German equivalent said the FiskalUnion was illegal under Bundesrepublik law).

But not too deep down, we have all become used to the reality on these issues: that there will be brinkmanship and threats…followed by Troika victory. Until recently, ClubMed had the excuse that it was genuinely frightened of what disaster might befall them – and the global economy – if they didn’t obey those they increasingly see as the masters…as opposed to the masturbators they really are. That kop-out no longer applies: in terms of economics, fiscal prudence, currency markets and ECB diligence, by far the best option for Portugal, Greece, Cyprus, Spain and Italy now is to default.

What is the alternative? Very simple: increasingly risible lies from Brussels to shatter any remaining confidence in euro-bond markets; a quick, tall spike in French borrowing costs; the ECB printing more and more money to put off bigger and bigger crashes; increasingly severe austerity flogging a collection of rotting horses; a German public turning to protectionist self-pity and demanding a euroexit for the Fatherland; and then an almighty crash forty times more serious than forgiving Greek debt way back in 2009.

Let’s get real here: if ClubMed told the Troika to insert its scorched earth where monkeys are alleged to keep their nuts, history would rapidly thank them for so doing. For they would have engineered a win-double: the destruction of a fascist Supersovereign, and the cushioning of a potentially mortal uppercut to the global economic system.

So far, only Grillo in Italy looks to have a real chance – and the cojones – to do so. Stournaras should stop venting his spleen at hastily prepared news conferences, and instead show some dignified courage by asking the Troika politely to leave…on a one-way ticket.

Fine words from the blogger in the armchair? Hardly: Nazi tank jokes aside, ClubMed is holding a royal flush, and B-am-B aces and eights….the dead man’s hand. But it takes balls to play poker…and a sound grasp of when the other bloke’s bluffing. Not many politicians have either. It’s time they worked it out.

and.....

http://www.zerohedge.com/news/2013-04-08/record-2564-spanish-firms-file-bankruptcy-q1-45-higher-year-ago

Record 2,564 Spanish Firms File For Bankruptcy In Q1, 45% Higher Than Year Ago

Submitted by Tyler Durden on 04/08/2013 13:04 -0400

Gross Domestic Product

Perhaps the best measure to gauge the European recovery is by the soaring number of companies going bust, because only from this perspective is Europe finally "fixed." As Reuters reports citing a report by Axesor, a record 2,564 companies filed for "insolvency proceedings", a more palatable version of the word bankruptcy, in the first quarter - an increase of 10% from Q4 and up a whopping 45% from Q1 2012. The reasons given: "tight credit conditions and meager demand." Or in other words: no actual cash flow to fund demand for products and services. Obviously it will take some truly phenomenal massaging and manipulation to represent GDP as rising in this environment, but we are confident the Spanish authorities are already on it, and somehow the Spanish pension fund, already 97% filled with Spanish government bonds, will somehow have a finger in yet another completely unbelievable economic print which will fool most of the algos most of the time on flashing red Bloomberg headlines.

Per Reuters:

"Most Spanish businesses did not prepare for a crisis this big or this long, which could be a determining factor," said Javier Ramos-Juste, head of economic studies at Axesor.

Spain has been in its second recession in five years for the past 18 months and unemployment is more than 25 percent.

A credit freeze, liquidity problems, late payments and poor risk management contributed to the record number of bankruptcies since Spain's insolvency law changed in 2004, Axesor said.

Almost 28,000 companies have filed for bankruptcy since Spain's economic crisis set in five years ago, Axesor estimates.

Banks have tightened lending after a property boom turned to bust in 2008 and face stricter regulation since Spain received a bailout of about 41 billion euros ($52 billion) from international creditors last year.

Naturally it is the evil banks' fault for not lending out money.

What is not discussed is that with deposits flying out of the door, the local banks simply don't have the cash to make such loans. What is also not discussed is that even in that stalwart of economic growth, the USA, total commercial loans as of last week were virtually unchanged from the date Lehman filed for bankruptcy, at just over $7.2 trillion. But at least the US has a Federal Reserve which does not mind being the bad bank for thousands of businesses that otherwise would have gone insolvent if only it weren't for an abundant source of zero-cost credit.

And with the banks engaged in simply chasing the stock market, while the Fed still has $85 billion/month of liquidity injections and deposit creation to do for at least year longer and possibly, forever, expect the unprecedented misallocation of capital to continue until such time as there is absolutely no more end demand and the Fed is forced to not only fund company balance sheets but to be the last resort buyer of goods and services. Which it will eventually become before it is all over.

And Greece items of note........

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_08/04/2013_492569

Tough talks with troika resume

Rattled by merger freeze, gov’t seeks consensus on civil servants, debts, before summit

Finance Minister Yannis Stournaras is to resume on Tuesday tough negotiations with troika envoys on several contentious issues, including a delayed overhaul of the civil service, in a bid to reach a consensus before Friday’s informal Eurogroup summit in Dublin.

Government and troika officials on Monday took a day off negotiations to prepare their arguments and to allow the dust to settle following the unexpected news of the suspension of a merger between National Bank of Greece and Eurobank. They are to resume talks at 4 p.m. on Tuesday and have a lot of ground to cover if they are to reach an agreement by Friday’s summit. Greece’s economic reform progress will be on the agenda of talks at the summit but a decision on the release of a 2.8-billion-euro loan installment that had been due last month is not expected until later in April while a decision on a subsequent tranche of 6 billion euros is likely in May. Unless the disbursement of the tranches is delayed until after May 20, when Greece must cover 5.6 billion euros in bonds that are set to expire, government officials say there will be no cash-flow problem.
Greek officials have much progress to make before aid is approved. Stournaras admitted that he was not sure negotiations would be over in time for the summit.

But officials said some issues had been resolved. It appears that firms or individuals owing tax or social security contributions will be allowed to pay off their debts in 48 installments rather than the 36 the troika had favored.
It is unclear whether the foreign envoys will show similar understanding when it comes to Greece’s cutbacks in the civil service. The two sides have reportedly agreed that the government will be able to hire a new civil servant for each of the bureaucrats it is forced to fire in coming months. The firings are to start with staff who have been found guilty of disciplinary offenses and continue with those who consistently fail to turn up for work. A scheme for downsizing the public sector, drawn up by Administrative Reform Minister Antonis Manitakis, remains the basis of talks, sources said. But it will be Stournaras, not Manitakis, who will negotiate with the troika, who reportedly want layoffs over and beyond some 4,000 civil servants accused of breaking the code of conduct.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_08/04/2013_492570

Turkey to send seismic vessel off Cyprus by April 15

Foreign Minister Davutoglu calls anew for joint energy exploitation

In a sign of growing assertiveness in the region, Ankara said it will dispatch a vessel to conduct two- and three- dimensional seismic surveys for hydrocarbon deposits in the Eastern Mediterranean.

In comments made over the weekend, Turkey’s Energy Minister Taner Yildiz said the Barbaros Hayreddin Pasha boat, which was recently acquired from Norway, will arrive off Cyprus’s northern coast by April 15. Yildiz said the vessel will conduct research within Turkey’s territorial waters as well as in a 800-cubic-kilometer stretch off Cyprus.

Greek officials are concerned the Turkish vessel will try to collect data in the area south of Rhodes and Kastellorizo islands and within Cyprus’s exclusive economic zone.

In February, Athens submitted a note verbale to the UN notifying international officials of Ankara’s granting of exploration permits for areas deemed to cover the Greek continental shelf.

Turkey has challenged Greece’s sovereign rights south of Rhodes and Kastellorizo and the right of the Aegean islands to a continental shelf. It claims that the Aegean should be treated as a special case as the islands are so close to the Turkish coast.

Meanwhile, Turkish Foreign Minister Ahmet Davutoglu, who on Sunday met with US Secretary of State John Kerry in Istanbul, repeated that Turkey is ready to negotiate a two-state solution to the Cyprus problem if no agreement is reached with regard to the joint exploitation of the island’s natural gas reserves.

Davutoglu said the Greek-Cypriot administration was making a “grave mistake” on the issue.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_08/04/2013_492583

Eurobank, National try to stay private

The reversal of the merger is forcing them to make a last-gasp effort to avoid full state control

By Yiannis Papadoyiannis
National and Eurobank will launch a last-ditch effort on Tuesday to preserve their private status, with their governing boards convening in the aftermath of the reversal of their merger confirmed on Sunday night.

The two lenders, which the Bank of Greece announced will be recapitalized separately after all upon the insistence of the country’s international creditors, will autonomously try to find investment interest to cover 10 percent of their share capital increases in order to avoid relinquishing their overall control to the Hellenic Financial Stability Fund (HFSF), the guarantor of the recap process.
It is, however, very doubtful whether they will be able to do so, as Kathimerini understands the HFSF is likely to proceed to the full coverage of their recapitalization as soon as the two banks’ general meetings have approved the share capital increases. The Bank of Greece reiterated on Sunday that all four main banks (including Alpha and Piraeus) will need to have their increases confirmed by the end of April.

Sources from National Bank said the country’s biggest lender will make a last-gasp effort to find funds, saying it is in constant contact with Greek and foreign investors. National’s requirements amount to 9.76 billion euros and those of Eurobank to 5.84 billion.

Eurobank believes it has an outside chance of attaining the goal of finding 10 percent of its fund requirements from the private sector, given that it has not tried to tap the market recently due to the acquisition of 84.3 percent of its shares by National, which has already been completed.

According to sources, Eurobank has already presented a plan as to how it will attract strategic investors: It intends to issue convertible bonds (CoCos) amounting to 1 billion euros, while only the remaining 4.8 billion will be covered via a share capital increase, which means that private investors will have to cover just 480 million euros.

The bank’s top brass acknowledge the huge difficulties of this effort in such a short period of time, but they stress that it will use the opportunity it has been given to tap the market. In fact, the reversal of the merger has pleased Eurobank staff, who have expressed confidence in the bank’s management and have even proposed that employees participate in the collection of the 10 percent required.

The new relationship between the two lenders will create some confusion for investors, but it is clear that the recapitalization will change the current stakes radically, with National’s stake in Eurobank shrinking to just 3 percent.

http://www.keeptalkinggreece.com/2013/04/08/greece-eu-commission-try-to-calm-citizens-deposits-in-national-bank-eurobank-are-safe/

Greece, EU Commission try to calm citizens: “Deposits in National Bank & Eurobank are safe”

Posted by keeptalkinggreece in Economy

Greek government spokesman Simos Kedikoglou rushed Monday morning to calm down depositors, concerned about their money in accounts of National Bank and Eurobank after the merger was called off. “Deposits are safe, the banking sector is shielded,” Kedikoglou told a private television channel.

Short time later, EU Commission felt also obliged to assure customers of the two banks. “I don’t see the reason, why customers should worry,” Simon O’ Connor, spokesman of EU Commissioner for financial affairs Olli Rehn told reporters in Brussels, when he was asked whether deposits in National Bank and Eurobank could undergo a haircut, following the bad Cyprus example-template.

Of course, neither O’ Connor, not Kedikoglou have reasons to worry about. They have good paid jobs and do not need to grab their savings to come along during the month.

But if they believe, low-pensioners, jobless and low-incomers would leave their savings to the banks to be seized for the banks rescue, they live on another planet. Because, on this very planet we live on, bad examples and warning messages about bail-ins do nothing else but trigger worries…

http://www.keeptalkinggreece.com/2013/04/08/national-bank-eurobank-merger-stopped-shares-plunge-30/

National Bank – Eurobank merger stopped; shares plunge -30%

Posted by keeptalkinggreece in Economy

The news fell like a bomb on Sunday night: that the much praised National Bank (NBG) - Eurobank merger was stopped by Greece’s international lenders, the Troika of EU, IMF and ECB representatives. Greek media reported that the Troika had objections about the size of the new bank to have emerged from the merger. The two banks head for state control (HSFS).

According to Troika: a merger would form a bank too big relative to Greece’s gross domestic product.

National Bank of Greece was to absorb the Eurobank.

As if the Troika did not know about the volume of the new bank, when it gave the green light for this…

Greek finance minister Yiannis Stournaras and governor of Bank of Greece Giorgos Provopoulos were obliged to announce that the merger procedure was stopped.

The two banks will call separate EGMs and will be recapitalized separately by the Hellenic Financial Stability Fund (HFSF), suggesting that NBG΄s 85% stake in Eurobank will be fully diluted.

Together, the two banks need 15.6 billion euros in fresh capital to shore up their solvency ratios to levels set by the central bank after incurring losses from a sovereign debt writedown and impaired loans.

Both banks will fall under the full control of the HFSF bailout fund. (Reuters)

If each of the two banks fails to raise the 10% minimum private participation (the two banks have reportedly informed BoG that they will not be able to raise the 10%) they will be 100% recapitalized by HFSF (according to BoG΄s assessment exercise, NBG needs €9.75 bn of capital and Eurobank needs €5.8 bn).

”NBG and Eurobank will create two separate banking groups which may take under their umbrella the banking stakes currently held by the HFSF, namely the good Postbank and the Proton bank, as well as smaller banks that may fail to raise the required capital through private investors such as Attica and Probank – which suggests that Eurobank may absorb the good Postbank and NBG may absorb any remaining stakes.

The aforementioned strategy changes intend to address Troika΄s concerns as expressed lately over the relatively big size of the merged NBG/Eurobank, the potential additional capital needs of the new entity and their impact on Greece΄s finances as well as the difficult task for the HFSF to sell its stake in the merged group recovering a large part of its investment.

The BoG announcement says that the recap process proceeds and should be concluded by end April (meaning that all necessary approvals and documentation should have been concluded by then).

All four bank, Alpha, Piraeus, NBG and Eurobank have already called or about to call the EGMs. The BoG announcement also reminded that the 4 banks have already received the required capital from the HFSF as part of the €50 bn package which have been approved for the banks΄ recap.”(via Capital.gr)

Several Greek journalists suggested that the National Bank of Greece, once the biggest bank of the country, may have to be sold at the end of the process.

As expected, the shares of NBG and Eurobank plunged on Athens Stock Exchange on Monday.

11:21 a.m.

NBG shares – 30%

Eurobank shares – 30%

Alpha -19.47%

Piraeus – 23.13%

It’s been vehemently assured that deposits are not at risk.

At the end of the day (metaphorically), one will be able buy all Greek banks for a piece of bread and a slice of cheese light. For just 2.5 billion euro.

At the end of the day, banks will break apart in ‘good’ (deposits) and ‘bad’ (loans), the buyers will get the good bank and taxpayers will sit on the bad loans.

And Yes, your bet is on the right place: nobody feels like taking responsibility, nobody feels obliged to resign. Neither the finance minister, nor the CEO of these two banks…

PS I remember when everybody was attacking left-wing SYRIZA for saying that the banks must come under state control lol

Catharsis Ours

Monday, April 8, 2013