Thursday, January 5, 2012

Which Euro Bank is the next Lehman?

© fintag

News comments:
We all know this time next year the Euro will not exist as it does now.

What has been intriguing is what will be the trigger to bring it down?

Bets are on Greece or Italy leaving, but having hung my tail firmly between my legs over my rather exuberant claims the Euro would be dead by the end of 2011, some soul searching and analysis on the ECB financial statements (plus lots of gossip and rumour) it is clear the Euro will crash when a bank or two turn into almost dead zombies.

Take UniCredit (reuters). It is struggling like many Euro banks to adhere to higher tier 1 capital ratios in a market that doesn't want bank debt and where bank's are being forced to asset strip themselves. Most bank's are depositing everything overnight at the ECB and just like Lehman there is a battle between PR and spin and reality.

UniCredit could be the next Lehman. Or was that Dexia?

Banks that are on the cusp are many. RBS, Credit Agricole, Alpha Bank and even supposedly safe Santander.

When Lehman went down it was pretty clear it was bust. In this Euro game of roulette, it is less clear because the banks and sovereign states are reliant on each other. Sovereign banks buying its own sovereign debt is a pyramid scheme that Madoff would be proud of.

It is in nobody's interest for a Euro Lehman to happen but it is well known many Euro banks are zombies. They died a while back and are surviving on fabricated assets.

SocGen, BNP, Bank of Greece, Bank of Ireland, Commerzbank. All potential Lehmans currently on probation.

Today's shorts:
RBS to cull all its staff and turn itself virtual (telegraph)

SocGen culls too (reuters)

Today's longs:

France to defy gloomsters (marketwatch)

Europe to outlaw banking.


Anonymous said...

This is still the case right?

Lisa Brown said...

The Euro was obviously instituted without forethought. Maybe if the Euro started out with some of the stronger and more stable European Countries and slowly expanded, we would have a different story right now. The Greek people have suffered enough, dropping the Euro would be in their best interest. This shall pass. It now seems inevitable that Greece will default on its debts, with all sorts of disastrous scenarios being discussed, particularly if it has to leave the euro.
Lisa from North'n Loans