One Of Ireland's Biggest Banks Busted Fudging The Books? Nah! Busted Concealing Debt? Nah! Busted.. Cyprus Was Just The PreambleSubmitted by Reggie Middleton on 04/02/2013 09:59 -0400
Mounds of cold, hard, indisputable evidence not found ANYWHERE else! Damn, you thought Cyprus was newsworthy? Ireland already Troika'd & they're bigger than Cyprus. Depositor recap of banks looks inevitable if this research is right!
It begins here: Introduction of cold, hard evidence of bank shenanigans (with complete documentation) that A) should be prosecuted & B) cause enough concern to make you worry about your bank's integrity.
As we noted yesterday, Slovenia appears the inevitable next player set to experience the non-template of uninsured depositor bail-ins and the good-bank-bad-bank solution that was uniquely applied to Cyprus. However, global investors should rest assured as this miracle of modern financial engineering will not be a detriment to the nations as the Slovenian banks will be internally recapitalized (in the latest proposal) by a government guarantee. Simply put, in the world of European accounting idiocy, Reuters reports "this would not result in an immediate spike in the government's debt level, because the authorities would initially provide banks with guarantees rather than newly issued securities." Which leaves us asking, just how much is a one-week-old Slovenian government's guarantee worth in real money? And why didn't the Cypriot government just 'promise' to do 'whatever it takes' to support their banks' bad assets? Of course the chance of the bailout happening just surged:
- *SLOVENIA WON'T NEED BAILOUT, ECB'S KRANJEC SAYS
- Cyprus Salvaged After EU Deal Shuts Bank to Get $13B (BBG)
- Last-minute Cyprus deal to close bank, force losses (Reuters)
- Anxious, angry Cypriots face uncertain future (Reuters)
- Spain Brings the Pain to Bank Investors (WSJ)
- First Switzerland now... U.S. Seeks Answers in Liechtenstein on Tax Cheats (BBG)
- Rebel Free Syrian Army founder loses leg in Syria blast (Reuters)
- European Stocks Rise on Cyprus Deal as Italian Bonds, Crude Gain (BBG)
- Michael Dell Likely to Sweeten Buyout Bid to Save Legacy (BBG)
- Bankers’ pay premium is narrowing (FT)
- Surgery Restoring Penis After Prostate Cancer Increasing (BBG)
- Silent or supportive, conservatives give gay marriage momentum (Reuters)
While this kind of 'wealth tax' has been predicted, as we noted yesterday, this stunning move in Cyprus is likely only the beginning of this process (which seems only stoppable by social unrest now). To get a sense of both what just happened and what its implications are, RBS has put together an excellent summary of everything you need to know about what the Europeans did, why they did it, what the short- and medium-term market reaction is likely to be, and the big picture of this "toxic policy error." As RBS summarizes, "the deal to effectively haircut Cypriot deposits is an unprecedented move in the Euro crisis and highlights the limits of solidarity and the raw economics that somebody has to pay. It is also the most dangerous gambit that EMU leaders have made to date." And so we await Europe's open and what to expect as the rest of the PIIGSy Banks get plundered.
Some have attributed the resurrection of the financial markets (or more appropriately the banks) from the March 2009 lows to the IASB/FASB changes to factual to fantasy accounting. The Telegraph reports today that from PIRC's and the Bank of England's Financial Policy Committee that while banker bonuses continue to rise (for now), 'hidden' losses among UK banks could total GBP60 Billion (USD 90 Billion). HSBC topped the list with GBP10.4 Billion in bad debts that have yet to be written off and while the 'accounting' bodies are suggesting they will address criticism of this farce, as one analyst notes, they "can still make unprofitable lending appear profitable." Regulators expect to hear plans from lenders on how they intend to fill these holes before the end of the month to coincide either with the FPC’s meeting on March 19 or a statement scheduled for March 27. While outright recaps are unlikely, banks are expected to restructure and set out plans to raise their capital levels over the next couple of years. More fantasy...
You could even make a case that QE is part of TBTF. Chew on that for a while Shirley.
- US braced as cuts deadline passes (FT)
- U.S. stares down start of steep "automatic" budget cuts (Reuters)
- Yeltsin-Era Tycoons Sell Resources for Distance From Kremlin (BBG)
- Italy's center-left leader rules out coalition with Berlusconi (Reuters)
- Apple Required Executives to Hold Triple Their Salary in Stock (WSJ)
- BOJ Seen Spiking Punchbowl in April Under New Chief Kuroda (BBG)
- Diplomatic fallout from EU bonus cap (FT)
- Italy’s Stalemate Jeopardizes Resolution of Crisis, Finland Says (BBG)
- Chinese trader accused of busting Iran missile embargo (Reuters)
- JPMorgan No. 1 Investment Bank Amid a Flurry of New Deals (BBG)
- Eurotunnel’s Ferry Strategy at Risk as Rivals Cry Foul (BBG)
- Telepathic rats team up across continents (FT)
- Italy Political Vacuum to Extend for Weeks as Bargaining Begins (BBG)
- Italian impasse rekindles eurozone jitters (FT)
- On Spending Cuts, the Focus Shifts to How, Not If (WSJ)
- Obama spending cuts strategy focused on waiting game (Reuters)
- BOE’s Tucker Says He’s Open to Expanding Asset-Purchase Program (BBG)
- Fed Faces Explaining Billion-Dollar Losses in Stress of QE3 Exit (BBG)
- Carney warns over lack of trust in banks (FT) - here's a solution: moar bank bailouts!
- Bundesbank tells France to stick to budget (FT)
- China to tighten shadow banking rules (FT)
- Saudis Step Up Help for Rebels in Syria With Croatian Arms (NYT)
- After election win, Anastasiades faces Cyprus bailout quagmire (Reuters)
- Just for the headline: Singapore’s Darwinian Budget Sparks Employer Ire (BBG)
- Risk of instability hangs over Italy poll (FT), Protest votes add to uncertainty in close Italy election (Reuters), and... Risk On
- Czech inspectors find horsemeat in IKEA meatballs (Reuters)
- China’s Slower Manufacturing Casts Shadow Over Recovery (Bloomberg)
- So much for reform: China Prepares for Government Shuffle as Zhou Stays at PBOC (Bloomberg)
- France to pause austerity, cut spending next year instead: Hollande (Reuters)
- Sinopec to buy stake in Chesapeake assets for $1.02 billion (Reuters)
- White House warns states of looming pain from March 1 budget cuts (Reuters)
- China Quietly Invests Reserves in U.K. Properties (WSJ)
- Osborne Keeps Austerity as Investors See Downgrade as Late (BBG)
- South Korea's new president demands North drop nuclear ambitions (Reuters)
- Russia accuses U.S. of double standards over Syria (Reuters)
- Bersani's lead over Berlusconi continues to erode, now just 3.6 Pts, or inside error margin, in Tecne Poll
- Spain gears up for U.S. debt investor meetings (Reuters)
- PBOC Set for Record Weekly Liquidity Injection (WSJ)
- RBS Trader Helped UBS’s Hayes With Libor Bribes, Regulators Say (BBG)
- ECB, Ireland reach bank debt deal (Reuters)
- AMR-US Airways Near Merger Agreement (WSJ)
- Monte Paschi says no more derivatives losses (Reuters) ... remember this
- Harvard’s Gopinath Helps France Beat Euro Straitjacket (BBG) - by sliding into recession?
- Obama Relents on Secret Drone Memo (WSJ)
- Brennan to face questions on interrogations, drones and leaks (Reuters)
- Wall Street Success With Germans Boomerangs (BBG)
- Khamenei rebuffs U.S. offer of direct talks (Reuters)
- Boeing Preps Redesign to Get 787 Flying (WSJ)
We had to reread this DOJ statement on today's RBS wristslap twice, as the hypocrisy was literally mind-blowing: “As we have done with Barclays and UBS, we are today holding RBS accountable for a stunning abuse of trust,” said Assistant Attorney General Breuer. “The bank has admitted to manipulating one of the cornerstone benchmark interest rates in our global financial system, and its Japanese subsidiary has agreed to plead guilty to felony wire fraud. The department’s ongoing investigation has now yielded two guilty pleas by significant financial institutions. These are extraordinary results, and our investigation is far from finished. Our message is clear: no financial institution is above the law.”
Six months after the Barclays epic wristslap in which there were none - zero - criminal charges against Libor manipulators, it is time to trot out the same old theatrical song and dance again, this time focusing on bailed out RBS, which the CFTC just fined a whopping sum of $325 million, modestly less than the $16 billion profit the bank made in 2007, followed by the epic subsequent collapse which saw $104 billion in bailouts to keep the bank afloat courtesy of Biritsh taxpayers. In other words: manipulate the world's most sensitive credit-related metric, and you will see either 5% of your peak profits deducted, or we will force you to get even more bailouts.
Bob Janjuah may nt have rvrted to his RBS wrtng style of yore, yet, but the New Nrml appears to also fnly b getting to 1 of our fvrte strategists, who has finally gone bold, ALL CAPS. "IF I AM WRONG AND WE TRULY HAVE FOUND ECONOMIC AND MARKET NIRVANA SIMPLY THROUGH THE CENTRAL BANK PRINTING PRESS AND ENORMOUS INDEBTEDNESS, THEN I WILL HAVE NO HESITATION IN ENJOYING THE FUTURE, THINKING ABOUT THE FUNNY MONEY MIRACLE, NEVER NEEDING TO WORRY ABOUT ECONOMIES OR GROWTH EVER AGAIN (all hints of sarcasm entirely intentional)....Real wealth can only be created by innovation and hard work in the private sector, with policymakers, the financial sector and financial markets there to aid and encourage/incentivise. Real wealth is not created by the printing press and by excessive government spending. We simply cannot turn wine into water – after all, if it were that easy, why have we not done this before (with any lasting success, as opposed to abject failure, for which there is plenty of evidence)! "