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Portugal's Largest Bank Misses Bond Payment; Bonds Collapse
Brussels, we have a problem. As we warned 6 weeks ago, Espirito Santo International SA - is in a "serious financial condition" according to a central bank driven external audit by KPMG identified "irregularities in its accounts." Sure enough, the 'ponzi-like' maneuvers have left the bank unable to pay its bonds as Bloomberg reports bonds plunged to record lows after a parent company delayed payments on short-term notes. More importantly, given the divisively dependent nature of the domestic sovereign bond market (and hence the health of the EU) and its banking system, it is noteworthy that Portuguese bond risk has surged to 4 month highs with the biggest 2-day spike in a year. As one analyst noted, “The bigger question is whether the government will have to get involved,” leaving the EU taxpayer on the hook once again (for fear of M.A.D. threats) as most critically, it "will have to step in to prevent systemic repercussions?"
Banco Espirito Santo has been “adequately isolated” by the Bank of Portugal from the financial problems, Parliamentary Affairs Minister Luis Marques Guedes said on July 3. The bank was the only one of the three biggest publicly traded Portuguese lenders that didn’t request state aid after the country received a European Union-led bailout in May 2011.
Banque Privee Espirito Santo SA said yesterday the delay in payments of some debt securities issued by parent company Espirito Santo International affects “only a few clients.” Some investors have been asked to swap the commercial paper for stock and new long-term securities, according to Portuguese newspaper Expresso.
“The news flow in the last few days is confirming investors’ suspicions over how extensive problems are at the top of the group,” said Roger Francis, an analyst at Mizuho International Plc in London. “The market has huge uncertainty with reports of payments being missed and debt for equity swaps circulating widely.”
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Of course the government says its "contained" - now where have we heard that before?
Charts: Bloomberg
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don't run to the bank... TAKE YOUR CAR!!!
Waaaat? Wasn`t this fixed long ago? Like 2010? Aren`t we in a re-co-ve-ry? This will be the Amy Winehouse recovery, where the patient dies in the end...
NOT SHIT.......they promised me its fixed....They can't do this to me.....BWAAAAAAAAA
BULLISH, I say!
You'd have a better chance of getting hit by lightning than a default.
Pretend and extend......just make it happen.
Didn't know Portugal was part of the South Stream pipeline deal (sarc)
hahahahahahahahahahahahahahahahahahahahahahahahahahahahaha
They've got all their fingers stuck in this dyke - next they'll be trying to use their pee pees.
Who ever decided to call debt certificates a store of value?!... I like that shinny yellow metal in the palm of my hand. And I think that for those of us who think the same, we are going to experience a heck of a nice ride in the months ahead.
NO PROBLEMO folks, make the bond holders whole while making the depositors take a Cypress style SCALPING
Move right along nothing to see
No, that would be how it's SUPPOSED to work. At least partially. A classic (before TBTF) bank failure would be: wipe out the stock holders (and owners and officers), wipe out the un-insured depositors, the bondholders are the stockholders of the new bank all supervised by the courts. Orderly and predictable. The <$100,000 depositors are protected by FDIC insurance.
dontgoforit, dykes won't let pee pees be stuck in them (they are lesbians).
On a long enough timeline the survival rate for everybody drops to zero.
Hedge accordingly.
Bullish
Title is all wrong. It is NOT the bank, Banco Espirito Santos, that missed the payments. Its the Espirito Santos family Holding Company which owns 25% of the bank.
That said, the failure is still very glaring in the sense that Banco de Portugal (their central bank), had regulatory authority over the hoilding company and was only now through an external audit, that this black hole has come to light.
Just shows you how much crap is still under the hood in many financial institutions in Europe. This is why they are rushing to change the regulatory authorities and build buffers. But I expect more victims to come.
The central bank (Banco de Portugal) are just a bunch of useless breathers. The debt crisis that we find ourselves in, here in Portugal, was completely avoidable because they knew everything that was going on but they did not do anything because the politicians were filling their pockets.
Have you ever heard of EFFICIENT central bank regulations and oversight? I haven't!
The ECB or the Troika won't bring any better oversight either. They are just as criminal as all the others. The only difference is that they have a different agenda.
Their job is to patch the tires on the croney-mobile until there's no rubber left.
They can only be efficient to that point.
So what you're saying Revo is that nothing has really changed since 1974.
So she's the one been causing all that credit card debt? A mere isolated case. The rest of the world is OK.
Buy accordingly anything you can getchur hands on at any inflated prices.
Pay through the nose.
A rising tide lifts all boats.
The boat has a leak so pour in more water (krugman)
Don't worry be happy
Where's Portugal?
Not too far from Belgium as I recall.
Why? Three keystrokes and enough fake money to cover the whole crisis will be invented. Now back to your regularly scheduled programming....
Make it a nice car too.
And dress nicely!
We don't just return your 250 million in these here parts to a bunch of nobodies. And you have ask for your money back in a civilized manner. That would mean "would please give me my 250 million dollars back." And then upon receipt of said 250 miliion "do not forget to say thank you. How are the children doing?"
The larger European equity markets don't care. They all gonna rip higher today with U.S.. Strategy: short vol, get long equities, take profit end of week, buy gold. Easy as that.
bring forward the downward facing dog!
hugs,
BIS
Well how did the "kicking the can down the road" strategy work out for Banks in Eurozone periphery?
My guess: ECB stress test will be delayed for "logistical reasons" or they "couldn't hire all the specialists needed" or it's just "too complex".
No way they can seriously perform a stress test in 2014.
And finally they are going to blame the weather, Russia or .. horses.
The gentleman who is personally responsible for the stress tests was Al-Gored badly at the Pampalona Running of the Bull Markets due to Global Change the other day and is no longer available. Only 23 years old but now diagnosed as a paralyzed brain dead quadriplegic, under EU rules, he will remain in his position until 30 years after retirement causing a slight delay in the timeliness of the tests. In the mean time, a mime form Barcelona and a sword swallower form Paris will stand in temporarily to create estimates while they're on paid vacation in Majorca during the month of August.
What the fuck difference does it make, anyhow?
The number are about as reliable as Chinese statistics.
Time for a Portugese-style Cypressing, unless they do a Belgium turn-around. Must be Wednesday.
thank god none of that shit is interconnected...
LOL. Nice.
exactly..LOL
Ringfenced.
Anyone going to BTFD on these bonds? Isn't that what Pappillon's pal (Dustin Hoffman) went to Devil's Island for doing?
Ring barked more like it.
isolated incident.
sounds bullish, buy stokks/sell vix/treasuries!
moar accounting fraud can fix this
Can't wait until Japan fails. In the insolvent pecking order the PIIGS are turds they keep spraying with Brussels perfume.
Guess their starting to stink again.
WTF we gonna do when we all fail? Is that the NWO set-up senario? Faber: "I told you so!!!"
óh shìt
Debt does matter no matter what they say. Modern Monetary Theory often referred to as MMT to its many believers removes much of the risk ahead and guarantees that we will always be able to muddle forward. MMT also known as neochartalism is a economic theory that details the procedures and consequences of using government-issued tokens and our current units of fiat money.
Newly acquired tools like derivatives and currency swaps are suppose to allow us to print and manipulate away problems. What I'm seeing develop is an "almost surreal" feeling of indifference towards reality. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complace...
Is it year seven yet? Time for jubilee.
http://www.zerohedge.com/article/next-imf-bailout-wagon-portugal-dn-repo...
4 years later and still the same shit........
Portugal's Largest Bank Misses Bond Payment; Bonds Collapse, Hilarity EnsuesThey just covered the stench without cleaning the mess. Just like Japan and the US.
The PIIGS are starting to stink again.
Long tanker loads of Fabreze
4 years later and still the same shit........
Yeah.....like I said.....pretend and extend.
Too bad there's no Yangtze river to dump the PIIGS into.
Luckily the Atlantic Ocean is available to dump all their Fukushima radiated toilet paper into.
Bunds 1.211%
Recovery right around the corner! Long Bezerkers!
For the sake of my personal happiness, I am going to do what allll my friends do, ignore it.............
Shocked with surprise and sarcasm.
Keep your eyes locked on TAFTA deal.
It's cool man, I'll pay you later, or you can have this other stuff instead.
The "Wimpy" swap. I'll gladly pay you in 50 years for no coupon payments today.
"The "Wimpy" swap. I'll gladly pay you in 50 years for no coupon payments today."
WIMPY SWAP = With-held Interest, Maturity Priority and Yield Swap.
Sounds about right! -This little gem should be coming into broad useage right about now.
Bailout planet. Go ahead, raise interest rates motherfuckers. I double dog dare you.
I triple dare you, put your tongue on the icy flag pole
/ sarc
Moody's listened to you....instead of triple dare...they heard a triple downgrade and they did it...just for you....
Rating Action:
Moodys' downgrades Espirito Santo Financial Group ratings to Caa2 from B2, ratings remain on review for downgradehttps://www.moodys.com/research/Moodys-downgrades-Espirito-Santo-Financi...
Although, since people are supposed to rely on rating agencies insight (not hindsight), if they were worth a shit they'd have flagged it up some way back. They're not worth a shit though, as my decades in the financial sector have taught me, and they're as up to their necks in the manipulation as anyone. They continue because they still serve the same purpose they ever did - enabling the fraud.
Maybe more like "bail-in" planet now?
We are all Cypress.
Thank goodness I own Puerto Rican bonds.
"Please. Don't squeeze the Charmin". Mr. Whipple
What does collateral mean anymore?
Computer data digital entry into a secondary book ledger.
That's why they refuse a formalized audit. Make sense?
Collateral damage means exactly what it always did.
You, and your prodcutivity and earnings, are just the cannon fodder of Bankster Wars.
Why would anyone be responsible if they knew they would be bailed out?
Thought the PIIGS would play the game, things would quiet down for a while and then they would be bailed out.
Bankers,
Cook your books and transfer reserves to your private overseas accounts (millions/billions) then claim you need a bailout. The central bank comes to the rescue with the backing of the taxpayer. Rinse and repeat.
Fraud is the rule in these times, honesty the exception.
It may be "investor bail-ins" now, not "taxpayer bail-outs".
I wonder if queues are forming outside Espirito Santo branches...
Dude, are you nuts??
Portuguese people are the prototype of the "future zombie". No such thing as bank runs, everything is always OK (even when taxes SURPASS 50% of your income).
A consequence of voting for years for the most evil cancer known to mankind: socialism.
Rope and piano wire is the only solution (!)
Correct, and when fraud is the status quo, possession is the law.
all you need to know.
Well, this particular bank is being politicized... Ruling party is filling the Board with their "friends", because the current CEO made the mistake of having "secret" meetings with opposition leaders.
Anyway, this bank DESERVES to die. It is a remnant of the fascist dictatorship, the Espirito Santo family were very cozy with Salazar (the dictator) and his government.
But ALL BANKS in Portugal are on the verge of collapse, just takes a sneeze from the ECB and they'll all come crumbling down as the houses of cards that they are.
Thought those guys lived in Providence, RI now?
Not CGD or BPN...they're solid, solid like a rock. /sarc The banks here are stinking rife with leporous, infectious corruption it doesn't really matter whos in charge anymore. This is a vassal state to the globalist banksters who own it and its future para sempre.
It's so sad that Portugal digs itself out from under the Salazar dictatorship, only to sell its soul (not to mention its fishing fleet and agriculture) in order to get into bed with EU whores. Come on guys, you're better than that (world cup results not withstanding).
STRESS TESTS MY ASS...
I'm fairly certain all the proud owners of these bonds are stressed. I guess in that regard the stress tests were a success.
Oh, Doctor - there's blood in that stool.
Doubt it. CALPERS knows they are on the bailout phone tree too.
How does this happen? I though the governments were handing money to banks like a never ending roll of toilet paper?
Maybe this is the first step thinking about the BIS/Yellen article posted yesterday with a controlled collapse. The sooner we start bombing the shit out of each other the sooner we can move on. All this will lead to war at some point. All wars are fought over economics. Every one. This type of situation gives everyone a trigger to pull...the only question is what directions do the bullets fly. The enemy of my economic salvation is my enemy.
"All wars are fought over economics"
Correct
1 From whence come wars and fightings among you? come they not hence, even of your lusts that war in your members? 2 Ye lust, and have not: ye kill, and desire to have, and cannot obtain: ye fight and war, yet ye have not, because ye ask not. 3 Ye ask, and receive not, because ye ask amiss, that ye may consume it upon your lusts.
James 4 King James Bible
This should be very bearish for Gold and Silver.
Pool your family money and have at least one paid off house.
This is all just noise.
There will be a rally today. The lame stream have set it up with their "hawkish fears" headlines concerning the fed minutes. When the minutes reveal uber-dovish sentiment by the Ponzi Munchkin and her crew, everyone will be "surprised and relieved".
Rinse and repeat.
Don't worry, Mr Yellen will ship them the cash
How does a bank even lose money?
They lend out currency out of thin air on the fractional reserves they do have on deposit. And most loans are government backed.
The greatest business model evaaa
Seriously, I'm not that financially savy, I'd like to know, how can banks lose money?
By lending billions and billions to friends who were never going to repay them.
Thank you Bio
By leveraging up so much that even small defaults by debtors will cause them to have a problem.
You're basically right, it would be almost impossible for a bank to go bust if they used a fairly conservative lending policy, but they don't do that because the people running them are basically insane narcicistic sociopaths. So they lend and lend and lend money they don't really have to the dumbest most stupid schemes you could think of, encouraged by their old school chums in government until their Ponzi (because that's really what a fractional reserve bank really is) collapses.
The more "assets" you create, the bigger the bonus and the better the books look.
What happens later is...well, later.
Thank you CSS
I figured even a monkey could not help but make a fortune when granted the privilege by the state to hold a banking charter
But a narcissistic sociopaths, one rung lower on the evolutionary ladder, yeah I could see them screwing up
Jérôme Kerviel
OT, but another former JP Morgan employee and his wife dead in NJ of muder suicide. They had just moved into the $600, 000 home.
They defaulted even though there is plenty of liquidity available from the ECB???
This stinks big time.
This is surely part of the Fed's macroprudential strategy. Like a rock... of limestone.
Not to worry, though, this is all "adequately isolated." It's one turd floating in the toilet... for now.
GOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOAL!
Seriously? The family and the bank are called "Holy Spirit"?
They have to be fucking joking, right?
This can't be true.
Probably because they thought "Fucking You in the Ass" was a bit too direct.
The smart bankers will just extract all the reserves and leave the banks hollowed out shells. Just transfer the reserves to out of reach international accounts and then leave the banks with a package and all those millions/billions sitting in private accounts.
The Central Banks will keep quiet about all the fraud in the banking system and have the taxpayer cover the defaulted banks.
Look at the yield drop in the 2yr German bonds! Looks like traders are bailing in short term bonds.
EUR German 2-Year Schatz Auction 0.010% 0.060%
The GBP macro has also been shitty over the last 2 weeks and traders keep BTFD thinking Carney is going to raise rates. HAHAHA.
S&P500 up again - sounds about right.
KPMG audited Iceland way back when and their involvement in the 2008 MELTDOWN was key to the entire mess. KPMG should be exposed for their abject global failures and sent the way of Arthur Anderson accounting IMHO. I was raised by a Chartered Accountant and KPMG is the worst disgrace in accounting I have _ever_ witnessed in my entire life. WHEN WILL PEOPLE TAKE A LOOK AT KPMG, for cryin' out loud?
p.s. I would not let KPMG sort my garbage let alone audit accounts.
OCCUPY KPMG - OCCUPY EVERYTHING
Lest we forget what the US taxpayer is on the hook for....
http://www.bis.org/statistics/dt1920a.pdf
The Author Graham Greene once wrote a comedy called "Our Man in Havana".The plot summary is about a bumbling vacuum salesman in Cuba,who is recruited by MI5 to spy on the Cuban Gov't.Trying to put his daughter thru private school he fabricates a long string of imaginary agents and gets paid for it.
Greene had actually worked in military intelligence during WW2,and was based for a time in Portugal.
It was commonly known at the time that the German spies there would create imaginary strings of agents,send the rubbish off to Berlin,and get paid for it.
The Germans in Portugal got to spend the war in a neutral country,no shooting,sunny climate,friendly locals,lots of fresh fruit and vegies,decent wines.
Much nicer than the lads freezing in Stalingrad....
Portugal might once again be a nice place to be before too long.