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The Bonds Of The Third Largest Austrian Bank Are Crashing

Tyler Durden's picture




 

Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine writedowns) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today). Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, The Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...

 

RAFI bonds are collapsing...

 

As Bloomberg reports, Raiffeisen had a total of 4.3 billion euros of Swiss franc loans outstanding as of September 2014, according to estimates by Moody’s Investors Service.

The largest part of these are in Poland, where the franc has appreciated 17 percent against the zloty since Jan. 14, threatening to push up defaults on the bank’s 2.9 billion euros of mortgages in the Swiss currency.

 

“There’s a lot of people worried about the bank’s Swiss-franc mortgages in eastern Europe,” said Gregory Turnbull Schwartz, who helps oversee the equivalent of about $82 billion at Kames Capital in Edinburgh and doesn’t hold Raiffeisen bonds.

 

Raiffeisen said Jan. 15 that it can’t yet forecast the effects of the appreciation of the franc on its asset quality.

 

The bank “will certainly take one measure or the other in the near future,” Chief Executive Officer Karl Sevelda told reporters on the sidelines of the Euromoney CEE conference in Vienna today. He declined to elaborate. Franc loans in eastern Europe are “not a big problem,” he said.

The plunge appears focused on the potential capital shortfalls and talk of the bank selling its Russian unit - both have been denied... (as Reuters reports),

Raiffeisen Bank International has no desire to exit the Russian market, Chief Executive Karl Sevelda told a newspaper in response to market rumours it could sell its lucrative Russian business.

 

The Austrian lender has "absolutely no intention to sell our Russian bank", he told Der Standard in a report printed on Tuesday. A bank spokeswoman confirmed his remarks.

 

He was responding to Russian media reports that Raiffeisen was in talks with Alfa Bank about a potential sale. Sevelda dismissed these "unfounded rumours" and said Raiffeisen had "absolutely no contact" with Alfa Group.

 

Raiffeisen, which is conducting a strategic review of its portfolio, said this month losses for 2014 could surpass 500 million euros ($561.5 million) if it had to write down goodwill in Russia, its single most profitable market.

 

The spokeswoman also confirmed the paper's report that Chief Financial Officer Martin Gruell had denied market talk Raiffeisen may need to raise capital. It raised about 2.8 billion euros a year ago via a rights issue.

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Tue, 01/27/2015 - 12:30 | 5711164 Soul Glow
Soul Glow's picture

Bullish

Tue, 01/27/2015 - 12:37 | 5711192 El Oregonian
El Oregonian's picture

Down in the Valley... The valley so low...

Tue, 01/27/2015 - 12:40 | 5711206 Buckaroo Banzai
Buckaroo Banzai's picture

I wonder how Creditanstalt-y this is.

Tue, 01/27/2015 - 12:50 | 5711257 JRobby
JRobby's picture

Domino effect to be expected in completely manipulated markets.

Only question is how far it is allowed to go? Or better, when will news of any problem be completely surpressed?

Tue, 01/27/2015 - 13:05 | 5711332 El Vaquero
El Vaquero's picture

If the dominoes really start falling and all news of it is completely supressed, we're on the edge of supply chain breakages.  Maybe not total breakages, but bad enough that people will know that some things simply aren't going to be on the shelves.

Tue, 01/27/2015 - 13:18 | 5711394 KnuckleDragger-X
KnuckleDragger-X's picture

Even small oopsies have a bad effect. If this was Friday they would have the weekend to try and stabilize things but they are going to have knock-on effects. Looks like Draghi is going to have to move his QE magic up a bit.

Tue, 01/27/2015 - 12:52 | 5711260 Dubaibanker
Dubaibanker's picture

The stock price of Raiffeisen Bank has declined "only" 79% since Feb 2011.

While just in the last 1 year, they have declined 70% from 31.25 to 9.30 today.

https://www.google.com/finance?q=VIE%3ARBI&ei=xr_HVKmhNvHXwAPTooCwCg

There are strong rumours that the bank may shut down and sell its entire Russian operations which the CEO has nicely lied and denied today. http://www.themoscowtimes.com/business/article/no-plans-for-raiffeisen-b...

Russia and Poland are the 2 largest countries for this bank and since last year they had a major 'focus' on both these nations which has turned out to be a complete disaster.

Their bonds have dropped 14% just today and are now trading at EUR 64.50. This indicates stress!

As far as ECB stress tests are concerned that are a complete farce...this is what JPM had to say a few days ago:

"A full writedown of Raiffeisen’s Russian and Ukrainian business would cause its CET1 ratio to shrink to 7.4 percent from 11 percent, according to JPMorgan’s estimates."

http://www.bloomberg.com/news/2015-01-22/raiffeisen-could-face-domino-ef...

Even in Poland where they have a large exposure, they are looking to sell and run.....http://www.businessweek.com/news/2014-12-17/raiffeisen-bank-said-to-seek....

Adios Raiffeisen, it was nice knowing you since the 19th century..while you lasted until the early part of the 21st century!

Tue, 01/27/2015 - 12:56 | 5711283 me again
me again's picture

Not at all. I study Austrian Banks; never mind why. this particular bank tried to be cute and issued too many hme loans in the new Eastern Europe. It's specific to a couple of banks; not contagious. Most Austrian Banks are very conservative. It's almost impossible to fuck up a bank; the fucking thing is designed to make money; you have to be stupid greedy and take crazy risks to fuck it up.

Tue, 01/27/2015 - 13:20 | 5711416 Dien Bien Poo
Dien Bien Poo's picture

well then you are aware of the enormous losses its taking (along with standard Chartered) from its loan book in Indonnesia, per its transaction for the Bumi asset acquisistion to Borneo Lumbung?

I know a thing or two about the Bakries and the coal sector in indo. This is crazy risk taking and they are about to get doughnutted. In size.

 

 

 

Tue, 01/27/2015 - 13:36 | 5711496 me again
me again's picture

The Capital Reserve injection that will be necessary is do-able. i believe the Austrian's are sensible enough to let the Bond Holders dry out in the breeze.

Tue, 01/27/2015 - 13:22 | 5711417 Dien Bien Poo
Dien Bien Poo's picture

well then you are aware of the enormous losses its taking (along with standard Chartered) from its loan book in Indonnesia, per its transaction for the Bumi asset acquisistion to Borneo Lumbung?

I know a thing or two about the Bakries and the coal sector in indo. This is crazy risk taking and they are about to get doughnutted. In size.

 

 

 

Tue, 01/27/2015 - 14:51 | 5711908 hic sunt leones
hic sunt leones's picture

Well, I think this advertisment by Raiffeisen that was published in Hungary tells us a lot about "conservative" values and even more about "stupid greedy" and "crazy risks"

And this is not an spoof or joke, this was their actual TV-advertisment ;)

"We do not care about your monthly wage"

Zerohedgers will like this video:

https://www.youtube.com/watch?v=OjXl61uKq8c

Tue, 01/27/2015 - 15:30 | 5712177 Breaker
Breaker's picture

LOL. The video was great. If you changed the language to English, it could have been a Fannie Mae commercial before the 2009 crash for their no-income, no down, neg-am loans.

Tue, 01/27/2015 - 12:38 | 5711200 me again
me again's picture

Bought one Dec.'15 Silver Contract last night @17.600$ /  It's bullish for somebody; it's a just a question of whose Ox is getting gored; as it says in the Bible.

Tue, 01/27/2015 - 14:22 | 5711239 angel_of_joy
angel_of_joy's picture

The thing with the Austrians is that they can buy stupid bank bonds OR nice, shiny Philharmonikers. It's their choice to make...

Tue, 01/27/2015 - 12:32 | 5711166 GMadScientist
GMadScientist's picture

Can't shake Pooty Poot's hand and say you're only kidding.

Tue, 01/27/2015 - 12:35 | 5711174 Bell's 2 hearted
Bell's 2 hearted's picture

one of my prized canaries is coughing

core capital goods orders down 4 straight months

http://research.stlouisfed.org/fred2/series/NEWORDER

sticking with my "US will enter a recession no later than Q1 2015" call

Tue, 01/27/2015 - 12:36 | 5711188 Soul Glow
Soul Glow's picture

Doctor copper shit the bed today. 

Tue, 01/27/2015 - 12:38 | 5711197 Hobbleknee
Hobbleknee's picture

You mean it will improve from a depression to a recession?

Tue, 01/27/2015 - 12:37 | 5711198 Hobbleknee
Hobbleknee's picture

*duplicate*

Tue, 01/27/2015 - 12:41 | 5711208 Disc Jockey
Disc Jockey's picture

While you're here: inquiring minds what to know where the cool avatars is from.

Tue, 01/27/2015 - 13:14 | 5711373 Hobbleknee
Hobbleknee's picture

It’s Troy Hurtubise showing off his Trojan Combat Suit, complete with a compass and a clock in the cod piece.

 

I made the GIF myself, BTW.

Tue, 01/27/2015 - 12:40 | 5711211 Buckaroo Banzai
Buckaroo Banzai's picture

Q4 2015 is when the shit hits the fan.

Nine more months to prepare.

Tue, 01/27/2015 - 12:43 | 5711227 THX 1178
THX 1178's picture

Are you a blood moon shemitah kinda guy?

Tue, 01/27/2015 - 14:48 | 5711883 Buckaroo Banzai
Buckaroo Banzai's picture

The Federal Government kicked the can on its ridiculous finances to October 2015. That can is now full of cement. "It's a huge shit sandwich and we're all gonna have to take a bite."

Also, Martin Armstrong has been predicting October 2015 as the tipping point for quite a long time now. He's been right on everything else.

Tue, 01/27/2015 - 12:59 | 5711308 Spectre
Spectre's picture

Actually in my school of thinking it will happen on Feb 28 2015, so 1 month, not 9. YMMV

Tue, 01/27/2015 - 12:44 | 5711221 LawsofPhysics
LawsofPhysics's picture

"will enter"... LOL,  you still crack me up Bell's.

Tue, 01/27/2015 - 12:51 | 5711269 Bell's 2 hearted
Bell's 2 hearted's picture

i'm in complete agreement with those here who believe we never left the recession

 

"officially" (NBER makes the call) US left recession july 2009 ... eventually, NBER will get around to making the call ... after much kicking and scratching from the bullz

 

last go round US "officially" entered recession december 2007 ... last bull threw in towel september 2008 (and for a real funny ... FOMC june 2008 meeting ... their economists UPGRADED call for H2 2008)

Tue, 01/27/2015 - 13:04 | 5711317 JRobby
JRobby's picture

Never left the depression that started in 2008 I think.

FDIC, SS, other "social" programs and mostly a much broader base of "institutions" that can be printed for and "rescued" are the differences that 78 years made.

Tue, 01/27/2015 - 13:08 | 5711324 LawsofPhysics
LawsofPhysics's picture

The fundamental problem for the oligarchs and their politcal puppets now is that the majority of us still remember and have been keeping good records of exactly what has been said and precisely where all this "free money" has been going.

6+ fucking years of free money (QE and ZIRP), with ZIRP continuing and the evidence if pretty damn clear that 99% of this money is simply going to the bankers, financiers, and their political puppets as nobody else has really seen an increase in their wealth or compensation.

Tick tock motherfuckers.  People are paying attention and starting to "vote with their wallets".  If all these measures worked, then raise rates!!!  If not, then retribution must be paid.

Tue, 01/27/2015 - 12:59 | 5711309 sunny
sunny's picture

"one of my prized canaries is coughing"

Precious.

How ironic in that an Austrian bank run in 1929 was that little-bitty bump that started the collapse that will become known as The First Great Depression.

Tue, 01/27/2015 - 16:12 | 5712437 Fred Hayek
Fred Hayek's picture

Creditanstalt baby.
Ach du leiber was a scheisse storm that opened up. Well, that and the British intentionally dumping India's silver on the market thereby crushing the silver market and the economies of India and China.

Tue, 01/27/2015 - 13:18 | 5711391 BandGap
BandGap's picture

Have a case of Bell's Two Hearted home in the fridge, really good on tap. Have fished the Two Hearted for trout in the UP, too. I miss both.

Dragon's Milk from New Holland on tap will alter your perception of the world.

When the shit hits the blades I will be in a good place. the Recession will be a brief pause before the plummet, if there is a recession at all. Stay thirsty, my friend.

Tue, 01/27/2015 - 13:41 | 5711512 me again
me again's picture

I always found it fascinating that the bandgap varied as e to the exponent Boltzman's constant.

Tue, 01/27/2015 - 12:36 | 5711186 pocomotion
pocomotion's picture

All This news and gold is about to brake an upward bollinger band.   Hmmm, What's up with that?

Tue, 01/27/2015 - 12:38 | 5711190 Soul Glow
Soul Glow's picture

The nature of reality.

Tue, 01/27/2015 - 12:42 | 5711213 LawsofPhysics
LawsofPhysics's picture

paper gold or physical gold?  Big difference.

Tue, 01/27/2015 - 13:51 | 5711567 Quaderratic Probing
Quaderratic Probing's picture

Paper makes money up and down, gold not so much. 

Tue, 01/27/2015 - 12:47 | 5711229 roadhazard
roadhazard's picture

Great handle and user pic. If you don't have Poco in your collection you don't know music.

 

roadhazard likes these guy too.

The best blues song... evah

https://www.youtube.com/watch?v=szdKx9O31A0

 

Tue, 01/27/2015 - 17:11 | 5712776 walktheline
walktheline's picture

I owe you one buddy, totally awesome and new to me and I thought I knew the Allmans. Those good ol boys, Gibson guitars and Fender amps; the best of Amerika by a country mile.

Tue, 01/27/2015 - 12:57 | 5711297 me again
me again's picture

Fear and uncertainty. As usual. As always. Nothing unusual.

Tue, 01/27/2015 - 12:36 | 5711187 Sizzurp
Sizzurp's picture

Nothing loads of freshly printed Euro can't solve.

Tue, 01/27/2015 - 12:38 | 5711189 hic sunt leones
hic sunt leones's picture

There are more Raiffeisen banks in Austria than churches. Basically that bank runs everything and even has it's own political branch called OEVP (Austrian peoples party although nothing could be farer from the truth *lol*)

This one is to big to bail.

 

 

 

Tue, 01/27/2015 - 13:04 | 5711327 me again
me again's picture

Wrong. the number of branches is un-related to the Reserves. The possible Reserve Capital injection is a known number and quite do-able. Worry about B of A instead.

Tue, 01/27/2015 - 13:08 | 5711351 popocatepetl
popocatepetl's picture

D'accord, but to understand those dimensions u first have tell people, how many churches there are...and there are many!

Tue, 01/27/2015 - 12:38 | 5711194 Bell's 2 hearted
Bell's 2 hearted's picture

econoday on chain same store sales for week ending january 24th:

"Month-to-month, Redbook's sample is pointing to a major decline of more than 3 percent for a strongly negative indication on January's ex-auto ex-gas reading in the government's retail sales report, a reading that in December fell a very disappointing 0.3 percent."

Tue, 01/27/2015 - 12:37 | 5711196 firstdivision
firstdivision's picture

"unfounded rumor" = how the fuck did you find out the truth

Tue, 01/27/2015 - 12:44 | 5711233 GMadScientist
GMadScientist's picture

"unfounded rumor" == rumor not started by a founder.

Tue, 01/27/2015 - 12:48 | 5711209 LawsofPhysics
LawsofPhysics's picture

Last time I checked, banks around the planet are printing money out of thin fucking air, and everyone still seems to be accepting it in exchange for the fruits of their labor.  Please, banks will be fine.  Think about it, there is no longer any real risk in the current banking business model.

 

FUCK EM!!!

Tue, 01/27/2015 - 13:02 | 5711325 ucde
Tue, 01/27/2015 - 13:07 | 5711340 LawsofPhysics
LawsofPhysics's picture

Yes, yes, and "subprime is contained" and we "will not dirctly monetize any debt"...

 

BULLSHIT motherfucker.

Tue, 01/27/2015 - 12:43 | 5711215 WTFUD
WTFUD's picture

No matter how BAD folks on Z/H think things are out THERE, it's TWICE as BAD. In fact it's even BADERER than that.

Tue, 01/27/2015 - 14:29 | 5711781 Ancientkarma
Ancientkarma's picture

Please learn to spell.........BADDERER.thank you .lol.

Tue, 01/27/2015 - 12:51 | 5711217 noben
noben's picture

Solution: The bank renames itself from 'Erste' (First) to...

- TSTS (Too Small To Save)
- Letzte (Last) Bank
- Douched Bank
...
...

Tue, 01/27/2015 - 12:55 | 5711224 RadioactiveRant
RadioactiveRant's picture

Shares down 25% (YTD) in Vienna, 6% today.

 

Also noticed the Business Week story saying Raiffeisen had instructed Citi to float the Polish business due to poor performance BEFORE the SNB decision. Good luck with that.

Tue, 01/27/2015 - 12:47 | 5711225 SDRII
SDRII's picture

How does bafin issue a report saying PM manipulation worse than Libor then say there is none. Another midnight flight coming?

 

Worse than Libor circa July 2014?

 

What changed?

Tue, 01/27/2015 - 12:48 | 5711243 williambanzai7
williambanzai7's picture

All the charts seem to look the same today...

Tue, 01/27/2015 - 12:48 | 5711245 NOZZLE
NOZZLE's picture

Dammit, my sister in law works there at there FX desk, all I need is one more person to support.

Tue, 01/27/2015 - 13:02 | 5711305 Marco
Marco's picture

Just let the bank go bankrupt, pay the depositors up to 100K Euro and move on. This works fine as long as you don't have a disproportional number of foreign depositors. Sure it will have a knock on effect and all banks will tumble, that's fine too. Bailing out small depositors is small change.

Bailing out the 0.1% gets you in Ireland's position.

Tue, 01/27/2015 - 13:04 | 5711334 LawsofPhysics
LawsofPhysics's picture

"Bailing out small depositors is small change.

Bailing out the 0.1% gets you in Ireland's position."   <---  this motherfuckers.  insure all the deposits below even 250K would be NOTHING.

 

Fuck the oligarchs, the "wealth" wasn't real to begin with, it was built on fraud.  It high time there was real risk in the banking model anyway!!

Tue, 01/27/2015 - 17:24 | 5712854 walktheline
walktheline's picture

We'll soon see. I converted my various holdings into cash 1st week of Jan and will be looking at the Russ stocks this week  to see what the possibilties are. Until then the moolah is in the bank; whether its safe there is TBD . My guess is that Ponzi Global goes into meltdown around Q3.

Tue, 01/27/2015 - 13:11 | 5711365 Remington IV
Remington IV's picture

Euro ..... going to 80-c

Tue, 01/27/2015 - 14:00 | 5711619 researchfix
researchfix's picture

Freedom party doesn´t want you to choose free, from whom you lent?

Freedom party wants wins to be private and losses to be socialised.

Tue, 01/27/2015 - 14:46 | 5711881 Sandmann
Sandmann's picture

Raffeisen has even bigger problems in its loan book than mortgages

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