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The Bonds Of The Third Largest Austrian Bank Are Crashing
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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Bullish
Down in the Valley... The valley so low...
I wonder how Creditanstalt-y this is.
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?
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.
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.
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!
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.
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.
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.
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.
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
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.
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.
The thing with the Austrians is that they can buy stupid bank bonds OR nice, shiny Philharmonikers. It's their choice to make...
Can't shake Pooty Poot's hand and say you're only kidding.
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
Doctor copper shit the bed today.
You mean it will improve from a depression to a recession?
*duplicate*
While you're here: inquiring minds what to know where the cool avatars is from.
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.
Q4 2015 is when the shit hits the fan.
Nine more months to prepare.
Are you a blood moon shemitah kinda guy?
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.
Actually in my school of thinking it will happen on Feb 28 2015, so 1 month, not 9. YMMV
"will enter"... LOL, you still crack me up Bell's.
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)
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.
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.
"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.
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.
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.
I always found it fascinating that the bandgap varied as e to the exponent Boltzman's constant.
All This news and gold is about to brake an upward bollinger band. Hmmm, What's up with that?
The nature of reality.
paper gold or physical gold? Big difference.
Paper makes money up and down, gold not so much.
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
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.
Fear and uncertainty. As usual. As always. Nothing unusual.
Nothing loads of freshly printed Euro can't solve.
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.
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.
D'accord, but to understand those dimensions u first have tell people, how many churches there are...and there are many!
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."
"unfounded rumor" = how the fuck did you find out the truth
"unfounded rumor" == rumor not started by a founder.
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!!!
QE is not printing money.
https://www.youtube.com/watch?v=ryyX8amkFkg&t=12m5s
Yes, yes, and "subprime is contained" and we "will not dirctly monetize any debt"...
BULLSHIT motherfucker.
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.
Please learn to spell.........BADDERER.thank you .lol.
Solution: The bank renames itself from 'Erste' (First) to...
- TSTS (Too Small To Save)
- Letzte (Last) Bank
- Douched Bank
...
...
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.
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?
All the charts seem to look the same today...
Dammit, my sister in law works there at there FX desk, all I need is one more person to support.
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.
"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!!
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.
Euro ..... going to 80-c
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.
Raffeisen has even bigger problems in its loan book than mortgages
Novartis Reviews Swiss Costs as Franc to Hold Back Profit http://www.bloomberg.com/news/print/2015-01-27/novartis-sees-sales-growth-resuming-after-earnings-rise.html
Swiss Offices Get Riskier as Franc Surges: Real Estate http://www.bloomberg.com/news/print/2015-01-26/swiss-offices-get-riskier-as-franc-surges-real-estate.html