This page has been archived and commenting is disabled.
Greek Bank Stocks Crash Again Amid Fresh Signs Of Economic Disintegration
After trading limit-down on Monday when Greek stocks opened for trading for the first time since PM Alexis Tsipras called a referendum that would later prove to be a complete waste of time, shares of Greek banks once again flirted with the daily 30% loss limit on Tuesday as there were simply no bids for a set of institutions that everyone knows is insolvent.
The banks, which are only operational because the ECB has decided to keep the ELA liquidity drip on at least until the central bank sees whether or not Greece will be able to make a €3.2 billion bond payment on August 20, are in desperate need of recapitalization, and according to Brussels’ estimates, will need somewhere on the order of €25 billion to stabilize the system.
Of course that total effectively grows by the day, as the collapsing Greek economy (and we mean "collapsing" in the most literal sense of the word after yesterday’s astonishingly bad PMI print) takes its toll, driving up NPLs in a vicious circle wherein capital controls meant to stem the deposit outflow cripple the economy which in turn serves to further cripple the banks.
Speaking of this self-feeding loop, here’s Kathimerini with more on how the banking sector deep freeze has reverberated through the broader economy:
The state’s losses from indirect taxes alone in the first couple of weeks of capital controls and the shuttering of banks is more than half a billion euros, according to a study published on Monday by the Hellenic Confederation of Professionals, Craftsmen and Merchants (GSEVEE).
The drop in consumption in the first two weeks after June 28 amounted to 50 percent, or 3.8 billion euros, with corporate turnover falling 48 percent on average. This meant the state coffers missed out on 570 million euros in taxes.
Nine out of 10 enterprises reported a decline in turnover, with three in 10 seeing a drop of at least 70 percent.
The medium-term impact will be more serious, argued the report, as it is unknown for how long the capital controls will remain in place, and small and medium-sized enterprises are in a difficult position as the measures came during a period when they were completely defenseless.
Meanwhile, Greek FinMin Euclid Tsakalotos is meeting with the country’s creditors today to discuss the recap effort. Here’s Kathimerini with that story (Google translated):
The issue of recapitalization also becomes urgent, given that the aim is the share capital increases of the four systemic banks to be completed in October. The timetable provides that the details of the stress test (under way) will be known on September 4, and, based on them, they will proceed with the recapitalization, which will require at least 10 billion. However, the final amount will depend on the assumptions to be adopted in the stress test, the most important is the economic downturn and the duration will, handling deferred tax and the management of non-performing loans.
Yes, the final amount will "depend" on a few factors, but as noted above, the situation is deteriorating so rapidly as to make any stress test assumptions obsolete as soon as they are adopted, meaning that as long as the economy remains in free fall, assessing the capital needs of the banking sector will be well nigh impossible, but one thing is for sure, Tsakalotos' €10 billion figure is wildly optimistic.
»
- 15636 reads
- Printer-friendly version
- Send to friend
- advertisements -
Have these stocks turned negative yet?
Are Greek banks really any different than JPM or GS?
Yes, they dont control the government that prints money like GS and JPM. Nothing a Maiden Lane, I , II and III couldnt handle while preserving shareholder equity.
yes. there is a substantial difference between A) retail banks, B) business banks, C) private (wealth managing) banks and D) investment banks
in europe, the focus of most banks is on A, B, C, in this order, while D is only possible from a certain size on
JPM or GS are "Investment Banks" first, second, and last, while JPM has further business, but for many purposes it's just so that they reach the "too big to fail" and "too big to prosecute" size
the evil of the repeal of Glass-Steagall is still warping the banking world
btw, since you ask this kind of question, have a look at cooperative banks, or credit unions. a completely different breed again
"JPM or GS are "Investment Banks" first, second, and last, while JPM has further business, but for many purposes it's just so that they reach the "too big to fail" and "too big to prosecute" size"
Silly rabbit. JPM and GS are FDIC insured savings/commercial banks and therefore as safe as momma's hugs and kisses.
<Hugs and kisses from Jamie and Llyod>
that's not my point. yes, they do attach to themselves all the trappings of insured savings/commercial banks, but their "masters of the universe" are all so-called Investment Bankers
I know, this terminology is British, in origin, and does probably not mean much to American ears
nevertheless, if you ever meet one of them, you will notice the fundamental difference. those are the guys that gave us a whole universe of derivatives, for example, and the architects of shadow banking
My effort at humor failed miserably. My apologies.
I'll admit I have a soft spot for Ghordius, but his sense of humor could use some brushing up. He might even miss the irony of this last reply of yours.
It's becoming difficult to keep track of the green shoots.
Gonna need some more puke (or green spray paint) to keep them shoots green. . .
Odds are these very same banks would do well under the US federal reserves bank stress test
Yes. When the goal is to "prove" the banks' healthy the result is a certainty.
These Poor bankers are going through a tough time, They deserve a bail out and a bonus.
interestingly, those Greek bankers had the EU slap a Banker Bonus Cap on them. but I hear in London this does not apply, not really
I bet they are being driven to zero, then their German masters will pick them up for pennies. Then the real fun begins as each "bailout" goes directly to rich Germans! Yannis should have nationalized the banks when he had the chance. Somewhere down the road this ends in blood and tears.
"Somewhere down the road this ends in blood and tears."
Hopefully, German blood and German tears. But, I'm not going to hold my breath.
Who never saw this coming? Paul Krugman.
just put the latest bank recap on greece's tab the same way they always do and it's problem solved.
it is a bit more complicated then that. the Greek gov is indeed very much interested in keeping those big four afloat, then they are also the "primary dealers" for the Greek sovereign debt
I would not be astonished at all if they end up being recapped by the Greek gov, btw. possibly on credit, yes
Euclid Tsakalotos .... "Sacalotos" .... lottery chump in Latin America ! Euclidean Geometry meets Monedean Logic
" ...according to Brussels’ estimates, will need somewhere on the order of €25 billion to stabilize the system."
Please note that the word stabilize does not mean fix.
because continental europeans don't believe in "fix". which is why all those news in the US (and the UK) about "Europe is fixed" sounded so damn hilarious, to our ears
stabeeeleeeteee, on the other side, is a word that rings like silver, in our ears. hence stabeeeeelized
you can't fix the ocean, it will always change. but you can enjoy a stable situation, and build on that
and so banks are often stable, until the time comes that they aren't, and where they need to be stabilized. a phrase that encapsulates banking history, imho
In my view stabilize in this instance means, " this is what we need right now before we ask for more once the full truth is let out of the bag."
In this case, stabilization might mean to "decline at a constant rate".
I see Greece splitting into three parts....the government as one...the business sector as another..and the people as a third.....the last two wii never pay taxes again....and the only thing the government can do is beg for bailouts....Greece is toast....and will be for many years to come....even a new currency will not turn the mindset that is there now....that government is corrupt and so you dont pay any more taxes...
Greece cannot commence recovery in earnest unless it punishes the culprits that led to its utter ruin.
You might ask " on what basis" ?
The first basis is whether the politicians over the last 15 or so years could reasonably expect for the government to repay the moneys that it was borrowing.
If the answer is no then those politicians should be charged with gross dereliction of duty.
If the answer is "yes" then one must examine whether the expenditures were wisely spent or whether the expenditures were used to line the pockets of a select few with precious little benefit to the nation as a whole. If the answer is the latter then there is your second basis for jailing the politicians.
So I repeat, there can be no progress in mind set or systems unless the precedent is set for punishing wrongdoers commencing with the politicians.
Agree.
It would also if tried internationally set a precedent for all other nations governments when they act irresponsibly.
If Greek banks don't open their doors how do they even EXIST? If I own a private business and don't go and open up every day how can it function? Mark to fantasy?
they are open now, after weeks of being closed. still under many restrictions, though, aka governmental capital controls
If your private business is bribing politicians you are probably good to go without opening to the general public.
END THE NAZI SUPPRESSION OF GREECE! END THE DOUBLE STandard OF UKRAINE VS. GREECE. THE WEST HAS LOST ALL CREDEBILITY WITH ITS DOUBLE STANDARDS. NEMESIS IS NOT FAR AWAY.........
Nemesis would appear to be about 3 years late according to your signature wouldn't it?
Don't worry - there's plenty of time anyway - 2000 Years since Christ rose from the dead isn't until 2029 or 2033 - so we've got a few years yet do we not!
Oh, and then there's Apophis. When's that 2036? Oh we must have another 20 years or so...
Adolf Hitler, Josef Stalin, Mao Zedung, Angela Merkel…
Names that will live in infamy.
Bush, Blair, Cameron, Obama....
Wolfowitz, Rumsfeld, Cheney, Libby, Perle...
this is becoming sooo ridiculous. Some people claim that these banksters have some kind of a master plan, NWO plan or what....no, I think these banksters are just plain retarded. "Those whom the gods wish to destroy they first make mad". They just have had that amazing power for so long and they have gone crazy like all the people in history, who thought they are omnipotent, who thought that they can control everything, that they are some kind of a God. This stupid system will simply not work, no matter how much they try, how much money they pump in it...
and if they think some kind of a world war will save them this time - it won't. It is impossible to make a real war with nukes on so many sides now. Remember, BRICS countries like Russia, China, India, Pakistan all have their nukes. And stupid silly proxy wars will not save them anymore. The rot is too deep already. Besides, they forgot all about the old wisdom that slaves are actually not profittable. You have to expend a great amount of money to keep them in check and they do not make good consumers. Slaves will not buy stupid things like i-Phones. Once you destroy the middle class, you destroy consumers.
I rather think that we are ruled by stupid bank "managers", who live in some kind of virtual reality. Like in this video: https://www.youtube.com/watch?v=BKorP55Aqvg
"So what exactly is stopping us from doing this?" "Geometry." "Just ignore it." And this may go with bankers: "So what exactly is stopping us from maintaining this economic system forever?" "Mathematics." "Just ignore it."
But common people have to live in reality and they will slowly separate their daily lives from the virtual stupidity. The same way like it happened in the USA prohibition era. So for example, Greeks will return to the barter system (which will be impossible for their government to control). I am from EU and I can tell you that there is also a lot of black markets there already (which are impossible to control) and the same goes for Italy, Spain, France - black markets, barter. For example some Italian women pretended to be pregnant to smuggle olives under their T-shirts. These women were caught, but if there are too many people doing this (in order to survive), the state will not be able to stop it. The exact same thing is happening in Western Ukraine, people are starting to live off smuggling and barter. Common people will make do somehow - and they will start slipping out of the controllled system. This, however, is slowly taking us back to the Middle Ages. You survive, if you can grow your own food, or produce something (e.g. if you are a blacksmith or a carpenter, you can make a chair and exchange it for food). You also live in fear that some of your feudal overloards come and take your crops/chairs, whatever. But if they do, you will just make another and go to the black market again, as you simply must survive somehow. This was the way they lived in the Middle Ages and it is obviously coming back in Europe now. Yeah, the glorious new modern Westernised world! Back to the Middle Ages with glory.
Bankruptcy, during which both the defaulter and the lender take a haircut and then start anew, has been one of the great innovations of modern capitalism in the West. A big factor in making it the most prosperous region in all history. Why are TPTB foresaking it now? Two reasons: First, a wet dream by the thumb-suckers in Europe over what has been from the beginning an unworkable currency region, and second, the politicos worldwide have all been bought off by the pigmen.
There is a history of telling the EU electorate half the truth. If the formula is applied on the bank recapitalization the required capital should be 50 billion instead of the 25 billion we have been told recently. Let us wait for lithmus test.