A Furious Italian Prime Minister Slams Deutsche Bank As Europe's Most Insolvent Bank

Tyler Durden's picture

Several years ago, we were the first to point out the true "elephant in the room", namely Deutsche Bank's $75 trillion in derivatives which as we said at the time was about 20 times bigger than Germany's GDP, and 5 times bigger than the entire economic output of the Eurozone."


This was largely ignored by the "experts" because why bring attention to something which is fundamentally a devastating break in the narrative that "Europe is fine" and the financial crisis is now contained.

Fast forward to today when Europe is once again not fine, only this time one can't blame Europe's problems on Greece (instead the same "experts" are trying to blame everything in Brexit), when in a surprising admission of reality, none other than Italy's prime minister Matteo Renzi, "went there" and slammed Deutsche Bank as the true "derivative problem" facing Europe.

To be sure, Renzi has his own problems, chief among which is how to pass a banking bail out of his insolvent banks without implementing the dreaded bail in mechanism unveiled in 2016 as the only permitted European bank resolution mechanism. Alas, in his push to bail out rather than bail in Italian banks, Renzi has faced stiff resistance from the Germans, namely Angela Merkel and Wolfgang Schauble who have both strongly opined against this kind of backtracking. Just today, Wolfgang Schaeuble, speaking at a news conference in Berlin (just hours after Italy hinted once again at an imminent bailout of Monte Paschi), said his Italian counterpart Pier Carlo Padoan told him that Italy intends to stick to the banking-union rules. Perhaps not.

So it is not surprising that when faced with stiff resistance from the Germans, Renzi decided to call a spade a spade when, as Reuters reports, he said that the difficulties facing Italian banks over their bad loans are miniscule by comparison with the problems some European banks face over their derivatives.

One look at the chart above and it becomes clear just who he was referring to.

As Reuters adds, speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Renzi said other European banks had much bigger problems than their Italian counterparts.

"If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred," Renzi said

So just like that the Mutually Assured Destruction doctrine is activated, because now that Deutsche Bank's dirty laundry has been exposed for all to see, Renzi's gambit is clear: if Merkel does not relent on bailing out Italian banks, the collapse of Italian banks will assure the failure of Deutsche Bank in kind. And since in a fallout scenario of that magnitude DB's derivative would not net out, there will be no chance to save the German banking giant, bail out, in, or sideways.

And now the ball is in Germany's court: to be sure, traders everywhere will be curious to see just how this diplomatic escalation in which the fingerpointing at insolvent banks is only just beginning concludes, and most of all, they will follow every word out of Merkel's mouth to see if the Chancellor will relent and give in to what is the first tacit case of financial - and factual - blackmail.

Ironically, even the best possible outcome, namely another bailout of every insolvent European bank, will merely accelerate the same populist anger that catalyzed the Brexit-driven schism in the first place, and lead to even more anger at what will, inevitably, be yet another banker bailout until ultimately the war of words between the classes becomes all too literal.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mr. Kwikky's picture

We can analyze till we drop dead
It looks like GAME OVER.

BaBaBouy's picture

THEY are short GOLD ???

Thats a 1 to 1000 Problem ...

InjectTheVenom's picture

SQUIRM you little sociopathic elitist scumbag p.o.s. ... SQUIRM !!!     #TRUMP2016

AlaricBalth's picture

When the elites start eating each other, you know the end is nigh.

NidStyles's picture

These aren't the elites, they are the stooges that the elites are deciding to cut off to consolidate their holding's. The real elite's aren't in the news, they are the news owner's.

JamesBond's picture

So Germany is pulling forward the tax revenues from their future great, great, great, great, great, great grandchildren?


What did Hansel and Gretel do to the witch again?



froze25's picture

If you are an Italian and you read this article you would be wise to width draw all of your holding while you still can from any Bank in Italy. Trump 2016

Boris Alatovkrap's picture

If you are Russian, move your money away from Western Bank. Never forget Cyprus!

cdevidal's picture

Wow. Even the BBC is asking if DB is the world's most dangerous. Spotted first on ZHedge, of course.


johngaltfla's picture

Wow. The Italians are still sore about WWII.

ArgentoFisico's picture

No, fact is the Euro has served only the germans (I'm italian but part of my family is german), we have spent billions and billions to save Greece (read > german banks), we have paid billions and billions to facilitate the reunification of Germany years ago .. and then they come to us with that superiority face. FUCK OFF! Italians are the ones who paid the most and had the less in exchange in this fucking EU in the last 15 years


Innominate's picture

You know what the Italians have a lot of that the Germans don't?


Karma will be a bitch after the collapse!

fiddy pence haff pound's picture

Actually, if the Italians gave money "to save Greece", it went straight

to Deutschebank, but DB cannot be saved. Merkel has been telling you the money is for

Greece. It's for her banks to survive, day to day, until the Second Crashing. Then,

the Euro is cooked.

Renzi is doing what he should, and if Germany tell shim to stop, the Italian banks

will take down DB, and the Euro is cooked.

Herd Redirection Committee's picture

Not a single announcement will reach the public without our control. Even now this is already being attained by us inasmuch as all news items are received by a few agencies, in whose offices they are focused from all parts of the world. These agencies will then be already entirely ours and will give publicity only to what we dictate to them. – Protocol [12:4] The Protocols of the Elders of Zion

Just a simple forgery, folks, move along.  Its not as if the Rothschilds own Reuters and Associated Press, after all...  Oh wait...

Calmyourself's picture

I've never seen that, you may have gotten my investigative juice flowing..

knukles's picture

Holy Crap
Doesn't this guy know the First Rule of Fight Club?

Dead bankers my ass .. this guy's gonna be goned real quick.

johngaltfla's picture

The First Rule of Bankster Fight Club:

Before you speak, make sure you short the fuck out of your competition.


See: 2007, GS, re: BSC

sun tzu's picture

DB looks to be among the sacrificial lamb this round

auricle's picture

Soon to be Europes most disolved bank.

Lurk Skywatcher's picture

Only people who have zero knowledge of Europe (or the usual suspects who set to gain) think the EU was a good idea.

Regions have been at each others throats for thousands of years, and a simple conversation on any street corner will reveal long held contempt for the culture of any one region for another. It is present even within regions of the same nation state, which sugests that the nation state construct is possibly the largest stable entity that can be formed and held without tipping the balance, as evidenced by centuries of history.

Every attempt to increase the scope of control has failed miserably, no matter what force was brought to bear.


JustTheTTIP's picture

What are the limits of setting up a bank account in Russia as a foreigner?

johngaltfla's picture

You can set up a bank account in Russia, no big deal.

However when Obama attacks Russia before he leaves office, you just might not be able to touch your money.

Especiall once the EMP nuke's go off.

Boris Alatovkrap's picture

Bank account? You are refer to mattress in bedroom of multi-family apartment? Only big city and oligarch is trust bank, so sorry, Boris is only suggest you are hook up with Swiss banker or you are appear personally with local bank teller.

nevenbridge's picture

italian ppl are old and a lot of them rely only on official medias, lots of rainbows and unicorns, old ppl dont use the web. It will be fun to watch my country go to hell, i hate italians, not everyone but a big slice of italians are worse than shit, stupids and conceited

Here2Go's picture
Here2Go (not verified) nevenbridge Jul 6, 2016 1:41 PM

C'Mon Man! It's the greatest country in the world! Just sit in front of the TV all day long!



any_mouse's picture

Shaped like a boot and kicking Sicily. Awesome.

Bay of Pigs's picture

Douche Bank peaked at 146. It is now under 13. That's a 90%+ drop. Dead man walking?

cdevidal's picture

I think if DB goes teats-up I'll be doing some last-minute shopping that day...

asteroids's picture

Riddle me this Batman. Why does the FED or the ECB allow such a ludicrous position in the first place?

Boris Alatovkrap's picture

Douche Bank is not insolvent, is totally full of water with foul smell.

NoDecaf's picture

PM to DB

"And you can't make meatballs like I do! I got the best meatballs in the world"

Raffie's picture

Stock up on everything for sure.

Lock and Load as well.

bagehot99's picture

Correct, these are the people the elites allow to become moderately well off and famous, and play at being 'in charge'.

Drummond's picture

The elites are not losing control and if you think otherwise you are a fool. This crash has been perfectly engineered by these very elites.  

peddling-fiction's picture

This is street theatre by the politicians for the masses. Gangstalking and gaslighting the masses on all things financial and political.

sun tzu's picture

The rats are jumping off the ship. You know what comes next


NEW YORK (TheStreet) -- Shares of Deutsche Bank  (DB) are falling 6.16% to $12.57 in Wednesday morning trading as Ahmet Arinc, who oversaw currencies trading and emerging-markets debt trading, will leave the company, the Wall Street Journal reports.



Mr. Kwikky's picture

The main question, who is gonna pay the price?
Look at Venezuela etc. in the end it's us who pays the price.
FULL CIRCLE..banks/casino's aka cabal don't lose!

Believe me they have PLAN B..it's called concentration camp.

Are you hungry reach out to uncle Sam..so he can give it to you



Bank_sters's picture


German Finance Minister Wolfgang Schaeuble, speaking at a news conference in Berlin hours later, said his Italian counterpart Pier Carlo Padoan told him that Italy intends to stick to the banking-union rules.





Badsamm's picture

How long before they blame it all on Putin?

gatorengineer's picture

The solution is obviously to Drone some folks.....

gatorengineer's picture

Mr Kwikky how is it game over with S&P 2100?  I think not.

3Wishes's picture

DO you think he might have an accident ?

wobblie's picture

What a piece of shit.

It wasn't too long ago that Renzi wanted no quarter for the Greeks. Now? Renzi is ready to face the "facts". It's a different story now....


hobopants's picture

Still waiting on that glencore  implosion, any day now, right?