Meanwhile, European Bank Default Risk Is Spiking

Tyler Durden's picture

"It's probably nothing..."

The headline-maker in Italy is Monte Paschi which has seen CDS soar post the regulatory ban on short-selling stock. At over 1700bps, this implies a 67% chance of default... crushing the hopes and dreams of 100s of thousands of mommas and poppas and Renzi's dream of reelection...


As Bloomberg adds, Banca Monte dei Paschi di Siena’s subordinated bonds fell to a five-month low amid reports that Italy and the European Commission are in deadlock over how to boost the country’s broken banking system.

Monte Paschi’s EU379m of notes due September 2020 fell 13 cents on the euro to 64 cents on Thursday, lowest since Jan. 21, according to Bloomberg data; they were quoted above 90 cents last week. Italy and the EC are seeking ways to recapitalize Monte Paschi and other lenders amid concerns they may fail critical stress tests due at the end of the month.

Talks have foundered on whether creditors should face losses -- under so called bail-ins -- if taxpayer funds are used, according to people familiar with the discussions

* * *

And then there is the most systemically dangerous bank in the world... trading near its most risky ever... implying a 30% chance of default for Deutsche Bank...

"It's not a rosy picture, but we are well-positioned and our relative share of the available fee pie will probably rise," said  Alasdair Warren, who leads the company’s corporate and investment banking unit in Europe, the Middle East and Africa. "A decision by the U.K. to leave the European Union could take a lot longer than two years to implement. That will mean a lot of uncertainty."

And in case you thought that these were one-offs.. or could not affect US banks... Dollar liquidity is being sucked out in a hurry...


As UK bank counterparty risk concerns surge...


And all of this after Draghi has spewed trillions into the EU financial system to keep the 'whatever it takes' dream alive.

But - as we said - it's probably nothing.

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Haus-Targaryen's picture

Nothing to see here.  Move along please. Keep going.  Don't look back save you turn into a pillar of salt. 

froze25's picture

I have been saving since 2008 for this moment to unfold, can't wait. Keep your powder dry.

ss123's picture

OT but oil just cracked

Squid Viscous's picture

shhh you're giving Gay Bob Pissonme a hard on

with oil and crack in the same sentence

jus_lite_reading's picture

Not to say, "WE TOLD YOU SO" but...... WE FUCKING TOLD YOU SO! All of us ZHer's and nutty conspiracy theorists said the next shoe to drop would be ITALY way back in 2011! So, dear EU leaders, globalists and other assorted filth, FUCK YOU!

Haus-Targaryen's picture

I've been waiting since 2011.  I lost money in 2012 because I thought the EUR as a currency zone was going to collapse.  My economic analysis was correct, political analysis was wrong.  Oh well.  

I have amassed quite a list of "ha! told you so motherfucker" to gloat about when this all comes unhinged. 

roisaber's picture

I've been telling everyone who will listen to me for 30 consecutive seconds since 2009. I never could have imagined things would drag out this long, I never would have believed that Greeks would take starvation over revolt. I'm either the smartest or the dumbest person I know, but at least I've got more silver than I can carry, and that's from working class wages.

jus_lite_reading's picture

WTF! I literally just wrote what you wrote word for word and I just saw you post after I posted mine! So yeah, GREAT MINDS THINK ALIKE! We were fucking right the whole time. I also thought 2012 would be the total collapse of the EU banking system but those fuckers managed to keep the shit show going! 3 years later and it is game over! This game of smoke and mirrors can no longer be sustained! It is no longer viable to have any faith in banks. The EU will pull the QE Infinity rip cord to save their preciious failed experiment which will cost lives!

Nobody For President's picture

Damn, Squid, you could (and sort of do) post that Jump You Fuckers on every financial post ZH does, and I'll upvote you every time.

The Duke of New York A No.1's picture

Yup, nothing at all ... until next week.

Iconoclast's picture

We are so fukced, DB going pop will make Lehman look like a kid smashing his piggy bank, the contagion will be epic.

hcho3's picture

EU will never do anything until it reaches 99.99999 % chance of default. 

Thx. WE ARE EUROPEANS and we never act before hands. We will ACT AFTER we get hit by a bus like US did in 2008. 

south40_dreams's picture

DB is simply an inconvenient truth the media is working hard to bury.

youngman's picture

This is a much bigger problem than the Real Estate investment trusts....much bigger

E.F. Mutton's picture

It's just a flesh wound.

Squid Viscous's picture

Credit suisse is "off the lows" so everything must be ok. buying moar FANGs here

oh and moar Tesla because Elon Musk is a super-genius

thismarketisrigged's picture

im waiting for the day that we can say ' worst'since deutche bank'' instead of worst than lehman.


Bankers should be fed to feral dogs upon the crash of DB. Kim Jung Un fed his uncle to a pack of starving dogs while he and some bureaucrats watched with delight.



my bad!



bob_bichen's picture
bob_bichen (not verified) MASTER OF UNIVERSE Jul 7, 2016 10:24 AM

There is a small tropical island off the coast of Sao Paulo State in Brazil.  We read a lot about bankers and other Power Brokers seeking places of "secure solitude."   This island, known as "Island of the Snakes" is just asking for a colony of bankers and their families.  Take a look:

CuttingEdge's picture

Ironic that the primary enabler and architect as FinMin back in the day of Italy's current banking crisis now has his hands on the ECB, and is printing €80b a month.

This is not going to end well.

dlweld's picture

So, we have negative interest rates – which means, basically that no-one wants your money – certainly won’t pay for it (no interest), of course the obvious solution to this is to print more unwanted money.

Thank God we have experts leading us.

Debugas's picture

who is providing DB CDS ? I would not be surprised DB is the insurer itself

zippy_uk's picture

Its only squiggly lines on a graph so its nothing to worry about.

"Move along..."

UndroppedClanger's picture

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