Dollar Libor Market Hints 66x Leveraged Credit Agricole Was Bank X

Tyler Durden's picture

Following yesterday's shove-liquidity-down-your-throat-of-last-resort action by the Fed et al. 3M USD Libor fell, admittedly marginally, for the first time since July 25th. The 0.1bps compression was practically insignificant as only 4 of the 18 member banks actually reduced their bids - Citi, Rabobank, RBC, and UBS but we are sure headlines will crow of the impact the coordinated central bank action has had already. What is most concerning when we look at the individual Libors of each member is one bank stands out over the last few weeks. Given that we know the dollar funding market is highly stressed (USD-cross currency basis swaps), this appears to be the only efficient way to understand which bank might be under the most stress. Given Credit Agricole's notably weak Tangible Common Equity Ratio and the fact that its Libor was such an outlier recently, it is hard not to suspect the global stick-save was instigated because this $1.59tn asset-heavy bank was on the verge of failure.

Credit Agricole's borrowing rate has been an outlier for the last few weeks suggesting, given the dollar funding stresses we know exist, a far greater desire to borrow USD than the rest of the motley Libor crew.

And given Credit Agricole's 2nd worst position on Bloomberg's Tangible Common Equity Ratio screen (behind Landesbank Berlin no less), it is hardly surprising that the giant French bank is suffering. At 66x leverage, it is perhaps no wonder the massive French bank was willing to pay up to 13bps more for 3M USD than the average Libor in early November, and still 7bps more (around a 15% premium).  As an aside, the whining out of Deutsche Bank this morning (to be discussed shortly) that "using the swap lines is not stigmata" is perhaps understandable considering their position in the "weakest TCE Ratio" screen is third worst, just behind CA.

Charts: Bloomberg

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Manthong's picture

El-Arian called it yesterday... something (stress) we don't know about..

And.. ES- Beautiful inverse head and shoulders print in last few hours..

slaughterer's picture

Yes, it was Credit Agri, I have confirmation of this.  Good work.  

Tsar Pointless's picture

From one of the Amerikkkans who helped bail you out, Credit Agricole, I say, "You're welcome".

onelight's picture

They would thank you, but their throat is tied, and stomach full of foie gras, fattening.

hugovanderbubble's picture

Emporiki bank = Default---------------------> Default contagious to Credit Agricole.... 32.000 Mn Loan Dissapeared....

TruthInSunshine's picture

1.59 trillion?


Marc Faber: Now We Will See If Bernanke Is A True Money Printer Or An Amateur



SheepDog-One's picture

I think Bernank has cold feet, he'll just operate in secret now.

TruthInSunshine's picture

In secret but his cover is so blown.

By the way, bad link above (sorry).

Here's the correct one (gotta love the part where Faber rips The Bernank a new asshole and laughs hysterically as the Bloomberg Reporter even laughs).

Marc Faber: "Now We Will See If Bernanke Is A True Money Printer or Just an Amateur
schismjism's picture

maybe the bankers will get rid of sarkozy this time? fat chance....

i've started a direct democracy blog, if you are interested in it:

CClarity's picture

Sarkozy will try to nationalize the French banks before they try to get rid of him in earnest.  And they'll both be "right" to try.

And none of that will be the solution to the debt saturation drowning European sovereigns and banks, permeating the world bycreating global quicksand.

twotraps's picture

here we are again, faced with crap news....and now Goldman thinks it could be great for investing, Barclays thinks the reaction is misguided....the banks are broke but we still listen to them?  Hilarious.  Only to be surpassed by them upgrading and downgrading eachother!!!  Think about the psychology here...........GM ran itself into the ground fair and square.  If they issued weekly directives on everything from managment guidance/advice/suggestions, 'research' on earnings/inventory/sales estimates, smarty pants articles about trends in the industry...everyone would laugh and dismiss them.   How the banks continue to be taken seriously is beyond me.

Spooky Polish's picture

Big money = big serious 

Big Fiat = serious fail 

SheepDog-One's picture

Why do we keep listening to those who fail the most? Oh wait I remember, because of their 'talent'. Remember thats why they said the banks cant take a hit years ago....why, they wouldnt be able to replace all that top TALENT! Folks, we've been Jewed.

hugovanderbubble's picture

Sarkozy please tell us , the World, where has the money from Emporiki Bank( Greek Credit Agricole Bank) gone? ------------------FIRE PARIS---BURNING ATHENS

Christoph830's picture

Bravo, Tyler.  Bravo.

electricgorilla's picture

One bank of many teetering on the edge of not only a liquidity crisis but an insolvency crisis.

On a side note, kudos to Zerohedge for the great market leading insightful info. I've been getting most of my financial news from here as of lately and happened to view some stuff on CNBC. Going back to that website was like taking a step back into the Ice Age with a hint of comedy. Pitiful if you ask me.

Seasmoke's picture

there is a crazed lunatic at the controls and the rest just sit back and hope it works out for him

SheepDog-One's picture

No one does anything, just marveling at their captors.

Gee, I wonder what the insane lunatics next move will be? Shoot another dollar hostage?

Carlyle Groupie's picture

I hope for a US taxpayer bailout of all French banks. It's time we reward these people for the fast food marvel; fries.

Which to date has added 19% yoy to US GDP.

Scalaris's picture


O/T : Sky News - UK Banks Told To Plan For Eurozone Split

Britain's biggest banks have been urged by the City regulator to prepare for a break-up of the eurozone. The head of the Financial Services Authority (FSA), Hector Sants, has told financial institutions to accelerate plans for a separation of the single currency area.

Senior excutives from Barclays, HSBC, Lloyds Banking Group, RBS, Santander UK and Standard Chartered were given the warning at a private meeting with the FSA boss.


Joe Sixpack's picture

I just heard on National Puking Radio (NPR) that they "probably just avoided a Lehman like event".



Sandy15's picture

MF Global started the majority of this.  I believe people are getting their money out after Jon Corizine stole money from customers but is still walking FREE because he is a DemoRat.

SheepDog-One's picture

Sure they avoided another total collapse...for a few days anyway.

Everybodys All American's picture

When will a major ratings agency decide France should lose the AAA rating? Sean Egan s not a major btw.

Who are the counter parties to Bank X? That is going to be the major story. One bank could set the whole panic in motion? Hedge accordingly.

justanothernerd's picture

Go get a job at Goldman and that information will probably be in your training packet.

Tsar Pointless's picture

Meanwhile, OT, but the Bloomberg Consumer Comfort Index for Nov. 27 was released, and once again, it is below -50, dropping to -50.2 from -50.1.

I think there has been just one week since late September that this index hasn't been below -50.

DeadFred's picture

It's hard to follow the colors so who is in 2nd place BofA or SocGen? I thought it was interesting that the Fed move was right after BAC dropped below $5. But course everyone knows their financial situation is just fine.

lolmao500's picture

Now won't be long before traders pick up on that and destroys what's left of Credit Agricole.

Mike2756's picture

Is that bac running a close second?

Christoph830's picture

We need to find out who is the AIG this time around.

Who's writing all the CDS?

prodigious_idea's picture

ZH, like a dog on a bone when it smells something funny.

rambler6421's picture

Doesn't Mike Mayo work there?

lolmao500's picture

Deutsche Bank are really insane... Leveraged 62 times with 2+ trillion in assets... crazy bastards.

When they go tits up, Germany is screwwwwwwwwwwwwwwwwwed.

bbelux's picture

Hmm considering the ration only for ACA FP Equity is partial. ACA is only one part of the listed credit agricole vehicle. have a look at CNF CAF CRBP2 CCN CRAV CRLA CRAP (no joke) CIV CMO CRLO CRTO CAT31 CRSU.

The so called "caisse" around the listed ACA stock are liquidity providers to ACA, in that extent I think Tangible equity should be adressed in another way

Hohum's picture

Liquidity down your throat of last resort?  It is never "last resort" for the Fed--there's always another scheme.

GMadScientist's picture

Comment dit-on "Lehman" en français?

Scalaris's picture

Was it SocGen or CredAg that was leveraged by 50X, and how close would that be for it to become the next X bank event?

slewie the pi-rat's picture

i generally don't approve of any balance sheet leverage past 50:1

if i could just see their 0ff-balance-sheet "derivatives & SIVs" i'm sure they would look much stronger

i guess we are gonna spend the foreseeable future looking @ one damned zombie after another...

lQQk!  a zombie bank!  full of highly-paid & -bonused banksters!  if we don't keep shoveling them money, the sky will fall!  just ask them!

lolmao500's picture


if i could just see their 0ff-balance-sheet "derivatives & SIVs" i'm sure they would look much stronger

Riiiiiiiiiiiiiight. Sorry but derivatives won't get paid once it starts going south.

SillySalesmanQuestion's picture

A tip of the hat Tyler,,,great job!

alpharack's picture

Markets are devouring dollars like there has never being supply of dollars. Expect the knee-jerk reaction to go on.

Chicago bear's picture

Best analysis and news anywhere. Hear none of this anywhere else. Do radio news announcements all get printed and distributed from the same place? Even independent news is not up to par with ZH.

bbelux's picture

From the US the Credit Agricole core-sattelite funding model may sound strange. But ACA is maybe the biggest bank in terms of deposits in France. I am not working there :-) But just to be clear, ACA is more the Investment Bank vehicle than the retail vehicle. In that extent things are pretty normal. CA CIB as shown on the graph is a small player in the US market, so this, in my opinion, is not relevant. Bank X should be elsewhere. Is the Dexia case closed? 

onlooker's picture

I was reading yesterday that some Government computers are blocked from ZH as well as Survival Blog, and I Hate the Media.


It seems we are all naughty, in the eyes of Big Bro.

fgambs's picture

According to anoher serious economist, who has been monitoring (and exposing!) most TBTF banks leverage for years, Credit Agricole leverage is rather in the low 30x range, which is only half that bad.


The worst bank's leverage stands at 50X, for SocGen.