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Germany Planning For Commerzbank Nationalization

Tyler Durden's picture




 

That Commerzbank, effectively Germany most insolvent lender (after the bank that shall not be named because if it falls, so goes Europe) and the first international bank scrambling to demand Discount Window cash from the Fed not in 2008 but all the way back in 2007, is broke is no secret. The only question was when will the bank which is a pseudo-TBTF, be nationalized. According to Der Spiegel the time is rapidly approaching. Specifically, "Germany's government is preparing plans for a potential nationalization of Commerzbank AG, in case the Frankfurt-based lender isn't able to raise additionally needed capital, German magazine Der Spiegel reports Sunday, citing government sources. Germany will reactivate its bank bailout fund, SoFFin, to acquire additional shares in Commerzbank if the bank hasn't raised necessary capital by next summer, according to the report. Germany already took around a 25% stake in Commerzbank to keep it afloat during the financial crisis following its acquisition of Dresdner Bank. According to the report, it is assumed that the majority of new shares would fall to the government in the event of a capital increase for Commerzbank. Germany has ruled out taking over Commerzbank's Eurohypo public finance unit, which it is required to sell to fulfill a European Union restructuring mandate tied to its use of state aid, according to the report." And so the world's most undercapitalized banks as so often demonstrated by Zero Hedge continue dropping like domino. Below we recreate the most recent list of Tier 1 casualties (seen most recently when exposing Credit Agricole as one of Europe's most dire casualties of a USD funding shortage), or banks that have the lowest capitalization, and thus highest leverage ratios in the world. If we were betting people, we would say that Deutsche Bank (and Postbank), Credit Suisses and BNP may well be next...

 

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Sun, 12/04/2011 - 12:10 | 1943920 cossack55
cossack55's picture

It seems the Germans are prone to anything that involves nationalizing, nationalist, nationalism.  Flawed historical character trait?

Sun, 12/04/2011 - 12:14 | 1943933 GeneMarchbanks
GeneMarchbanks's picture

In our world of 'market' fundamentalism, I see any kind of return to national identity as positive. I mean, are Greeks really Greeks or IMFers?

Sun, 12/04/2011 - 12:24 | 1943966 Manthong
Manthong's picture

Don't forget the socialist part.. national, socialist..

and they are all pretty good workers, too.

Moves towards more nationalism in a globalist tending environment is a good direction just as more individualism in a socialist tending environment is.

Sun, 12/04/2011 - 12:29 | 1943998 French Frog
French Frog's picture

That's uber-bullish news, right

;-)

Mon, 12/05/2011 - 05:26 | 1946030 philipat
philipat's picture

@Manthong

With respect, that is a truly ignorant comment.

My Grandfather (Infantry WW1) and my Father (Air Force Pilot WW2) were both killed fighting Germany. Today, I have many German close friends and I admire German culture, German technology and design. Young Germans are very nice people who, perhaps because of the past, are amongst the most liberal Europeans.

Sun, 12/04/2011 - 12:50 | 1944082 economics1996
economics1996's picture

We know this is falling apart, but will some asshole pick a fight?  Are the Chinese so fucking stupid to stick up for Iran?  The Russians? 

I think the hot spot will be the USA.  When our Feds come undone there is a lot of hidden animosity in the tribes from years of repression of capitalism, cartelization, affirmative action, and immigration.  Quite the volatile cocktail that is a few years from being unleashed.

Learn how to hunt fools.  If you perfect your killing skills...

http://www.youtube.com/watch?v=EjYLRxHWKiQ

 

http://www.youtube.com/watch?v=O5gsclfUhp0

Sun, 12/04/2011 - 12:57 | 1944104 economics1996
economics1996's picture

Yugoslavia.

Mon, 12/05/2011 - 05:30 | 1946034 philipat
philipat's picture

The Chinese get a lot of their oil from Iran. Like the US, China needs natural resources and will get them where it can. Next question?

Sun, 12/04/2011 - 16:06 | 1944621 CPL
CPL's picture

But I just made an IMF salad and a IMF bun.

Mon, 12/05/2011 - 02:26 | 1945921 Totentänzerlied
Totentänzerlied's picture

Neither, they're human beings.

Sun, 12/04/2011 - 18:18 | 1944937 covert
covert's picture

there is a covert reason behind this. it involves German national security.

http://expose2.wordpress.com

 

Sun, 12/04/2011 - 23:21 | 1945660 Buck Johnson
Buck Johnson's picture

They are trying to delay the inevitable, but it's pulling them and us kicking and screaming to eventuality.

Mon, 12/05/2011 - 02:46 | 1945933 Totentänzerlied
Totentänzerlied's picture

Nietzsche says, quite presciently, of German national character:

"“Practice loyalty and for loyalty’s sake risk honor and blood even on evil
and dangerous things” – teaching themselves thus another people con-
quered themselves, and thus conquering themselves they became preg-
nant and heavy with great hopes."

("“Treue üben und um der Treue Willen Ehre und Blut auch an böse und fährliche Sachen setzen“: also sich lehrend bezwang sich ein anderes Volk, und also sich bezwingend wurde es schwanger und schwer von grossen Hoffnungen." Also Sprach Zarathustra, Erster Teil - Von tausend und Einem Ziele)

Mon, 12/05/2011 - 05:15 | 1946020 philipat
philipat's picture

Actually, no. Germans are very pragmatic and sensible people. When push comes to shove, they can more easily be persuaded to bail out German Banks than throwing more money down the black hole that is "Club Med". I agree to the extent that it is a better option, but an even better option would be to allow the Banks to fail. In summary, fuck the Banks and the Banksters. We don't need them and there are too many of them, so let them fail. They made bad investment decisions and should face the consequences.

Sun, 12/04/2011 - 12:10 | 1943921 GeneMarchbanks
GeneMarchbanks's picture

GermAA-ny! No!

Sun, 12/04/2011 - 12:10 | 1943922 Triple A
Triple A's picture

Dropping like flies

Sun, 12/04/2011 - 12:15 | 1943940 Dick Darlington
Dick Darlington's picture

It may be time for Germany to take the mark back, take care of itself and leave the insolvent zEurozone to take care of themselves. Finland is contemplating it's options if (more like when) they would take the old finnish mark back. (I posted a Google translated story from finnish press earlier today abt it.)

Sun, 12/04/2011 - 13:12 | 1944166 Watson
Watson's picture

Makes sense to me, and probably also to most German voters.

But Frau Merkel really does believe in all this European unity, no more wars with France, etc., and that the Euro is the way to accomplish this.

However, no need to worry.
Merkel also knows that it is political suicide for her to put more German resources behind any bailout without serious (ie German policed) national budgets.

If she got this, Euro probably wouldn't need bailout using German resources anyway.

But she won't get it, so Euro will fail (but she will have a clear conscience), DEM will return, and her party is the 'party of the return of the DEM', and because of this maybe starts winning elections again...

Sun, 12/04/2011 - 12:15 | 1943941 Council of Econ...
Council of Economic Terrorists's picture

Bullish for green shoots

Sun, 12/04/2011 - 12:16 | 1943945 RobotTrader
RobotTrader's picture

Nationalization of entire industries in the U.S. back in 2009 kicked off one of the biggest stock market rallies of all time.

It removes a huge amount of uncertainty from the market.

Will this time be any different?

Sun, 12/04/2011 - 12:18 | 1943951 GeneMarchbanks
GeneMarchbanks's picture

On cue stupidity. It's like clockwork with you.

Sun, 12/04/2011 - 12:19 | 1943953 Sudden Debt
Sudden Debt's picture

Probably... It's just fucking weird that state intervention in our 'free economy' is the only thing that keeps market affloat these last 5 years...

Sun, 12/04/2011 - 12:27 | 1943992 Council of Econ...
Council of Economic Terrorists's picture

Which means it's all phony prosperity. Inflated, debt ridden, and debased dollars or it's taken from someone else which doesn't make anyone better. Yet the sheeps will vote their own slavery. Maybe the Founders were on to something by limiting suffrage in some fashion.

Sun, 12/04/2011 - 13:18 | 1944188 wandstrasse
wandstrasse's picture

well said - not only the absurd wealth of 0,0001% came out of the printing press, also European/American Joe Sixpack's wealth (which is rapidly becoming history). When all money is debt, all real value creation by human labour disappears unrecognizably in this sea of debt.

Sun, 12/04/2011 - 13:44 | 1944265 I am a Man I am...
I am a Man I am Forty's picture

Markets would be just fine if you let the large financials go out of business when they should have and let the shit hit the fan once.  Now it's going to hit the fan a hundred more times.  As long as there are outrageously levered large financial institutions we will have volatile markets.  We've had state intervention for as long as I can remember and the markets have gone nowhere in 10 years.  I would argue that state intervention is holding the markets down.

Sun, 12/04/2011 - 12:44 | 1944062 DoctoRx
DoctoRx's picture

GIGO.  Fannie/Freddie were nationalized early Sept if memory serves.  Boy did that kick off one of the biggest stock market . . . oh yes, down 30% in one week.  Your bad.

Sun, 12/04/2011 - 13:18 | 1944186 GMadScientist
GMadScientist's picture

Look at that GM stock just soar!


Sun, 12/04/2011 - 13:52 | 1944292 kito
kito's picture

Well robo, considering italy spain portugal greece etc cant afford to absorb the losses of their to be newly nationalized but broke banks, leading to further and quicker sovereign downgrades, leading to worsening bond yields, leading to sovereign defaults, id say it might be different this time.

Sun, 12/04/2011 - 12:16 | 1943946 Sudden Debt
Sudden Debt's picture

This will probably be bullish once again....

Sun, 12/04/2011 - 12:21 | 1943960 magpie
magpie's picture

unless it is denied. or maybe even then, too.

Sun, 12/04/2011 - 12:25 | 1943981 Sudden Debt
Sudden Debt's picture

If denied it's over and you'll get 2 euro's for a dollar. That won't happen

Sun, 12/04/2011 - 12:23 | 1943969 spacecadet
spacecadet's picture

This must be a mistake. This bank passed the last stress test with flying colors.

Sun, 12/04/2011 - 13:56 | 1944303 ucsbcanuck
ucsbcanuck's picture

Like Dexia did...

Sun, 12/04/2011 - 12:26 | 1943987 Slowpoke Rodriguez
Slowpoke Rodriguez's picture

It appears our friends in Germany are stumbling a bit.

Get down to the dealerships and buy the Mercedes, BMWs and Audis you've always wanted. We have to do our part to support the Kraut takeover of the EU.

Sun, 12/04/2011 - 14:47 | 1944413 Rainman
Rainman's picture

nicht lustig

Sun, 12/04/2011 - 12:35 | 1944023 vegancapitalist
vegancapitalist's picture

"Citing government sources"

 

WHO???

Sun, 12/04/2011 - 12:43 | 1944058 Snakeeyes
Snakeeyes's picture

So, Germany and France think they can save the Euro when C-Bank can't stand on its own? This is CRAZY!

Can Europe Control Its Spending And Save The Euro (or Gyro)? Don't Look To China As A Role Model For Economic Growth Either

http://confoundedinterest.wordpress.com

Sun, 12/04/2011 - 12:45 | 1944066 PontifexMaximus
PontifexMaximus's picture

This is bullish news, but first just kick out the dumbass martin blessing and the stock will skyrocket!

Sun, 12/04/2011 - 16:27 | 1944675 Gavrikon
Gavrikon's picture

Why, specifically, is he a dumbass?  Inquiring (investing) minds need to know.

Sun, 12/04/2011 - 13:06 | 1944139 El Gordo
El Gordo's picture

Truth is that they cannot afford to let it die because of what the autopsy would reveal.

Sun, 12/04/2011 - 14:04 | 1944321 slewie the pi-rat
slewie the pi-rat's picture

i think they should merge it with dexia

sarko & angela could celebrate like they were having a baby!

Sun, 12/04/2011 - 13:13 | 1944171 robertocarlos
robertocarlos's picture

There's a next summer? Thank God.

Sun, 12/04/2011 - 13:23 | 1944201 i-dog
i-dog's picture

It could be an untidy summer ... there are lots of cans being kicked into it.

Sun, 12/04/2011 - 14:08 | 1944333 slewie the pi-rat
slewie the pi-rat's picture

don't get your can recycled in the short run, i_dawg

we should be off-road by next summer and the fuking cans will probably be a fond memory...but you know i'm such an optimist...

 

Sun, 12/04/2011 - 23:33 | 1945684 i-dog
i-dog's picture

I think they're doing everything possilble to kick every conceivable can into late summer (after the London Olympics) then ... ka-boom! ... global crackdown and no election for the US sheeple.

But your optimism may prevail....

Sun, 12/04/2011 - 13:29 | 1944222 Bam_Man
Bam_Man's picture

This means that the Germans are getting ready to either

1) Leave the Euro themselves

or

2) Kick the Greeks out now and possibly the Italians later.

Sun, 12/04/2011 - 14:23 | 1944370 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

My guess would be booting all of the PIIGS out of the Euro.

Sun, 12/04/2011 - 16:29 | 1944470 WVO Biker
WVO Biker's picture

Following a government takeover reply to them: No, thank you HERR BANKBEAMTER I do not want the ALLIANZ Kapitalanlage that you sell me with Commerzbank short term credit financing.

Sun, 12/04/2011 - 15:22 | 1944487 Mike2756
Mike2756's picture

I thought they didn't have the money to recap the banks.

Sun, 12/04/2011 - 17:48 | 1944867 swissaustrian
swissaustrian's picture

I´d rather look at TCE/RWA than at TCE only. A study by McKinsey figured out that banks with a TCE/RWA ratio below 7.5 % were most likely to get in trouble in 2008:

Banks with a TCE to RWA ratio of less than 6.5% to 7.5% accounted for a disproportionate share and the vast majority of distressed banks. Approximately 21% of the largest global banks became distressed during the crisis. Banks with a TCE to RWA ratio of less than 6.5% prior to the depths of the crisis had a distress rate of 33% and made up 58% of distressed banks. Banks with a TCE to RWA ratio of 6.5% to 7.5% had a distress rate of 25% and, together with those with a lower ratio, made up 83% of all distressed banks.

http://www.mckinsey.com/App_Media/Reports/Financial_Services/Capital%20ratios%20and%20financial%20distress.pdf

So KBC and Credit Agricole have a high probability of getting in trouble.

Sun, 12/04/2011 - 19:10 | 1945064 Snakeeyes
Snakeeyes's picture

We can't rely on public sector bailouts anymore.

Look at charts of ineffectiveness of more debt from Treasury or Fed policies.

Have The Fed and Treasury Run Out of Magic Bullets? It Takes a Village … to Destroy a Global Economy

http://confoundedinterest.wordpress.com

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