The Corporate Bank Run Has Started: Siemens Pulls €500 Million From A French Bank, Redeposits Direct With ECB
In a shocking representation of just how bad things are in Europe, the FT reports that major European industrial concern Siemens, pulled €500 million form a large French bank, which is not BNP and leaves just [SocGen|Credit Agricole] and deposited the money straight to the ECB. The implications of this are quite stunning, as it means that even European companies now refuse to work directly with their own banks, and somehow the ECB has become a direct lender/cash holder of only resort to private non-financial institutions! As Bloomberg reports further on the FT story, in total, Siemens has deposited between 4 billion euros and 6 billion euros, mostly through one-week deposits, with the ECB, FT says, cites the person. It isn’t clear from which bank Siemens withdrew its deposits, per the FT... but it is hardly difficult to figure out. BNP Paribas isn’t the bank involved, FT reports, cites unidentified person familiar with the bank. This story should be having far more impact on the EURUSD than any rumors about Greece lying it will fire all of its public workers only to make sure Eurobanks can survive one more day.
More from the FT:
The company’s move came almost a year after Europe’s largest engineering conglomerate prepared itself for a future financial crisis by launching its own bank, an unusual move for an industrial group outside the car sector, where companies run big car financing and leasing businesses.
In an interview last December, Roland Châlons-Browne, chief executive of Siemens’ financial services unit, said its banking business would enable the group to tap the central bank for liquidity and deposit cash at the ECB.
“In the case of another financial crisis, we will be able to broaden our flexibility and take out risk with our own bank,” Mr Châlons-Browne said at the time.
Siemens does not only use the ECB as a haven; it also gets paid a slightly higher interest rate than it would get from a commercial bank.
The ECB paid an average interest rate last week of 1.01 per cent for its regular offers of one-week deposits, under which it withdraws from the financial system an amount of liquidity equivalent to the amount it has spent on eurozone government bonds.
Update: reader Arnold informs us that Siemens was lucky enough to be the functional equivalent of a Goldman Sachs ATM (you know, Goldman as an FDIC insured "depository" organization) when back in 2010 it got a bank license:
At the end of 2010, Siemens was granted authorization by the German Financial Supervisory Authority (BaFin) to operate banking business in Germany.
Through its loan business, Siemens Bank expands the product range of Siemens’ Financial Services unit, especially in sales financing. In addition, the deposit business of the bank increases flexibility in the area of corporate financing and provides the opportunity for the further optimization of risk management.
Siemens Bank is based in Munich and will be located in Germany only for the time being. Cross-border activities are planned in future. European countries will be the initial focus of such activities. Select emerging markets are additional focal points.
Siemens Bank is a subsidiary of Siemens AG and acts as an independent company. Nonetheless, it profits from its inclusion in the network of Siemens Group’s financial services companies. The bank employs about 100 people, mainly experts from the areas of risk management and risk controlling as well as specialists from loan origination & structuring.
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market doesn't care
And why would they? The ECB will just turn around and use this money to buy bonds... issued by the bank Siemens has just pulled it out of. At 40:1 leverage.
I'm sure the momos would say the death of SocGen is already priced in.
Until it isn't!
turbo timmy was just on bloomberg and everything is strengthened in the united states so there is no need to worry
Oh good, then it must be a good time to raise taxes by $1.5 Trillion.
Beware the bankster shills:
http://www.youtube.com/watch?v=eWYW0H7-c_w&feature=player_embedded#!
Back to Basics
Here's the question the sheeple need to start asking......
If X is a sovereign country then it should have the power to coin its own money. So why does it "borrow" anything from anyone?
No problem can be solved until it is reduced to some simple form. The changing of a vague difficulty into a specific, concrete form is a very essential element in thinking.
J. P. Morgan
To keep them from coining too much too fast. It's all borrowed from the taxpayers labor. It's like the SCOTUS is supposed to keep the laws Congress passes in check. Theoretically, they would tell the Congress...no, you've already borrowed too much...you'll have to wait until you've paid that other thing you "just had to have" back first.
Yep, and none of these banks are undercapitalized, especially BAC. Now where have I heard this all before?
turbo timmy was just on bloomberg and everything is strengthened in the united states so there is no need to worry
SocGen: 50x leverage to be exact.
Of course is there any real difference in the end? They won't let SocGen fail. And I wonder how many execs there have also worked at the ECB, and vice versa?
SCGLY who (besides the boyz from jersey) ever heard of a bank that trades on the pink sheets?
They launched a bank a year ago, that makes them a financial institution. Increasing their deposits with the central bank could mean they're looking to expand their banking business. Nothing to see here, move along.
That's right BigJim. Let's get the facts straight people- when you trade paper for paper, the status quo remains. That is, of course, until inflation eats away at the fiat standard.
You want a real run on the system?
BUY SILVER
It's a very significant development and good reportage; I reported here a couple of days ago that WSJ Live from London was carrying this as a story; "various, "large; Euorpean corps. removing funding from large French Banks. Giant Sucking Sound. Not good. Possibilitiy market will care big time; waiting and watching.
Who wants to be the last one out?
How long does it take to print 500 million euros anyway... An hour?
according to Benocide the ills of too much money printing can be reversed in 15 mins. The initial printing is instantaneous and of no concern to a central banker
ask Switzerland
Every crowd has a silver lining.
P. T. Barnum
I did everything by the seat of my pants. That's why I got hurt so much.
Evel Knievel
I got a kick out of having a big bankroll in my pocket. Even if I only made a couple hundred dollars, I'd always keep it in fives and tens so it'd look big.
Mickey Cohen
No one is entitled to the truth.
E. Howard Hunt
Yep ---
I knew the big corps were moving their money --- But i've got to be honest --- i never thought they would (could) move directly to the ECB. Where do I sign up for my account at the fed???
Great place to put your $ if you never want to see it again.......Oh yea...I forgot they print $ don't they!!
You have to incorporate as a bank- as the article notes Seimens did.
Which is not actually a terrible idea, if you have a lawyer that is willing to arrange it for you. It is not even necessary to have clients outside of your own family- if you do it correctly, it is possible to incorporate a family bank with FDIC insurance and become a member (however minor) of the Fed. If you can get that far, you can use the discount window and create your own loans with fractional deposits at the Fed rate- far cheaper than using an outside bank, but you would need to use it enough to justify the legal and accounting expenses associated with maintaining the corporation.
Of course, the odds of getting a 1% reserve are pretty slim if you are not one of the big boys, but even a 25% deposit rate would allow you to print your own money on demand.
All that being said, I would imagine that the process is not as easy as it sounds, and I'm sure you have to have a sizeable amount of capital to begin with.
did they move the money out of fear, or because the ecb is offering higher deposit rates?
"teaser rates"
With the ECB, they get "Europoints." Watch them grow, cash them in for valuable prizes and travel rewards.
I bet even DSK has his money out of french banks.
I agree.....NO DOOMSDAY TODAY!!!!
RoboTarder considers today a 0.8% gainer, since the U.S. markets closed 0.8% up off of their intraday lows.
RoboTarder is killing it.
Holy Shit..
Neither does the Honey Badger. It doesn't give a shit.
http://www.youtube.com/watch?v=4r7wHMg5Yjg
market doesn't care
Cash is Trash, accumulate Gold, next target is 2200 in the short term, medium term 2500!!!!!!! Any Comments appreciated
Define "short term" and "medium term"
But there was a phone call! Didnt Siemens get the word that all is well?
Of course all we heard was the Greek version of that conference call...oh yeah somebody cue the riots.
You may call this European Integration.
Disntergration
Divided we stand and united we fall? That should be the EU's slogan.
Hmmm, I wonder I should deal with ECB directly instead of WFC.
The story of how SocGen was nationalized... {yawn}
also the beginning of the story of how EVERYTHING private (ie for profit) will be nationalized..
But they had to do something! The childrens!
How about that ES. Not making anyone in credit much happier today though :/
Credit is happy and running normal. Equities on the other hand have offically suffered brain damage.
If by happy you mean generally wider, with ugly spreads, and really small clips going off...then yes. All is not ok in bond-land either.
They're not Canadian Womens; how can they be truly happy ? No seriously; yes.
They should have purchased physical Gold with it. Not one single Bank in the world is safe.
Maybe the ECB is their gold broker.
that brings to mind an old English Sarcasm; "And the Best of British Luck to you, Lad". Bout all you could say to someone thought the ECB represented Gold Stabilized Currency.
Centralized Mattress Stuffing
<Spit Take> ROTFLMAO !!!
On the Toika call, Greece appears to be attempting to delay the announcement until after the NA markets close. Why would they do that if they knew the news would be positive?
As a German firm Siemans likely has had a inside heads up on what this way comes.
It really is that simple.. any parent out there sees all these bullshit delays for what they are lol
Yea another after the market close news delay no doubt, in order to be swept under the rug overnite and a new carrot and stick thought up for tomorrows gap up open.
Nevermind just Saturday Germany said it has no support for printing further, or backstopping Greece debt.
European Banks are fine.*
*Famous last words.
Yeah, and I won't come in your mouth either.
and the check is in the mail.
I'll only put the tip of it in.
This won't hurt a bit.
I get tested every six months...
We're from the government and we're here to help.
--and you can rest assured that everything will be OK.
Don't worry Hun, I had a vasectomy...
We'll fix the sound in the mix...
"the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained" Ben Bernanke 3/28/07
"we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited” Ben Bernanke 5/17/07
or, you can't get pregnant if you're on top.
There are no Americans in Baghdad. They are on the run everywhere.
I did send you an email about that.
Actually that one is true, as long as they're both dudes.
At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. - Fed chairman, Ben Bernanke, Congressional testimony, March, 2007
Truthie, we had STRESS TESTS remember. This year, last year and the findings were that it's all good, all fine baby. 3,5 billion of capital needs among the 90 or so "banks" tested.
We also had a bank run whereby deposits went straight into the TBTF after it was announced/expected they would be backstopped no matter what... no reason Europe should be different... but, I suspect the ECB will have to come out with some type of announcement similar to the FDIC whereby the guaranty on deposits was strengthened/increased, etc. They'll have to make some type of administrative maneuver or else all of the money will flow to the last backstop...
I thought this same system was going to be used to suck all the decent assets of local and regional banks into the TBTF to shore up the balance sheets for pennies on the dollar... I guess it could still happen... or, a variation of it may happen in Europe... good times.
Im really tired of this whole thing that Greece is the black hole of all the Eurozone and world troubles. I remember about a year ago Putins advice to Greece was to tell the ECB and everyone else including the US to go piss up a rope...hell here in the US we;ve got STATES with bigger debt problems than Greece!
Greece is the "rogue trader" in this scenario.
It's just another way to say, Epic Fail. Slowly, step by step, still time to make our getaway, Kemosabe.
"what do you mean "our" getaway, paleface?"
Interesting. Think it's the beginnings of European bank runs? You know what they say, "It's never good to panic. But, if there's going to be a panic, it's best to be first to do so."
judging by this and 3 month, 6 month tresury yields, the big boys are continuing the run for cover.
i just dont understand the drop in PM's, maybe this has something to do with more than manipulation and trying to prop up currencies? help me with this.
Gold priced in paper currency is sensitive to paper currency liquidity, though less so than equities. Expect it to be rangy until Benny's next liquidity dump. If your trading the paper market, selling OTM puts/covered calls for the weeklies, and some spec long OTM calls around the December 30 opex is a good way to play this.
Thanks, funk
i like physical silver, i dont believe in paper
thank you, again
If you're such a BA gold bug who looks at how much phyz you can buy with an ounce of Franklins then why do you care what the broken paper market thinks about the value of your gold?
Personally I think the Gartman margin call scenario has merit. Gold went down the last time we had a panic. Remember 2008? It wasn't that long ago.
Pierre Lassonde: 20% gold correction, then BOOM.
http://www.kitco.com/falltour2011/
And if you don't like that prediction, just dig Camboner's amazon lips and chin that looks like it can take some abuse. Love me some Kitco.
i bookmarked it
thanks, park
p.s. kitco rocks!
24hgold.com is another good one, their widgets are the ones I use at my blog. Note the "h" in their name!
hey, bearing, got your post yesterday, good stuff.
thanks for the info
Good point, cvi
I just wanted to know if you guys saw something I didn't.
Thank you
--China commenting on the rationale behind its dumping of the dollar.
Late afternoon ramp job is being hampered a little... probably only for 10 min. must... close... above... 1200
Reggie Middleton has been talking about this. Nice call, Reggie.