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Two More European Banks Nationalized Following Dexia's Example

Tyler Durden's picture


Thank god for Dexia's implosion this morning, or else the world would be forced to pay attention to the fact that Greece is still as insolvent as ever and still without a formal Troika approval for disbursement of the critical 6th tranche that Greece needs or else. Also, were it not for Dexia someone might notice that two other banks bit the nationalization bullet in the past 24 hours as the contagion, not from Dexia, but from the fact that there is simply not enough money around: as a result Danish Max Bank and Greek Proton Bank just handed the keys to their HQs to their primary regulators, with the management teams quietly riding off into the sunset. They are the lucky ones: in a few months it won't be nearly as easy to find "nationalization" funding and keep your depositors away from the "tar and feathers" toolshed.

From Reuters on Proton:

Greece's central bank said on Monday it activated a bank rescue fund to save Proton Bank, effectively nationalising the small lender that is under investigation for possible violation of the country's money-laundering laws.


It is the first lender to be nationalised under the Financial Stability Fund (FSF), a safety net set up by Greece and its international lenders for banks that need to recapitalise but cannot raise funds in the market.


Analysts said the move had to do with Proton's own business problems and not with the country's severe debt crisis.


"After recommendation by the Bank of Greece, the Finance Ministry proceeded to apply to Proton Bank a new law about the restoration of banks," the Bank of Greece said in a statement.


The Bank of Greece said Proton was split into a "good bank" where all of its private sector, government deposits and sound assets were transferred. The good bank will have the FSF backstop as its sole shareholder and retain the trade name Proton.


"The 'good bank' is well capitalised, with a capital adequacy ratio that is well above the regulatory threshold. It has access to euro-system liquidity through the Bank of Greece," the central bank said.

And from Bloomberg on Max:

Max Bank A/S became Denmark’s first insolvent lender to test a bank package designed to sidestep the country’s bail-in laws after the state was able to find a buyer and avert senior creditor losses.


Sparekassen Sjaelland A/S will take over parts of Max Bank after it was declared insolvent by the Financial Supervisory Authority, the government said late yesterday. The bank package under which the takeover will be engineered allows Sparekassen Sjaelland to tap Denmark’s guarantee fund to subsidize the purchase, while the state will take on some bad loans. Senior creditors will be spared, while shareholders will lose their investments.


“I’m pleased that the new consolidation initiatives, which are backed by a broad majority in parliament, have proven workable,” Economy and Growth Minister Ole Sohn said in a statement on the ministry’s website. “This solution means that no depositors or other simple creditors in Max Bank will lose money.”


The maneuver allows Max Bank to avoid Europe’s toughest bank resolution laws, which had led to senior bondholder losses twice since February. Those credit events had left international funding markets closed to most of Denmark’s roughly 120 banks. Lawmakers last month passed the consolidation bill in an effort to avoid triggering more senior creditor losses and to help banks return to bond markets and generate funds needed to avoid a credit crunch.

"It's all Bush's Fault" - don't be confused and rush to judge the banks as being "insolvent" insolvent, there is a damn good reason why both banks went tits up, or so the regulators will tell you:

Proton's woes erupted this summer after it disclosed it was being probed by the central bank on money laundering violations related to transactions by its main shareholder.


"The activation of the Financial Stability Fund for Proton Bank has nothing to do with its exposure to Greek sovereign bonds but it has to do with its bad loans' portfolio," said a Greek-based bank analyst who declined to be named.




“Max Bank had fallen into a regrettable situation,” Sohn said. “The FSA’s inspection showed that the bank no longer lived up to its solvency requirements primarily because of its engagements within real estate.”


Sparekassen Sjaelland will take over all private and corporate clients at Max Bank with engagements of less than 5 million kroner ($900,000) a piece, the government said. The remaining commitments will be transferred to a unit of The Financial Stability Company, the state’s winding-down arm, it sai

Yes sadly, there always is a reason. In the meantime, the net resultis that "bailout" funds are becoming depleted, credit ratings are getting even more strained, and eventually even the whole "good bank/bad bank" paradigm which has suddenly taken Europe by storm will fail once the vicious math of continental bail outs hits home, and Europe's last attempt at kicking the can fails, as it will... In a few months.

But for now, it's rally monkey time, the only question is what is the half life of this particular global attempt at sticking one's head in the sand.


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Mon, 10/10/2011 - 07:02 | 1756782 papaswamp
papaswamp's picture

Algos won't notice...Rally and haircuts Bitchez!!!

Mon, 10/10/2011 - 07:10 | 1756783 GeneMarchbanks
GeneMarchbanks's picture

The market loved the Dexia deal so let's just nationalize it all.

'Proton's woes erupted this summer after it disclosed it was being probed by the central bank on money laundering violations related to transactions by its main shareholder.

 "The activation of the Financial Stability Fund for Proton Bank has nothing to do with its exposure to Greek sovereign bonds but it has to do with its bad loans' portfolio," said a Greek-based bank analyst who declined to be named.'

Even 'openly' criminal lenders are bailed out... nice.

Mon, 10/10/2011 - 08:10 | 1756892 TheFourthStooge-ing
TheFourthStooge-ing's picture

"The activation of the Financial Stability Fund for Proton Bank has nothing to do with its exposure to Greek sovereign bonds but it has to do with its bad loans' portfolio," said a Greek-based bank analyst who declined to be named.

The unnamed Greek-based bank analyst failed to point out that Greek sovereign bonds are a part of Proton Bank's bad loans portfolio.


Mon, 10/10/2011 - 07:03 | 1756785 achmachat
achmachat's picture

This just in:
KBL in Luxembourg bought by... wait for it... Katar!!!
Somebody is bank shopping over here!

Mon, 10/10/2011 - 07:16 | 1756805 GeneMarchbanks
GeneMarchbanks's picture

Qatar heart Europe. Makes for warm fuzzy feelings. Europe 60% off sale.

Mon, 10/10/2011 - 07:26 | 1756822 Schmuck Raker
Schmuck Raker's picture

Sure to be a winning investment. [eye roll]

Mon, 10/10/2011 - 07:04 | 1756787 Irish66
Irish66's picture

A fool and his money are soon departed.

Mon, 10/10/2011 - 10:54 | 1757458 Bananamerican
Bananamerican's picture

" the sands trickle off the eyelash of the camel, oh great ship of the desert!"

Mon, 10/10/2011 - 07:09 | 1756789 gojam
gojam's picture

"Proton's woes erupted this summer after it disclosed it was being probed by the central bank on money laundering violations related to transactions by its main shareholder."

Says it all really, doesn't it?

“Max Bank had fallen into a regrettable situation,” Sohn said. “The FSA’s inspection showed that the bank no longer lived up to its solvency requirements primarily because of its engagements within real estate.”

AKA, the Irish Disease.

Mon, 10/10/2011 - 07:10 | 1756794 Paralympic Equity
Paralympic Equity's picture

Tyler, it's rally monkey time only in the European markets that foreigners look at, but look at Austria and eastern Europe...they don't seem happy at all. Erste bank having a lot of problems in eastern Europe, and Italian banks following, just wait.

Mon, 10/10/2011 - 07:16 | 1756807 Gandalf6900
Gandalf6900's picture

As I said previously, Italian banks are FINE didn't you get the memo, even the mkt has confidence in the Italian Banks, until it doesn't

Mon, 10/10/2011 - 07:11 | 1756795 DogSlime
DogSlime's picture

Shouldn't CDS's be triggering all over the place after Dexia and now this?

Mon, 10/10/2011 - 07:25 | 1756819 Dick Darlington
Dick Darlington's picture

My guess is that it will be more of the same (fraud):

"Judge rules, no violation"

Mon, 10/10/2011 - 07:12 | 1756796 westboundnup
westboundnup's picture

Are countries nationalizing banks, or are banks nationalizing countries?

Mon, 10/10/2011 - 07:15 | 1756804 Gandalf6900
Gandalf6900's picture

good point, I've been trying to answer that question for a couple of days now...I think the answer is "our kids are getting raped"

Mon, 10/10/2011 - 09:44 | 1757169 j0nx
j0nx's picture

Only happening because the people allow it. OWS ought to be outside DOJ HQ and the SEC HQ in DC asking for all senior execs to come out and surrender to the American people for trial. Instead we piss and moan on the internet and march around wall street when most of the really guilty parties aren't even there any more.

Mon, 10/10/2011 - 07:12 | 1756797 Gandalf6900
Gandalf6900's picture

On this news and other alike Unicredit soared 30% in 2 weeks...makes a lot of sense!!!

Everything fixed, move along!!!

Mon, 10/10/2011 - 07:21 | 1756813 papaswamp
papaswamp's picture

Looks like the Danes are in serious trouble bank wise....

"The government last month passed Denmark’s fourth bank rescue package since 2008. The bill seeks to spur consolidation and help banks sidestep the country’s bail-in laws by subsidizing takeovers before a troubled lender collapses. The specter of senior creditor losses has cut off most of Denmark’s roughly 120 banks from international funding markets. About 75 regional lenders need either to be wound down or bought up, according to Henning Kruse Petersen, the chairman of the Financial Stability Company."

4th rescue package since 2008???? WTF batman?

Mon, 10/10/2011 - 07:24 | 1756817 Poor Grogman
Poor Grogman's picture

Wow this Euro experiment is going well now isn't it.

I can feel a Northern Rock moment coming on.

Mon, 10/10/2011 - 08:19 | 1756909 MsCreant
MsCreant's picture

Or the violence of the lambs? OWS gone baaahd:

Mon, 10/10/2011 - 07:24 | 1756818 Dick Darlington
Dick Darlington's picture

And of course all the recent failures in Spanish caja's have been shrugged off as transitory and meaningless. Simply stunning...

Mon, 10/10/2011 - 07:28 | 1756825 flyr1710
flyr1710's picture

can't wait for the compression trade on this event....boom!

Mon, 10/10/2011 - 07:29 | 1756827 johnnymustardseed
johnnymustardseed's picture

Europeans are stupid.. all you have to do to fix this crisis is lend them money at a quarter of one percent. Teach them to buy Greek bonds paying 40% and let them screw with the equity and PM markets. Problem solved!

Mon, 10/10/2011 - 07:31 | 1756830 Irish66
Irish66's picture

CDS please

Mon, 10/10/2011 - 07:37 | 1756834 oldman
oldman's picture

Wouldn't it funny if decades from today, we learn that the whole Ponzi collapse occurred from 'washing' the CIA's businesses?

Mon, 10/10/2011 - 07:40 | 1756839 The Onion Of Tw...
The Onion Of Twickenham's picture

So Proton has been bailed out while it's being investigated for money laundering. Just what the fuck do you have to do before you don't get a bailout?

Mon, 10/10/2011 - 08:55 | 1757008 BetTheHouse
BetTheHouse's picture

Become middle class.

Mon, 10/10/2011 - 09:46 | 1757178 j0nx
j0nx's picture

Oh hell yeah! Best comment of the day. This needs to get sent to everyone's Congress member.

Mon, 10/10/2011 - 07:40 | 1756840 s0lspot
s0lspot's picture

The humanity, The insanity...

Societal deconstruction in full march, the culprit is the victim and the victims are the culprits.


No matter how you look at it and what you believe, this is akin to some kind of societal satanic belief-system implemantation...poor kids won't be able to tell right (responsability, autonomy, value/wellness creation) from wrong (theft, lies and supreme irresponsability).


It's as if westcoast rappers (bitches, drugz, theft, "pop a cap") managed to reprogram the minds of washington politicians. Bad is Good. Wrong is Right (for them).



Mon, 10/10/2011 - 08:28 | 1756934 TheFourthStooge-ing
TheFourthStooge-ing's picture

In a world gone mad, lies are the truth.

In a world gone mad,up is down.

In a world gone mad, your mommy will rip off your head and feed it to the dog.

In a world gone mad, the leaders are evil puppets...


Mon, 10/10/2011 - 07:41 | 1756841 Volaille de Bresse
Volaille de Bresse's picture

We need our own Bernanke! Print 3 Tril of paper money, fill the gaps with them and voila!

Mon, 10/10/2011 - 07:46 | 1756850 Dick Darlington
Dick Darlington's picture


See, no worries at all. Everything is golden! No access to capital markets, bad loans soaring, cajas going under etc and still NO PROBLEMS!

Mon, 10/10/2011 - 07:47 | 1756852 kahunabear
kahunabear's picture

Risk on overdrive trade!

Mon, 10/10/2011 - 07:49 | 1756853 cbaba
cbaba's picture

Final countdown..

Mon, 10/10/2011 - 08:18 | 1756907 HoofHearted
HoofHearted's picture

This is ground control to Major Tom...oh wait, it was Thomas SARGENT that won the Nobel today. Congrats to a great scholar and a helluva guy. He spent an entire lunch shooting the breeze with me at a conference. Well deserving after work in five different decades...

Mon, 10/10/2011 - 07:53 | 1756862 pelagivore
pelagivore's picture

The real question is trying to understand when/how the bailouts will end.

Nationalisation must continue or the system fails and those in power lose their positions (a certainty), legacy (too late) and fortunes (unavoidable). That the system should have failed years ago which would have saved billions (trillions) and corrected massive imbalances is obvious but this reluctance to face reality surely serves as a template for the near future. The costs are now even larger so the incentive to avoid a correction is greater. Bailouts continue, money is printed and global growth is once again financed (or at least attempted). This time China is in a much weaker position... so success of this is less assured. 

The BoE has taken the first step in the latest round... ECB, PBOC and Fed are up next. Hyper-Keynesianism cannot be stopped (until the mob rips them to pieces of course). What a great time to buy gold for investors that have missed the last 10 years. 

Mon, 10/10/2011 - 07:55 | 1756865 Scalaris
Scalaris's picture

Today's menu: Nationalization with a touch of debt haircut, so take your seats ladies & gentlemen.

Mon, 10/10/2011 - 07:56 | 1756868 Which is worse ...
Which is worse - bankers or terrorists's picture

Clearly the answer here is to privatize all European pensions and let them play in the stock market. LOL :headexplodes:

Mon, 10/10/2011 - 09:29 | 1757115 MsCreant
MsCreant's picture

Bankolize everything. Bankolize NOW!

Bankolize everything. Bankolize NOW!

Bankolize everything. Bankolize NOW!

Mon, 10/10/2011 - 09:51 | 1757197 slewie the pi-rat
slewie the pi-rat's picture

Max Proton never rests till everything is Banko!

+++ msC!  sould like something they would do to a banking fabric to keep it from shrinking


Mon, 10/10/2011 - 08:06 | 1756881 somethingelse
somethingelse's picture

the good bank/bad bank "solution" panders to our human minds' love of dichotomies

Mon, 10/10/2011 - 08:09 | 1756889 disabledvet
disabledvet's picture

All eyes on Cyprus as the various wildfires become a conflagration.

Mon, 10/10/2011 - 09:58 | 1757222 Zero Debt
Zero Debt's picture

What's the difference between a bank and a government department?

Mon, 10/10/2011 - 10:13 | 1757280 eurogold
eurogold's picture

Isn't this evolving into the banking default scenario that happened in the U.S. recently? O.K. for other reasons, but still it all looks familiar. By the end of the week France should start nationalizing.

Mon, 10/10/2011 - 10:30 | 1757363 OffShorewHore
OffShorewHore's picture

Let them all nationalize as far as I'm concerned, more volatility in the markets -- short the usd/chf this morning -- means a better lifestyle in my P/L .

Mon, 10/10/2011 - 11:16 | 1757564 PulauHantu29
PulauHantu29's picture

Odd how this stuff never makes MSM headlines.

Thanks ZH!

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