Posted on 09/13/2011 10:01:08 PM PDT by bruinbirdman
Where now for European banks? Sir Howard Davies, former chairman of Britain's Financial Services Authority, said on BBC Radio's Today programme on Tuesday morning that he thought the French government was only days away from having to recapitalise the country's banking system for a second time. It's hard to disagree.
The panic seems to have been temporarily stemmed by a statement from BNP Paribas to the effect that it wasn't having the problems widely reported of finding dollar funding. There was also an emphatic denial of discussions over state intervention. But no-one is kidding themselves. Italy had to pay the highest spread since joining the euro to sell its bonds on Tuesday. There are growing fears over whether Europe's largest borrower can stay the course.
The eurozone sovereign debt crisis is meanwhile exacting a devastating toll on the European banking system as a whole, the UK included. With their high exposure to eurozone debt, the problem is particularly acute for the French banking goliaths, BNP Paribas and Societe Generale.
BNP alone has a eurozone sovereign debt exposure of some €75bn, amounting to roughly 6pc of total assets, including €14bn of Greek debt and €21bn of Italian government bonds. And that's just BNP. The other two major French banks, SocGen and Credit Agricole each have exposures of a similar order of magnitude. Collectively, French banks have €56bn of Greek sovereign bonds alone. They've so far only written down this Greek debt by around 20pc, or in line with the restructuring agreed at the time of the last bailout.
That's nowhere near mark to market. In the increasingly likely event of Germany kicking the Greeks out of the eurozone altogether, Greek debt will become close to worthless. Greece is already effectively a cash only economy. Most forms of credit has effectively dried
(Excerpt) Read more at blogs.telegraph.co.uk ...
The other possibility is the EU issuing eurobonds based upon the gold reserves of the EU member states (of which, of course, Germany leads in value of gold).
The fat lady is clearing her throat...
Merkel Will Press Obama And The Fed To Help Bail Out The Eurozone.
Lenin had no use for Russia's gold, either, nor the Tzar's crown jewels.
There's still a lot of wealth to be confiscated in EUSSR.
yitbos
Very temporarily ...
The sooner the world is free of mega banks the better. Too big to fail is too big to exist.
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