Category: Financial Institutions
Two Billion Dollars Lost because the FDIC Ignored United Commercial Bank’s Frauds
The good news is that we finally have the second group of indictments of senior bank officers. The prosecution involves officers of United Commercial Bank (UCB), a roughly $10 billion San Francisco bank that originally specialized in lending to Chinese-Americans and became primarily a commercial real estate (CRE) lender. The indictment deals only with the cover up phase of UCB’s senior officers’ frauds. I will show in future posts that the reported facts on UCB’s loans were consistent with accounting control fraud. The UCB case is so rich in lessons that it will take a series of articles to capture what the case reveals about the degradation of regulation and prosecution of elite accounting control frauds
Full Text: Moody’s downgrades Spanish savings bank CAM to B3;
On Friday, I asked why CAM’s credit default swaps were soaring. This is why? Clearly someone had inside information
Europe’s Other Bank Problem
Europe is way over banked and the chart illustrates the monumental task and cost of recapitalizing some of their largest banks. The size of the largest four banking institutions in France, for example, represents over 300 percent of the country’s GDP. The markets will monitor carefully the sovereigns’ incremental obligation of the new recapitalization plan
Deposit Flight from euro zone periphery to Germany
The data have shown that deposit flight out of the euro zone into the US just isn’t happening. But what about intra-euro zone deposit flight? Here’s a chart from the Council on Foreign relations that suggests this could be a story supported by the data
S&P and Fitch downgrade a slew of Spanish banks as Europe talks EuroTARP
Last week Moody’s cut the ratings of 12 British lenders, including Royal Bank of Scotland and Lloyds Banking Group. This week the other two ratings agencies, S&P and Fitch cut the ratings of 10 Spanish lenders
It’s official: Spain following Japanese example of propping up zombie banks
Moody’s decision to place Popular’s ratings on review for possible downgrade is driven by our view that the combined entity emerging after the integration with Pastor is likely to have a weaker credit profile than Popular’s standalone credit strength
Large writedowns at Austrian bank connected to Hungary, Romania and CDS losses
Whether the writedowns make investors feel relieved because of the alleged balance sheet transparency remains to be seen. However, the balance sheet woes at Erste highlights how active banks within the EU are in cross-border relationships
Belgian PM says nationalised Dexia is “200% safe”
As we reported on Friday, Dexia, the troubled Franco-Belgian bank, has been nationalised over the weekend. At the time, I indicated this would be a negative for the sovereign’s creditworthiness. Moody’s, the ratings agency, agrees and has placed Belgium on review for downgrade
Belgium will nationalise Dexia this weekend
Franco-Belgian bank Dexia is being officially nationalised according to two Belgian newspapers
Why is a bank that failed the stress tests in Spain getting bought at a 31% premium?
I don’t follow the Spanish banking sector well enough to know what hidden value Banco Pastor has but I find it curious that it is the subject of a takeover bid at a 31% premium by Spain’s fifth largest bank, Banco Popular
Europe’s Bank Problem
Another informative chart from the IMF showing the fundamental problem in Europe’s banking system – excessive leverage and dependence on wholesale funding. Add to that overexposure to highly indebted sovereigns with deteriorating credit fundamentals. It also illustrates why the German DAX and French CAC stock indices have been hammered over the summer and are two of the worst performing markets this year