Monday, August 27, 2007

Landesbank Sachsen Fire Sale / Bailout complete

Whenever you sell a bank with a core capital of € 1.5 billion for just € 300 mio you know that things are not looking good. In this case things are ugly. Almost all of the risks that had lead to the pro forma insolvency of the Landesbank Sachsen will remain at the taxpayer. On top of this sale was forced from the ( long time asleep) banking oversight Bafin. The Bafin tries to mask the damage that they havn´t done anything to stop the LB to pile up close to € 26 billion (Source : Handelsblatt) off balance sheet vehicles ( Sachsen LB balance sheet € 68 billion...). Off course the rating agencies have now ( just in time) put the conduit vehicles on watch negative from AAA....... It looks like their model is always working with a time lag.....

Immer wenn man zu hören bekommt das eine Bank die eigentlich ein Eigenkapital von 1,5 Mrd € hat für schlappe 300 mio € vertickert wird weiß man das die Dinge nicht gut stehen. In diesem Fall sind Sie in der Tat extrem unerfreulich. Die Risiken die zur quasi Insolvenz der Sachsen LB geführt haben bleiben letztendlich dank der Gewährträgerhaftung beim Steuerzahler hängen. Ein Zeichen mehr das der Sachsen LB das Wasser bis zum Hals stand ist der Umstand das die Bafin den Verkauf angeordnet hat und damit der Landtag der ansonsten über solche Transaktionen zu entscheiden hat ausgehebelt worden ist. Die Bafin probiert wohl zu retten was Sie durch Ihre nicht vorhandene Aufsicht mitprovoziert hat. Wie sonst sind bis zu 26 Mrd € in Zweckgemeinschaften ausserhalb der Bilanz möglich wenn die eigenen Bilanzsumme gerade einmal 68 Mrd € beträgt. Ganz unabhängig davon das ein Großteil obendrein noch in die riskantesten Papiere investiert worden ist.... Das WSJ berichtet zudem das noch eine Schieflage mit einem 20 fach gehelbelten Hedge Fonds aus London droht bei dem die Sachsen LB mit knapp 20% beteiligt ist......

Here the saga with all the nasty details and early dementies that evevthing is just fine 14 days ago....

Hier nochmal das ganze Drama mit dem frühen Dementi das alles in bester Ordnung vor gerade einmal 2 Wochen.....

Second Major Bailout Underway In Germany ?

SachsenLB Has EU3 Billion in Subprime Investments


Marketwatch Stuttgart-based state-owned bank Landesbank Baden-Wuerttemberg will buy Sachsen LB, one of two German banks threatened by a global credit crisis, Baden-Wuerttemberg's state governor said at a press conference Sunday.

Sachsen LB is selling itself to Landesbank Baden-Württemberg an investment in a hedge fund turned sour, adding to the bank's struggles in the asset-backed commercial paper market, according to a report in the online edition of the Wall Street Journal, citing unidentified people familiar with the situation.

Under the terms of the deal, Gov. Guenther Oettinger said, the state of Saxony, which holds 37% in Sachsen, and the Sachsen-Finanzgruppe, owner of 63%, will receive stakes in LBBW, but that exactly how large these stakes will only be determined on Dec. 31.
bigger overview all Landesbanken including balance sheet, ownerstructure etc.... Too bad that they didn´t include the off balance sheet vehicles....

größere Übersicht über alle Landesbanken inklsuive Bilanzsummen, Eignerstruktur usw....leider ohne die ganzen Aktivitäten ausserhalb der Bilanz......

Earlier Sunday, Oettinger estimated that Sachsen might be worth between 300 million and 800 million euros, less that the 1.5 billion euros in equity capital the bank had according to the latest figures. The Journal report that as an immediate measure to support Sachsen liquidity, LBBW will inject $342 million into the bank.

Sachsen has an estimated €200 million ($271 million) stake in a fund run by Synapse Investment Management LLP, a London-based fixed-income hedge fund firm, the Wall Street Journal said on Saturday.

The fund has received margin calls from British bank Barclays Plc and faced a seizure of collateral, the newspaper added. Barclays discussed with Sachsen the idea of Sachsen providing money to Synapse to protect Sachsen's own investment. But it appears that Sachsen will be sold, the WSJ said.

20 times leverage
Synapse was set up in 2006 by Graeme Anderson and Mark Holman, former managing directors at Barclays Capital, the investment banking business of Barclays. The firm oversees more than $500 million in assets.

It's not clear which Synapse fund Sachsen invested in. However, one of the London firm's funds, the Synapse High Grade ABS Fund No. 1 Plc, lost 6% in July, according to the firm's Web site.
The 189.5 million euro fund, run by Rob Ford, Ben Hayward and Eoin Walsh, invests in AAA and AA rated asset-backed securities only, according to an update from Aug. 1 on the firm's Web site.

The update also noted that the fund is expected to be 20 times leveraged. That means it borrows 20 times the level of equity invested by clients. So a 189.5 million euro fund could in theory control more than $3 billion in assets using this amount of leverage.

Conduit crunch
Sachsen LB had already been hit by credit turmoil. The bank said on Aug. 17 that disruption in the asset-backed commercial paper market left doubt about whether an investment conduit called Ormond Quay could repay 17.3 billion euros in debt that it owed.

bigger / größer

A group of German banks and regulators lent $17.3 billion to the conduit so it could repay what it owed.

But more trouble emerged when another affiliate, Sachsen Funding I Ltd., said it was having financial difficulties amid the lack of demand by asset-backed commercial-paper investors and might have to be restructured, the WSJ said.

Handelsblatt
BERLIN. Die LBBW übernimmt das Institut zum Ende des Jahres und unterstützt es zudem mit einer Kapitalspritze in Höhe von 250 Mill. Euro. Auf einem Großteil der Risiken, die aus den von der SachsenLB geführten irischen Tochtergesellschaften herrühren, bleibt der Freistaat jedoch sitzen.

„Es musste wegen der Liquiditätsnot gehandelt werden“, sagte Oettinger. Die Rettung könnte für die LBBW teuer werden. Die Kapitalspritze eingerechnet, liegt der Kaufpreis zwischen 550 Mill. und 1,15 Mrd. Euro, wobei die LBBW die Übernahme zu zwei Dritteln mit eigenen Anteilen bezahlt.

Der Hals über Kopf am Wochenende ausgehandelte Verkauf geht offenbar auf massiven Druck der Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) zurück. BaFin-Chef Jochen Sanio, der sich in die Verhandlungen in Dresden eingeschaltet hatte, habe deutlich gemacht, dass jede weitere Verzögerung die Verluste der SachsenLB erhöht hätte, sagte Milbradt. Er verzichtete wegen der „besonderen Situation“ darauf, den Landtag über die Transaktion abstimmen zu lassen.

Die Lage der SachsenLB war offenbar weitaus dramatischer als bislang angenommen. So schlummern noch beträchtliche Bewertungsrisiken in den Büchern der SachsenLB, heißt es in Bankenkreisen. Zudem drohten weitere Belastungen aus den Engagements der außerbilanziell geführten Tochterfirmen. Diese drohten die Landesbank, deren Eigenkapital Ende 2006 rund 1,5 Mrd. Euro betrug, zu überfordern.

Erst vor zehn Tagen hatten die Sparkassen die Landesbank mit einer Kreditlinie in Höhe von 17,3 Mrd. Euro unterstützt. Das Institut war wegen riskanter Geschäfte seiner irischen Töchter in erhebliche Liquiditätsnöte geraten. Die irische SachsenLB-Tochter Sachsen LB Europe betreibt drei außerbilanziell geführte Zweckgesellschaften, die im Verbriefungsgeschäft tätig sind, mit einem Gesamtvolumen von rund 26 Mrd. Euro – bei einer Bilanzsumme der SachsenLB von 68 Mrd. Euro.

Für Ausfälle bei den Fonds der irischen Töchter steht aber letztlich das Land Sachsen durch die Gewährträgerhaftung gerade. Zwar wurde diese Absicherung im Juli 2005 auf Druck der EU-Kommission abgeschafft, doch Verbindlichkeiten aus den Jahren 2001 bis Anfang 2005 unterliegen noch der Gewährträgerhaftung.

Bislang musste die SachsenLB die Kreditlinie der Sparkassen noch nicht anzapfen, doch weiteres Ungemach drohte. Da der Markt für Commercial Papers, mit denen sich Zweckgesellschaften refinanzieren, nach wie vor ausgetrocknet ist, war es eine Frage der Zeit, bis die beiden anderen Zweckgesellschaften, Georges Quay und Sachsen-Funding, in Liquiditätsnöte gekommen wären. Bislang konnte die SachsenLB ihren Finanzierungsverpflichtungen hier selbst nachkommen, was die BaFin bestätigte.

Am vergangenen Mittwoch stellte die Ratingagentur Standard & Poor’s die Bonitätsnote der SachsenLB Europe „AAA“ auf „Beobachtung“. Eine mögliche Herabstufung hätte die Refinanzierung weiter erschwert. Die Muttergesellschaft SachsenLB wurde bereits zuvor um eine Stufe von „A-“ auf „BBB+“ herabgestuft.

> Mal wieder zeitig......

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19 Comments:

Blogger jmf said...


Mortgage Crisis Forces Sale of German Bank / NYT


On Friday, BayernLB, a large state-owned German bank, acknowledged that it had invested in assets linked to risky United States home loans but did not disclose the size of its exposure.

1:57 AM  
Anonymous Anonymous said...

Moin,

I am still not clear whether the probleme and "sale" relate too Sachsen Europe (subsidiary) 4.5bn or Sachesen Girozentrale (the parent) 65bn. Can you clarify?

2:10 AM  
Anonymous shtove said...

Germany is taking its medicine early. What about British and American banks?

2:28 AM  
Blogger jmf said...

Moin,

they have sold the entire Sachsen LB ( but the risks related to the conduits are separated).

The German Sparkassen have provided the multibillion € liquidity that is needed to keep the conduit alive.

But after they have closed the conduits the losses will be taken over by the taxpayer

The risks and losses from Sachsen Europe will be taken over from the "Gewährträgerhaftung".

That´s a nicer way to say the taxpayer will eat the losses....

2:55 AM  
Blogger jmf said...

Moin Shtove,

lets hope that no other bank around the globe was so dumb to make off balance sheet bets that account for almost 40% of their balance sheet....

"Germany is taking its medicine early. What about British and American banks?"

Lets hope that other states don´t bail them out like the Germans have done it also with the
IKB
....

So Germany is clearly leading the global bailout trend :-(

2:59 AM  
Blogger jmf said...


LBBW to Buy SachsenLB to Help Rescue State-Owned Bank


Landesbank Baden-Wuerttemberg, the largest German state-owned bank, agreed to buy Landesbank Sachsen Girozentrale following a 17.3 billion-euro ($23.7 billion) credit bailout because of investments in U.S. subprime debt.


The purchase agreement includes an opt-out clause that would allow LBBW to abandon the deal if it discovers unforeseen risks

3:52 AM  
Blogger jmf said...


WestLB verliert halbe Milliarde durch Fehlspekulationen

6:04 AM  
Anonymous Klabautermann said...

"Gott, schütze uns vor Wasser und Wind, und vor Banken die aus Bayern, NRW und Sachsen sind!"

Diese Möchtegern-Bankiers sind eine Schande für unser deutsches Bankenwesen und im Besonderen für unser geliebtes Deutschland.

DIESE RÄUDIGEN HAUBENTAUCHER 3x UNBESCHWERT KIELEN LASSEN UND ZUM TROCKNEN AM MASTTOPP AUFKNÖPFEN!

7:04 AM  
Anonymous Anonymous said...

Tja, und immer noch ist die deutsche Presse zu faul um dem ganzen Ausmass nachzugehen. Nachdem sich vor zwei Wochen alle ueberschlagen haben, denkt jetzt alles, der Vatikan in Form der FED bzw EZB hat sich als Retter bewiesen. Ich kann einfach nicht verstehen, warum von den Herren/Damen Journalisten oder Pseudo Managern niemand hier bei Jan reinguckt.

Der Boss der LBBW uebrigens will unbedingt expandieren, habe ich vor Monaten gehoert. Hoffe, er hat sich da nicht verkalkuliert jetzt?

Gudda Morga, wie man bei den Schwaben sagt. Aber ich verstehe 'moin' schon.

7:15 AM  
Blogger jmf said...

Moin Klabautermann :-)

kann gut sein das auch noch Banken aus anderen Bundesländern diese illustre Runde erweitern.....

Ist im übrigen keine schlchte Idee.

Stattdessen werden die meisten wohl recht sanft fallen......

7:19 AM  
Blogger jmf said...

Moin Anon,

gebe Dir in Sachen Berichterstattung uneingeschränkt Recht.

Was in den einschlägigen Publikationen in den letzten Jahren abgegangen ist und worüber nicht berichtet worden ist (erst als das Kind bereits in den Brunnen gefallen ist) bzw was alles verhamlost worden ist, war der Hauptantrieb meinen Blog zu starten.

Habe aber festgestellt das sich speziell seit dem IKB Debakel etliche IP-Adressen einschlägiger Zeitungen auf die Seite verirrt haben. :-)

7:30 AM  
Blogger jmf said...


Barclays faces exposure of over $100 mln on Sachsen: report


Barclays down 1.8% amid Sachsen exposure

12:31 AM  
Blogger jmf said...


Room305
has some good comments on the Irish regulation of all the conduits

"I see the Irish "light touch" financial regulatory regime - described by the New York Times as a "financial wild west" - is starting to come in for criticism. How long before we see some kind of EU-wide Sarbanes-Oxley?"

But, as the name implies, it is undeniable that Ormond Quay is an Irish company, based in Ireland and with two Irish directors. And this company somehow got itself into a predicament so serious that the collapse of a German bank was only avoided through emergency intervention to the tune of €17.3 billion by a group of other German banks.

The fact that the Irish regulator is not technically responsible for Ormond Quay does not detract from the reality that something occurred within this jurisdiction that has cast the financial services regime here in a very bad light. The Central Bank and IFSRA cannot simply wash their hands of the matter. They must take steps to ensure no recurrence. That is the essence of their job. .....

12:35 AM  
Blogger jmf said...


Barclays’ woes grow as crisis in sub-prime forces its client to be rescued

Barclays appears to have been responsible both for designing a complex fund that got Sachsen into difficulty and for helping to pull the plug on the bank by demanding margin calls in respect of another Sachsen investment.

Sachsen Funding I, a Dublin-registered fund created jointly by Sachsen and Barclays Capital, said last week that it was having financial difficulties and might have to be restructured.

Meanwhile, last week Barclays made margin calls on a client, Synapse Investment Management, a credit hedge fund in which Sachsen has an estimated €200 million stake – almost the entire equity in the fund – and later seized some of its collateral.

Barclays Capital, Barclays’ investment banking unit, has been aggressively marketing so-called SIV-lites such as Sachsen Funding I – investment vehicles sponsored by banks but held off the balance sheet, which use the commercial paper markets to finance purchases of mortgage-backed securities. A souring of sentiment in the commercial paper market left funds desperate for cash, forcing sponsors to provide emergency funding.

Last week Edward Cahill, head of the BarCap department responsible for creating these complex vehicles, left the bank

The relationship between Barclays and Sachsen is thought to have been particularly close. The German bank’s 2006 annual report features a double-page photo spread of Jane Privett, a BarCap director, quoted as saying that Sachsen Funding I generates “attractive returns without neglecting the security aspect”.

Sources close to Barclays said that any SIV losses appeared minimal for it and that it should not be blamed for clients’ difficulties since it was not responsible for picking assets in the funds or running them. It foresaw “little flowback” – continuing financial or legal liabilities. Barclays would in theory be obliged to make a statement only if the loss topped £700 million, a tenth of annual profits.

12:59 AM  
Blogger jmf said...

State Street reportedly has exposure to $22 bln in conduits

State Street has exposure to $22 billion of asset-backed commercial paper conduits, the types of vehicles that have caused problems at European banks such as Sachsen LB, according to a report in The Times of London newspaper, citing regulatory filings. Its exposure accounts for 17% of all assets, the highest exposure to conduits of any European or American bank, the report said

2:14 AM  
Blogger jmf said...

More wisdom from another Landesbank...


WestLB Posts Loss After EU604 Million of Bad Trades

8:28 AM  
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3:58 PM  
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9:30 PM  
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11:23 AM  

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