Sunday, October 05, 2008

German News Update......Hypo Real Estate Bailout

As expected the Hypo Real Estate bailout was announced before the markets open. At least the government has managed to bring the financial sector to take up to € 8.4 billion of the guarantee. On top of this i assume the step to guarantee all German banking deposits will force other countries to follow. What a difference a week makes..... Only a few days ago our leaders were ranting on the mess outside of Germany and especially the US........

Erwartungsgemäß wurde die Rettungsaktion vor Börseneröffnung verkündet. Immerhin hat der Staat es geschafft dem Finanzsektor noch eine Garantie von 8,4 Mrd € aus dem Ärmel zu leiern. Der Schritt praktisch alle Kundeneinlagen in Deutschland zu garantieren ist sicher mehr als nur als PR anzusehen . Obwohl es diverse Einlagensicherungsfonds gibt darf doch momentan zumindest daran gezweifelt werden das der Bankensektor von sich aus in der Lage ist die Kontrolle nicht noch mehr zu verlieren. Insofern wird diese Zusage sicher helfen den GAU eines Bankruns zu verhindern. Dies wird unweigerlich dazu führen das anderen Staaten nachziehen müssen um eine Kapitalflucht aus Ihren Ländern zu unterbinden. Siehe das Beispiel als irische Bnaken mit der Staatsgarantie massiv und offensiv um Einlagen britischer Banken geworden haben....... Schon erstaunlich welch Unterschied eine Woche ausmachen kann.... Noch vor wenigen Tagen hat sich Steinbrück derart abfällig über den Zustand des US Finanzsektors geäußert das eine gwisse Arroganz und Überheblichkeit nicht zu überhören war. Etwas mehr Demut hätte sicher gut getan.....


Dank an Hartgeld

Hypo Real Gets EU50 Billion Government-Led Bailout
Germany's financial industry agreed to double a credit line for Hypo Real Estate to 30 billion euros, Torsten Albig, a spokesman for Finance Minister Peer Steinbrueck, said late yesterday in an e-mailed statement. The federal government's guarantee for the credit line remains unchanged, Albig said.

Handelsblatt
Der vom Bund zur Verfügung gestellte Bürgschaftsrahmen von bis zu 35 Mrd. Euro werde nicht verändert. Bis zu einer Gesamthöhe von 14 Mrd. Euro trage der Finanzsektor 60 Prozent (das sind 8,5 Mrd. Euro) und der Bund 40 Prozent der möglichen finanziellen Belastungen, die sich aus einer Inanspruchnahme der Ausfallgarantie ergeben könnten.

> This piece from the NYT is the first and only detail that i have found as a cause for the liquidity shortfall. I´m still in the camp that the short term repofunding has played the major role for the needed baliout. ( see Hypo Real Estate And The Art Of Reading The Latest Interim Report..... )

> Der nachfolge Absatz aus der NYT ist der bisherher einzige Detailpunkt den ich haben finden können der erklärt warum die Depfa/HRE in Probleme gekommen sind. Ich bin nach wie vor der Überzeugung das eine weitere wesentlich Rolle die viel zu kurzfristige Refinanziereung über Repogeschäfte gespielt hat. ( siehe Hypo Real Estate And The Art Of Reading The Latest Interim Report..... )

NYTDepfa, a Dublin-based lender that Hypo acquired last year, is at the center of its problems. Depfa underwrote a package of municipal bonds which were subsequently downgraded by ratings agencies. That step obliged Depfa to buy the bonds back, a contractual requirement that would create almost immediate liquidity problems at Hypo itself, given the difficulty of getting short-term funding in today’s drumtight credit markets

Germany guarantees savings to avert panic Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.

Merkel sagt Staatsgarantie für Spareinlagen zu
Die Bundesregierung sagte derweil am Sonntag aufgrund der Verschärfung der Finanzmarktkrise die Bereitschaft zu, angesichts der Krise der Finanzmärkte eine Staatsgarantie für alle privaten Spargeldeinlagen, Termineinlagen und Girokonten zu geben

Aus dem Finanzministerium hieß es, die Regierung übernehme damit eine Garantie, die über das Einlagensicherungssystem der Banken hinausgehe. Es gehe um eine Summe von 568 Milliarden Euro. Die Garantie gelte aber unbegrenzt


European leaders eye German moves UK and other European officials on Sunday expressed surprise at Germany’s abrupt move to guarantee German private bank accounts, amid concerns other European governments would have to follow Berlin’s lead and offer similar safeguards to savers, to avoid a cross-border flight of capital to more secure banks

One UK official said there was annoyance that German chancellor Angela Merkel had acted unilaterally only hours after attending an economic summit in Paris at which she agreed there should be greater cross-border co-ordination of measures during the economic crisis

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9 Comments:

Anonymous Anonymous said...

Here from FT: http://www.ft.com/cms/s/1/8202e378-9302-11dd-98b5-0000779fd18c.html

and in the background...http://www.ft.com/cms/s/0/e9f0a2e2-9305-11dd-98b5-0000779fd18c.html

11:30 PM  
Anonymous Richard Smith said...

It was good to see you drop by at Naked Capitalism the other day.
I expect Yves will in due course notice that you have interesting stuff to say especially about the German/European end of the crisis.

1:08 AM  
Anonymous Anonymous said...

Germans reacting to competitive inevitability of budget busting fiscal stuff, precedent set in US and Ireland. Can Depfa with its european public debt portfolio be seen as a canary?

1:32 AM  
Blogger jmf said...

Moin Richard,

it really looks like the epi centre has shifted somewhat to Europe....

Yves blog is just superb.

For sure my favouite blog & source when i start my working day....

3:35 AM  
Blogger jmf said...

Moin again,

i once was a shareholder in Depfa ( 4-5 years ago ) and they wanted to expand their business to the muni market in the US.

They desperately tried to create a MBIA/ABK monoline type of vehicle for insuring the muni bonds to enter the market in a big way.

With this management i´m pretty sure they would have also entered the srtuctured finance businessin light speed.

Thank god the rating agencies back then refused this approach......

Probably the only thing the rating agnencies refused during the past few years....

5:05 AM  
Blogger Edward Harrison said...

That is a great picture ofMerkel and co. on the movie poster - a classic mock-up! Well done, Jan-Martin.

6:12 AM  
Blogger jmf said...

Moin Edward,

thanks :-)

But unfortunately this piece of art wasn´t my work.

I have borrowed this from the gold site HARTGELD ( see blogroll )

Things are getting even uglier than i have feared.

And my view was very gloomy from the beginning.....

8:55 AM  
Anonymous Barley said...

Scroll back a few months...I still think this will settle at Dow 9600 ish.

While I too have been gloomy for about a year, I am going to second your concern that this might get very ugly. I think much worse because of the commodity bubble that has burst (still got gold, tho)

Banking and finance is transnational and in spite of singular country actions, it will continue to create havoc.

Ping took a $2.6 loss on AIG. Kinda like whack-a-loss on a global basis.

I dont care how much liquidity is pumped into the system, no banks are going to risk a further loss.

I like the Dutch approach - just take it over and let the shareholders and (repeat AND) the bondholders take the loss. Make it immediate and then re-float the company.

10:51 AM  
Blogger John Harry said...

Banking News Update A Complete Banking Guide

5:55 AM  

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