Re:Italy’s teetering banks will be Europe’s next crisis
by bonzini on Monday July 11, 2016 @04:41AM
(#12069698)
> You manage a German bank. You follow strict capitalisation rules, are careful about the loans you make and operate your business according to the highest principles.
Like Deutsche Bank? They were chock-full of bad derivatives, Greek bonds, and whatnot.
Most of Italy's big banks are fine. They went just fine through the subprime crisis and the Greek bond crisis, and the government never had to save them.
It's the smaller banks that have problems.
Re:Italy’s teetering banks will be Europe’s next crisis
by mrighele on Monday July 11, 2016 @04:44AM
(#12069714)
How is this different from European governments buying Greek bonds held by German banks [1] ? (Banks from French and Italy got similar treatment, but German banks where the biggest lenders)
[1] http://www.bloomberg.com/view/articles/2012-05-23/merkel-sho...
Re:Italy’s teetering banks will be Europe’s next crisis
by Gmo on Monday July 11, 2016 @07:16AM
(#12070264)
Except the German banks are not as clean as they would like you to believe, particularly the regional ones.
Re:Italy’s teetering banks will be Europe’s next crisis
by adrianratnapala on Monday July 11, 2016 @08:27AM
(#12070535)
I read simonh's comment explaining why German banks were not particularly clean. That is, within the eurozone (or any equivalently open financial realm) if one country is willing to subsidise bad loans, then banks from all round will need to pile in on the scam.
You clients start doing more and more of their business with an Italian bank that has poor capital reserves and a shoddy loan book and is losing money, but offers better terms to customers. The bank looks like it's going to fail, so the Italian government props it up with cheap credit and buys it's bad loans at above market rates so that it can stay in business - and keep winning business off you because it's still offering better terms to customers. Plus now those customers know the bank won't go bust and they can rely on it because the Italian government will support it no matter what.
The customer's business is being indirectly subsidised by the Italian government through below-market banking fees. Why should they ever do business with you again?