One day after Germany’s second largest lender confirmed reports of a massive restructuring when it announced it would lay off nearly 10,000 employees, or about 20% of its entire workforce while slashing the bank’s dividend for the rest of the year, the Dutch newspaper Het Financieele Dagblad reported that ING Groep, the largest Netherlands lender, will announce thousands of job cuts at its investor day on Monday.
It is not solvency, or the lack of capital – a vague, synthetic, and usually quite arbitrary concept, determined by regulators – that kills a bank; it is – as Dick Fuld will tell anyone who bothers to listen – the loss of (access to) liquidity: cold, hard, fungible (something Jon Corzine knew all too well when he commingled and was caught) cash, that pushes a bank into its grave, usually quite rapidly: recall that it took Lehman just a few days for its stock to plunge from the high double digits to zero.
It is also liquidity, or rather concerns about it, that sent Deutsche Bank stock crashing to new all time lows earlier today: after all, the investing world already knew for nearly two weeks that its capitalization is insufficient. As we reported earlier this week, it was a report by Citigroup, among many other, that found how badly undercapitalized the German lender is, noting that DB’s “leverage ratio, at 3.4%, looks even worse relative to the 4.5% company target by 2018” and calculated that while he only models €2.9bn in litigation charges over 2H16-2017 – far less than the $14 billion settlement figure proposed by the DOJ – and includes a successful disposal of a 70% stake in Postbank at end-2017 for 0.4x book he still only reaches a CET 1 ratio of 11.6% by end-2018, meaning the bank would have a Tier 1 capital €3bn shortfall to the company target of 12.5%, and a leverage ratio of 3.9%, resulting in an €8bn shortfall to the target of 4.5%.
Instead of doing what many have correctly suggested he should be doing, namely focusing on ways to raise more capital for the undercapitalized Deutsche Bank in order to stem the slow (at first) liquidity leak, first thing this morning CEO John Cryan issued another morale-boosting note to employees of Deustche Bank who have been watching their stock price crash to another record low, dipping under €10 in early trading for the first time ever. In the memo the embattled CEO worryingly did what Dick Fuld and other chief executives did when they felt the situation slipping out of control, namely blaming evil “rumor-spreading” shorts, saying “our bank has become subject to speculation. Ongoing rumours are causing significant swings in our stock price. … Trust is the foundation of banking. Some forces in the markets are currently trying to damage this trust.”
Just as important, Cryan confirms the Bloomberg report that “a few of our hedge fund clients have reduced some activities with us. That is causing unjustified concerns.” As we explained last night, the concerns are very much justified if they spread to the biggest risk-factor for the German bank: its depositors, which collectively hold over €550 billion in liquidity-providing instruments.
Three months later, the shredders are back…
… and this time they are joined by a friend: a van belonging to a professional demolition and dismantling service, which incidentally is parked right in front of the NY Fed’s master cargo door which among other places, leads to NY Fed’s gold vault.
Things must be getting serious if just using BleachBit won’t fix it.
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H/t reader squodgy:
“Just can’t work out how grown men, who for years have pledged peace are now determined to have a stand off for obliterating each other and maiming every living creature.
Stupid doesn’t even begin to describe this. One can only assume the Rothschilds have kidnapped their grandchildren & are threatening to kill them if they don’t comply, because what would be left when it’s all over is nothing. Just destruction & distortion of the human genome. Pointless.”
Barely acknowledged by the Western media. both Russia and America are “rearming” their nuclear weapons systems. While the US is committed to a multibillion dollar modernization project, Russia is largely involved in a “cost-effective” restructuring process which consists in decommissioning parts of its land-based ICBM arsenal (Topol) and replacing it with the more advanced Yars RS-24 system, developed in 2007.
While a new arms race has “unofficially” been launched, the US modernization process pertains to the all three legs of the triad system, -i.e land based airborne and submarine launched atomic missiles. It is also coupled with the development of the B61-12 tactical bomb to be deployed in Germany, Italy, Netherlands, Belgium and Turkey.
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Incoming migrants are bringing long-eradicated diseases to Germany and are putting the medical system under extreme stress.
As well as bringing a rising tide of crime and attitudes towards women that many consider incompatible with modern European values, the over one and a half million migrants who flowed into Germany last year have also brought unheard-of and rare strains of diseases to the continent. The new arrivals and their illnesses are putting pressure on the German health care system, reports Frankfurter Allgemeine Zeitung.
U.S. Presidential candidate Hillary Clinton has named German Chancellor Angela Merkel as her favourite world leader, choosing specifically to praise her record on the migrant crisis — despite her policies on opening Europe’s borders now providing a source of immense regret for her party and Germany.
The comments were made during a question and answer session on board Mrs. Clinton’s campaign aeroplane in Chicago yesterday, when a member of the press asked what the presidential candidate’s favourite world leader is. Initially leaving her answer quite open, remarking: “Look, I like a lot of the world leaders”, Mrs. Clinton then settled on Germany’s imperiled Chancellor Angela Merkel.
What will prevent TPTB from taking over all of that gold after the financial system has collapsed and there is total chaos everywhere?
For decades, Switzerland had a reputation for bank secrecy that made it the most sought after tax haven for billionaires from around the globe. But, after more than 80 years of secrecy, a series of bilateral agreements with countries around the world, including America’s Foreign Account Tax Compliance Act (FATCA), have forced the private-banking industry in Switzerland to embrace an entirely new era of transparency that requires a full exchange of tax-relevant information with more than a hundred countries.
Which, as Bloomberg points out, has been a huge boon for Swiss operators of private vaults which are not subject to the same transparency and reporting requirements as banks. In fact, these super-secret, privately operated storage facilities buried around the Swiss Alps can basically store anything from anybody because they’re not even required to report suspicious activity to Switzerland’s Money Laundering Reporting Office.