By Philippe Herlin - Researcher in finance / Contributor
to Goldbroker.com
Ain’t this bizarre... many large international banks, like Crédit
Agricole, Commerzbank and UBS are announcing important losses for the last
quarter of 2012. Monte dei Paschi, one of the largest Italian banks, is just
about to default, and SNS Reaal, from Holland, has been nationalised
precipitously. And we thought the crisis was over... truly amazing !
And each time, the bankers talk about « exceptional
situations », hinting that it’s only an unforeseen accident. Looking
more closely at it, one can see that it’s not the case, generally.
First, the consequences of the 2008 crisis are far from having
disappeared, contrary to what the bankers are saying. SNS Reaal is failing
because of the real estate crisis. Not because of the US subprimes, no, but
because of Holland’s real estate market : prices are quite high and
households are quite endebted. But the bubble hasn’t bursted yet; what will
happen when it does ?
Monte dei Paschi is failing because of the CDSs. We thought that bankers
had learned their lesson... well, I guess not. For that matter it can be
noted that when banks are on the brink of failing, they then reveal their
exposure to derivatives, as a way of saying « Bail me out or I may cause
everything to blow up ». Dexia did just that recently. We know that all
the banks are exposed to derivatives, some of them potentially explosive in
nature but, for the moment, they’re managing... Don’t you find this
reassuring ?
Crédit Agricole is paying back its bad investments in Greece (Emporiki
Bank) and seems close to being done, but all the banks that have branches in
battered countries are exposed to significant losses.
More wrongdoing is coming out : Barclays is suspected of having
loaned many billions of dollars to Qatar’s sovereign fund so that it could
have cash, to prevent back then from being partially nationalised, like many
other British banks...
No, the 2008 crisis is far from having been resolved, and more risks are
showing up.
There’s the Libor scandal, that has already resulted in large fines (11
billion euros for the five large British banks), and it’s not over, many
cases still pending in court. As for Euribor, Société Générale has just been
accused in Italy. We haven’t heard the last of the manipulation of reference
rates.
In England, another scandal is hitting the banks : Barclays, HSBC,
Lloyds and RBS are being accused of having sold derivatives to small
businesses, which is against regulations. According to some experts, the
fines could reach between 1.5 and 10 billion sterling pounds. This will be in
addition to the 12 billion pounds already slated to relieve the households
that were victims of forced selling of Personal Payment Insurance (PPI), a
form of borrower insurance.
Other things are coming out, some a bit darker, like the one about Spain’s
governing party and its head Mariano Rajoy having received illegal paybacks
from banks during the real estate bubble. The same kind of accusation is
coming out in Portugal with BPN bank.
Real estate, malinvestments, derivatives, all kinds of manipulation... the
risks are still here. But what’s worse is that the banks have not become more
virtuous after the crisis of 2008. There is a « moral » component
at work here : Banks and their bankers have not paid the price of the
2008 crisis... so why then would they change their way of doing ?
