Italian borrowing costs increased to 3.67 percent at a sale of five-year securities today, from 3.24 percent the last time they were sold on Nov. 12. Demand was unchanged,
The extra yield investors demand for holding Austrian instead of German bonds is still the highest among the five top- rated non-German issuers in the euro zone. That spread started to widen two years ago amid lingering concern that Austrian banks’ investments in eastern Europe may go bad and require massive state bank bailouts.
Lingering concerns? Not lingering, growing would be more truthful.
And who were the banks most likely to be in trouble according the same article?
Erste Group Bank AG, UniCredit Bank Austria AG or Raiffeisen Bank International AG expanded for two decades in the Austro-Hungarian empire’s former hinterland, buying local banks in nations including Ukraine, Romania and Croatia. They have the most outstanding loans in eastern Europe as a percentage of national output among all of Europe.
In Dominoes, and since, I suggested that UniCredit was the “Too Big to Mention” bank that would soon be creeping ingloriously into the headlines and sure enough here she comes.
In addition to Golem's point about UniCredit being hit with a train load of debt from east, there is more trouble brewing in the west. Kathleen Barrington reported in Ireland's Business Post last Sunday that "The Central Bank of Ireland has initiated another review following further media reports of alleged liquidity breaches at the Irish subsidiary of a leading international bank in 2007." http://www.thepost.ie/themarket/new-probe-into-liquidity-breaches-53862.html
Kathleen Barrington refers to the question raised by Dr. Graf in the Austrian parliament on 23 Dec. 2010, the link to the question is:
http://www.parlament.gv.at/PAKT/VHG/XXIV/J/J_07341/index.shtml
A previous article by Kathleen Barrington relates to the curious way in which "UniCredit Bank Ireland reclassified €3bn of assets":
http://kathleenbarrington.blogspot.com/2010/12/unicredit-bank-ireland-reclassified-3bn.html
For further reading about UniCredit Ireland and the Irish Regulator's handling of its business conduct, please see the cover story in the recent edition of Village magazine:
http://www.villagemagazine.ie/index.php/2010/12/still-waiting-for-the-truth-from-the-regulator/
For further information about UniCredit Ireland, please visit my blog at:
http://whistleblowerirl.blogspot.com/
Regards,
WhistleblowerIRL.
That spread started to widen two years ago amid lingering concern that Austrian banks’ investments in eastern Europe may go bad and require massive state bank bailouts.
I love that last part, where it is just assumed that "massive state bank bailouts" are available as & when needed. This is a good example of how a very contentious issue is now presented in the media as simply the way things are done, with no further discussion necessary, no hint that there's even an option to do otherwise. If a bank goes bust, then of course the state will bail it out!
dah_sab said…
I love that last part, where it is just assumed that "massive state bank bailouts" are available as & when needed
Yes indeed. It would seem it's now ingrained in banking DNA. That any banking failure will naturally receive an immediate bailout.
It should be written in large headlines (although we know it won't) across the red tops.
An end to the natural assumption that Europe's/USA's taxpayers will aways come the aid of failing banks. Is something that needs urgent attention. The sooner politicians and central banks introduce measures which include regulations that state clearly that NO bank is to big to fail. The better we all will be. Without such measures a return to an economic disaster much worse than the one we've experienced is inevitable.