Is the end nigh for the Euro? [vol. 3]

[Digga]

Enricogto said:

Can we, again, put things into perspective?

Veneto Banca has a balance sheet size of about 30bn € (about 80% of the Yorkshire Building society, for comparison) and has therefore hardly any systemic impact on the Italian banking sector.

What the article reports poorly, is that the practice perpetrated by the bank (and common in other EU countries but only with mutualistic banks) is slightly different. The bank won't lend you more money than needed provided you buy shares. What it will do, (and it's common practice also for RE mortgages), is to allow for better contractual conditions to the bank's shareholders (again, valid only for mutualistic-type banks). Mr De Longhi won't have been forced to buy 60k of shares (if it has, then that's unfair market practice and it will be reviewed accordingly). He will have been asked to subscribe a token amount of shares (often less than 1000 €) in order to achieve a better loan rate.

That's the bank's version of events and they're sticking to it.

We've heard all of this before <cough>RBS</cough> where banks swear blind they weren't shafting customers. In the end, the truth will out.

As for the scale of the issue, sure, this is but one bank, but it is by no means the only one that is ailing. When markets take against a sector...

[arguti]

Likes Fast Cars said:

Yes there was quite a bit, probably still is. There are also quite large ops of French banks in Italy such as SocGen, BNPP, and a few others, so if problems continue to manifest in Italy there will be some impact on the larger French players.

there was a lovely interactive web page link that somebody provided a few years ago that showed which banks and governments were the biggest creditors across Europe.

I cant find it but remember it was around the time Sarkozy spent so much time running around telling everyone there was no default because to have default would have landed up triggering the +++ CDOs that the French banks were holding if that makes sense.

[Enricogto]

Well,

what I can offer you is my first hand experience as a customer (not of Veneto Banca) and my previous 10 years in the Italian financial industry (again, not in any of the institutions mentioned).

There is a tendency, from both the media and people on the street, to enjoy and hail the benefits of a system up to the point when the system, naturally, spits a cog. We've seen it in the sub-prime crisis, we've seen it with the dot-com bubble etc... After that, all was wrong and of course, no one of those who enjoyed the benefits, knew.

The market is made of opinions, fear and follow-the-other-sheep behaviors. Although I respect and, to an extent, i'm part of the game, I wouldn't attribute to it particular strategic forecasting abilities.

[Digga]

Enricogto said:

Well,

what I can offer you is my first hand experience as a customer (not of Veneto Banca) and my previous 10 years in the Italian financial industry (again, not in any of the institutions mentioned).

There is a tendency, from both the media and people on the street, to enjoy and hail the benefits of a system up to the point when the system, naturally, spits a cog. We've seen it in the sub-prime crisis, we've seen it with the dot-com bubble etc... After that, all was wrong and of course, no one of those who enjoyed the benefits, knew.

The market is made of opinions, fear and follow-the-other-sheep behaviors. Although I respect and, to an extent, i'm part of the game, I wouldn't attribute to it particular strategic forecasting abilities.

ISWYM and I agree. It is so often simply a case of everything's perfectly fine... until all of a sudden, it's not.

[Andy Zarse]

Digga said:

Enricogto said:

Well,

what I can offer you is my first hand experience as a customer (not of Veneto Banca) and my previous 10 years in the Italian financial industry (again, not in any of the institutions mentioned).

There is a tendency, from both the media and people on the street, to enjoy and hail the benefits of a system up to the point when the system, naturally, spits a cog. We've seen it in the sub-prime crisis, we've seen it with the dot-com bubble etc... After that, all was wrong and of course, no one of those who enjoyed the benefits, knew.

The market is made of opinions, fear and follow-the-other-sheep behaviors. Although I respect and, to an extent, i'm part of the game, I wouldn't attribute to it particular strategic forecasting abilities.

ISWYM and I agree. It is so often simply a case of everything's perfectly fine... until all of a sudden, it's not.

This is why we in the UK pay billions for our financial regulator, The FCA, so that this sort of thing doesn't happen here. Naturally, the FCA's (continual and manifest) failures are rightly pointed out and they get all defensive and pass/agg when put under the spotlight. But to be fair to them, if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

[Digga]

Andy Zarse said:

if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

Or Bernie Madoff for that matter.

[Andy Zarse]

Digga said:

Andy Zarse said:

if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

Or Bernie Madoff for that matter.

I wonder what happened to Roger Levitt?

[Enricogto]

Andy Zarse said:

This is why we in the UK pay billions for our financial regulator, The FCA, so that this sort of thing doesn't happen here. Naturally, the FCA's (continual and manifest) failures are rightly pointed out and they get all defensive and pass/agg when put under the spotlight. But to be fair to them, if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

https://lmgtfy.com/?q=PPI

Again, the practice of offering better conditions to members is not illegal nor fraudulent.

[Andy Zarse]

Enricogto said:

Andy Zarse said:

This is why we in the UK pay billions for our financial regulator, The FCA, so that this sort of thing doesn't happen here. Naturally, the FCA's (continual and manifest) failures are rightly pointed out and they get all defensive and pass/agg when put under the spotlight. But to be fair to them, if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

https://lmgtfy.com/?q=PPI

Again, the practice of offering better conditions to members is not illegal nor fraudulent.

Such a scheme doesn't need to be illegal or fraudulent to be stamped on by the regulator. In the UK it simply needs to be likely to lead to poor customer outcomes or the provider fails to have a proper procedures, controls and risk evaluation in place. This more than fails on all counts and the directors would be struck off and heavily fined.

[Digga]

So the Italian government are 'hoping' that investors will stump up and recapitalise the banks. (Well you can wish in one hand and st in the other, and see which fill up faster.)

http://www.bloomberg.com/news/videos/2016-11-25/ma...

The only alternative is to defy EU/ECB rules and re-capitalise the banks through Italian government money. All this whilst undergoing a referendum and a general election.

[LongQ]

Enricogto said:

Andy Zarse said:

This is why we in the UK pay billions for our financial regulator, The FCA, so that this sort of thing doesn't happen here. Naturally, the FCA's (continual and manifest) failures are rightly pointed out and they get all defensive and pass/agg when put under the spotlight. But to be fair to them, if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

https://lmgtfy.com/?q=PPI

Again, the practice of offering better conditions to members is not illegal nor fraudulent.

Indeed not.

The PPI "scam" has, in some cases, worked both ways.

I am aware of a situation where some bank clients took out PPI on a loan, made use of the cover and got a payout of a few grand and then claimed for mis-selling and got a few more grand.

As for "investments" in the lender in order to get a load, I assume the mutuals in Italy are pretty much what we had in the UK 30 years ago known as Building Societies.

The deal there at one time was that if you saved with the Building society and had been a customer for a while you had a better chance of getting a loan than if you did not. In fact at one time that was the whole point - they were there for "members" of good standing for their mutual benefit.

Then we had a loosening of the banking constraints for central borrowing rules, the Building Societies' traditional hold over domestic mortgage loads was attacked by the banks entering the market, the Societies needed to access loans in the city rather than rely on members deposits because otherwise they could not compete. Banks bought building societies and Societies converted to be banks and everything changed with PPI and the like sneaking in through the back door in the chaos.

For the borrower it meant ever increasing property prices (with the odd blip) which is OK if you are on the ladder but not so good if trying to reach the first step. At some point later the ride on the ladder may turn out to be not quite as wonderful as it seemed at the time since everything else has dragged along with it.

Quite why our recent rides to our futures, in all aspect of society, should now be a priority for "historic investigation" I find puzzling.

I assume it because few are prepared to face up to the issue of today for fear of rocking too many boats?

[Police State]

This is an interesting (BBC R4) programme on the Italian Banking Crisis, little stories about the little people...

http://bbc.in/2gmG3nK

[Digga]

Police State said:

This is an interesting (BBC R4) programme on the Italian Banking Crisis, little stories about the little people...

http://bbc.in/2gmG3nK

Good piece that. Unbelievable the scale of the impact on the savers/bondholders.

[Police State]

Digga said:

Police State said:

This is an interesting (BBC R4) programme on the Italian Banking Crisis, little stories about the little people...

http://bbc.in/2gmG3nK

Good piece that. Unbelievable the scale of the impact on the savers/bondholders.

Even more unbelievable is that many of the banks were 'saved' (rolled up/quarantined debt, etc.) none of the crooks were sent to jail. In one form or another, this happened on a worldwide scale, billions poured into saving these crooked enterprises, and no comeback for the culprits.

[Digga]

Police State said:

Digga said:

Police State said:

This is an interesting (BBC R4) programme on the Italian Banking Crisis, little stories about the little people...

http://bbc.in/2gmG3nK

Good piece that. Unbelievable the scale of the impact on the savers/bondholders.

Even more unbelievable is that many of the banks were 'saved' (rolled up/quarantined debt, etc.) none of the crooks were sent to jail. In one form or another, this happened on a worldwide scale, billions poured into saving these crooked enterprises, and no comeback for the culprits.

You have to feel for the Italian general public; the tradition for savers had been buying bonds or shares and this was historically deemed 'safe'. The rules penned by the EU specifically threw them under a bus, where actual cash savers/depositors of other banks in other countries (e.g. Northern Rock) were spared, up to a limit.

[Andy Zarse]

LongQ said:

Enricogto said:

Andy Zarse said:

This is why we in the UK pay billions for our financial regulator, The FCA, so that this sort of thing doesn't happen here. Naturally, the FCA's (continual and manifest) failures are rightly pointed out and they get all defensive and pass/agg when put under the spotlight. But to be fair to them, if any institution had tried this filthy trick they would have been shut down before you can say Hector Sants.

https://lmgtfy.com/?q=PPI

Again, the practice of offering better conditions to members is not illegal nor fraudulent.

Indeed not.

The PPI "scam" has, in some cases, worked both ways...

Indeed, but the one difference between the Uk PPI and this Italian scandal relates to compensation. The cost of sorting out the UK PPI debacle is reckoned to be c£50 billion+. Eye-watering for the banks and institutions involved, but ultimately affordable. In my veiw PPI refunds have been a driver in the general UK economic revival over the last few years.

However there's no way that bankrupt Italian institutions have got a single lira set aside to pay restitution to customers. Nor will the regulators demand they do, since they know the blood/stone analogy. Consequently we see the comment in the Shaun Richards article that regional GDP in Venito is estimated to fall by 3-4%.

This, in anyone's terms, is a massively different end result.

Edited by Andy Zarse on Friday 25th November 16:34

[jjlynn27]

from the start of this thread

Andy Zarze said:

The Euro will stagger on for another year or so. From day one I said this will take years to unravel, and origianlly punted 2014 as Euro D(estruction) Day. I have no reason to change my mind, though I can't now see it happening before that.

This thread just keeps giving.

[dandarez]

jjlynn27 said:

from the start of this thread

Andy Zarze said:

The Euro will stagger on for another year or so. From day one I said this will take years to unravel, and origianlly punted 2014 as Euro D(estruction) Day. I have no reason to change my mind, though I can't now see it happening before that.

This thread just keeps giving.

while you just keep

TOFL

Doesn't take much to guess what the T stands for

...does it?

[Andy Zarse]

jjlynn27 said:

from the start of this thread

Andy Zarze said:

The Euro will stagger on for another year or so. From day one I said this will take years to unravel, and origianlly punted 2014 as Euro D(estruction) Day. I have no reason to change my mind, though I can't now see it happening before that.

This thread just keeps giving.

So tell us, how do you think the Eurozone is doing? Is the crisis over? Are they all happy campers? Have the contradictions of its construction being resolved?

[loafer123]

The Market Can Remain Irrational Longer Than You Can Remain Solvent

...but eventually it does become rational.