Depfa still an 'Irish bank'??? German Banks Inside the IFSC and Out

[TotalMayhem]

According to an article in Der Spiegel (http://www.spiegel.de/wirtschaft/unternehmen/0,1518,730449-4,00.html), Irish banks were cut off from the capital markets in October and received aid to the tune of 150 billion Euro. 20 billion Euro from the Central Bank of Ireland, topped up with 130 billion Euro from the ECB.

Short term loans from the ECB to Irish banks*:

http://img405.imageshack.us/img405/7057/20101123034111clipboard.png

* Milliarden = billions

Depfa Bank (http://en.wikipedia.org/wiki/Depfa_Bank) was purchased by German mortgage giant Hypo Real Estate in October 2007. Through a series of bailouts, the German government ended up with 100% ownership of Depfa's parent company, Hypo Real Estate.

How come Depfa Bank still appears on the 'Irish balance sheet'?

This so-called bank, hardly a household name in Ireland, certainly dwarfs the terrifying figures we have gotten used to hear in connection with Anglo. Depfa is said to be responsible for at least two thirds of the HRE losses (well over 200 billion Euro).

[Captain Con O'Sullivan]

Ah ... Depfa ... its owner Hypo was indeed bailed out by the German government and I've been snuffling around the news reports on that from some of the English language editions of the German newspapers and the one impression I am left with is that Depfa/Hypo was very hurriedly taken under Mrs Merkel's wing in order to keep the lid on the behaviour of a number of German banks in connection with low regulatory regimes like the Dublin IFSC and in particular some of the transactions run via Austria and elsewhere.

Hypo I am convinced is an iceberg in connection with German banks and Mrs Merkel is in the same position as Cowen and Lennie two years ago in that she doesn't want a light shone in this area.

If the German electorate knew what the banks had been doing to put holes in their own balance sheet very like our friend Sean Quinn did to Quinn group then there would be serious uproar in Germany.

Hypo isn't the only German bank involved either ... I'm certain of that.

[TotalMayhem]

But why do loans from the ECB to Depfa (which obviously received more than any other 'Irish bank') appear on the 'Irish balance sheet'???

[Captain Con O'Sullivan]

Because Depfa is registered as a subsidiary of Hypo in the Dublin IFSC I should imagine ... unless there is a reason why Depfa's books should not be looked at in Germany by German regulators;)

[TotalMayhem]

Isn't it funny then, that we don't hear a word about this house of horror then in the news HERE if their debt is being dumped upon us as well?

[Captain Con O'Sullivan]

Thats exactly it ... Mrs Merkel doesn't want Depfa's books being looked at in Germany for the same reasons Cowen and Lenihan don't want Anglo's books being looked at... the German taxpayer has effectively bailed out Hypo whose books are clean except for the losses at the Depfa subsidiary in Dublin IFSC ... the losses are effectively from the offshore subsidiary at Hypo and she's managed to keep German eyes focused on the holding company.

The more snuffling around I do on this in Germany and in Italy the more I suspect that the events at the Quinn Group are a pointer to what's been happening at a number of large banks across Europe.

Its politically more palatable for the German government to be able to keep Depfa books at arms length from the German taxpayer in the same way that Quinn transactions are muddied...

The politicians can't accept the fallout from the truth becoming known because the first question will be 'where was the regulation'?

[TotalMayhem]

The more snuffling around I do on this in Germany and in Italy the more I suspect that the events at the Quinn Group are a pointer to what's been happening at a number of large banks across Europe.

Could this be true then??? ;)


Basically it boils down to this. The system of finance, globally, must lower its level of indebtedness. The obvious place is bank bad debts. That has been ruled out by the financial class via our oh so compliant politicians. The other way to lose indebtedness is to use a country or countries as a conduit for debt reduction - a sphincter through which to sh!t out as much debt pressure as possible. Ireland is already in that ignominious position.

And so it has come to pass for Ireland. European and UK banks are now going to use Ireland as their sphincter.

Sphincter-nomics (http://golemxiv-credo.blogspot.com/2010/11/sphincter-nomics.html)

[Captain Con O'Sullivan]

Looks about right to me....

[C. Flower]

Very interesting thread.

[TotalMayhem]

Very interesting thread.

I stumbled upon this last night, and TBH, i couldn't believe my eyes when I spotted Depfa topping the (s)hitlist of 'Irish banks' ...

[Captain Con O'Sullivan]

Strange sort of schizophrenic half-lit world some of these heavy gambing bank subsidiaries inhabit .... they are foreign and full of FDI when ministers are thinking of taxes ... when regulators look at them they are in the IFSC and therefore in a low tax and low regulation environment .... when they want their debts paying off they are as Oirish as a Boston Barmaid on paddys day.

Guess thats why banks like offshore centres. A flexible profile for a flexible economy. Always flexing away from regulation and horrific things like accountancy and flexing towards money laundering and gambling like a Vegas whore.

[C. Flower]

According to an article in Der Spiegel (http://www.spiegel.de/wirtschaft/unternehmen/0,1518,730449-4,00.html), Irish banks were cut off from the capital markets in October and received aid to the tune of 150 billion Euro. 20 billion Euro from the Central Bank of Ireland, topped up with 130 billion Euro from the ECB.

Short term loans from the ECB to Irish banks*:

http://img405.imageshack.us/img405/7057/20101123034111clipboard.png

* Milliarden = billions

Depfa Bank (http://en.wikipedia.org/wiki/Depfa_Bank) was purchased by German mortgage giant Hypo Real Estate in October 2007. Through a series of bailouts, the German government ended up with 100% ownership of Depfa's parent company, Hypo Real Estate.

How come Depfa Bank still appears on the 'Irish balance sheet'?

This so-called bank, hardly a household name in Ireland, certainly dwarfs the terrifying figures we have gotten used to hear in connection with Anglo. Depfa is said to be responsible for at least two thirds of the HRE losses (well over 200 billion Euro).


What's the source of that table, Total Mayhem ? Who produced the figures?

[TotalMayhem]

What's the source of that table, Total Mayhem ? Who produced the figures?

Table is a screen shot, taken from Spiegel Online, see the link in the OP, Source (Quelle): Barclays Capital

[C. Flower]

Table is a screen shot, taken from Spiegel Online, see the link in the OP, Source (Quelle): Barclays Capital

Yes - but do we know if it has any official standing?

[C. Flower]

Dan Boyle today in the Senate referred to unhealthy related activities of German and Irish banks.

[TotalMayhem]

I don't really know, but these figures were discussed on VB tonight and Barclays was mentioned.

[C. Flower]

I don't really know, but these figures were discussed on VB tonight and Barclays was mentioned.

I'll see if I can get a reply via twitter :)

[Newsy]

Because Depfa is registered as a subsidiary of Hypo in the Dublin IFSC I should imagine ... unless there is a reason why Depfa's books should not be looked at in Germany by German regulators;)


A specialist lender to governments and municipalities, Depfa had barely raised an eyebrow outside Dublin financial circles since it transferred its headquarters from Germany to Ireland in 2002 -- to tap the local educated workforce, "favourable" regulatory environment and, of course, the 12.5pc corporate tax rate..............

The presence of Ireland at the epicentre of the drama has left a bad taste in the mouths of many in Germany.

http://www.independent.ie/business/irish/depfa-demise-could-have-been-irelands-biggest-headache-1761066.html

Depfa's HQ's were in Dublin......and remember, when in Ireland do as the Irish do...!!!!

[TotalMayhem]

It really looks like we're being saddled here with 35 billion Euro of foreign debt in the hope that nobody will notice:


BarCap remind that there’s a distinctly German accent to a sizeable portion of those recent borrowings, and also that there’s an apposite calendar date here:

Of the EUR130bn headline borrowing number at the ECB, only EUR95bn relates to domestic Irish banks. Indeed, EUR35bn is linked to non ‘domestic’ Irish banks, which is almost entirely accounted for by the Hypo Re/Depfa group. These borrowings will likely disappear (or be transferred to Germany) on Dec 23, when the 1y Dec09 LTRO matures…

Try not to peek under the gift-wrapping paper before then, of course.

On the other hand, Irish taxpayers must already know what it’s like to find a large surprise when the wrapper comes off

Sorce: FT Alphaville (http://ftalphaville.ft.com/blog/2010/11/19/410571/to-rebuild-an-irish-banking-system-part-two/)

Happy Christmas, Mr. Ackermann
(http://www.politicalworld.org/showthread.php?t=5608)
http://img230.imageshack.us/img230/1617/20101122032011clipboard.png

[Newsy]

Depfa was among less than a handful of IFSC-based institutions that made a failed bid to join the Irish banking guarantee scheme. They were turned down because of the sheer size of their liabilities and the fact that they didn't have an Irish retail customer base.

http://www.independent.ie/business/european/lenihan-ruled-out-role-in-hypo-deal-1761029.html


But on the morning of September 29 last -- just 24 hours before the Government here unveiled its blanket guarantee of Irish lenders -- German Finance Minister Peer Steinbrueck announced that Hypo had received a €35m credit line from a consortium of other banks to keep it afloat.

http://www.independent.ie/business/irish/depfa-demise-could-have-been-irelands-biggest-headache-1761066.html

It appears very peculiar that on the morning that we DIDN'T guarantee Depfa, it's parent received a credit line of 35 billion........now, Depfa (Irish Bank) gets 35 billion!!!

Could be a co-incidence, then again, maybe not!!!

Would have liked to have been a fly on the wall during that conversation between our finance man and germany's!!!

[TotalMayhem]

And Deutsche Bank played a crucial role in the 'rescue' and subsequent nationalisation of HRE.

[Béal na Bláth]

35 Billion Euros plus interest of Irish workers contributions to the running of their state goes to mitigate the losses of a German bank with this guy as chief:


Recklessness, bravado and greed were the hallmarks of the troop of executives surrounding Gerhard Bruckermann, who ran Depfa -- a company registered under Irish law for the financing of government projects -- before selling it to HRE in the summer of 2007.

Five years earlier he had moved important parts of the company, which was supposedly rock solid but whose management took too many risks, to tax havens in order to save on taxes.

Bruckermann rewarded himself and his management board for such creativity by raising the board's salary by 100 percent in 2003 -- to €20 million. He went on amass an even greater personal fortune: he is believed to have earned €100 million through the HRE deal.

Insider Trading Alleged at Hypo Real Estate A Black Hole in the Banking Bailout (http://www.spiegel.de/international/business/0,1518,598499,00.html)

[TotalMayhem]

35 Billion Euros plus interest of Irish workers contributions to the running of their state goes to mitigate the losses of a German bank with this guy as chief

Add to that the 17 billion Euro 'emergency funding' for Depfa provided by the Central Bank of Ireland in 2009.

Mr Bruckermann is said to have funneled up to half a billion from the Depfa sale to HRE in 2007 into his personal coffers. He held well over 8 million shares in Depfa Bank plc at the time. Oh, and he's never been questioned by the commission of the German Bundestag dealing with the goings on in Hypo Real Estate.

[Captain Con O'Sullivan]

Interesting that the German authorities are going after Bruckermann on insider dealing charges.

That smells like it could be a deal with Bruckermann pleading down from market manipulation charges to insider dealing which is a fine and probably a suspended jail sentence if major- short time anyway.

Given the way the likes of Fitzpatrick and Bruckermann were bobbing to the top of the banking game and all major banks were in the same business profile then its safe to assume there is something very rotten in the financial affairs of Europe.

If what I think has happened is that various banks in Europe have had an arms race in terms of derivatives traded through low regulatory environments like the IFSC and they are now obliged by law to keep funds available against those gambles unwinding then that would explain the liquidity crisis around the banking system for the last couple of years.

It would explain why Germany have taken two clear political about-faces ((1) they've changed their minds on Hypo when Merkel was on record as being dead against bailing out banks (2) they've resisted bailing our Greece and then turned the taps on for the PIIGs through the ECB and are talking about a QE programme.

I think in the time between Merkel and Lenihan declaring themselves dead set against bailouts of private banks and the furious shovelling of public money into the banks since is a signal that both Lenihan and Merkel are aware of the size of the derivative liability monster the banks are using now as a lever.

[TotalMayhem]

That smells like it could be a deal with Bruckermann pleading down from market manipulation charges to insider dealing which is a fine and probably a suspended jail sentence if major- short time anyway.

The article is over 2 years old and dealing with HRE. From what I know, Gerhard Bruckermann's actions are not nor have they ever been subject of criminal prosecution in Germany or Ireland. Reckless? Most certainly, but all very legal.

[morticia]

Denial is a river in Egypt, innit, Angela...... sprechen Sie Dub???

[DCon]

Depfa (Ireland) included on a long list of German banks placed on negative watch


Moody's Investors Service has today placed on review for possible downgrade the ratings of 246 subordinated debt securities together with the subordinated tranches of the relevant debt programs issued or guaranteed by 24 banks in Germany (including one Irish subsidiary of a German bank). This follows the German parliament's approval of the German Bank Restructuring Act, which will become legally effective as of 1 January 2011.


Please see below for a full list of the affected banks and their current Adjusted BCA excluding systemic and regional and local government (RLG) support. All outstanding deposit and debt ratings are available on www.moodys.com. For the banks indicated by RLG and as discussed above, Moody's may decide to include some degree of RLG support in the Adjusted BCA for the purpose of rating subordinated debt as part of its review.



Bayerische Landesbank: Adjusted BCA equivalent to Baa3 (RLG);

Bremer Landesbank Kreditanstalt Oldenburg GZ: Adjusted BCA equivalent to A2 (RLG);

Commerzbank AG: Adjusted BCA equivalent to Baa1;

DekaBank: Adjusted BCA equivalent to A2;

DEPFA Bank plc (Ireland): Adjusted BCA equivalent to B2;

Deutsche Apotheker- und Aerztebank eG: Adjusted BCA equivalent to Baa1;

Deutsche Bank: Adjusted BCA equivalent to A2;

Deutsche Hypothekenbank AG: Adjusted BCA equivalent to A3;

Deutsche Pfandbriefbank AG: Adjusted BCA equivalent to B1;

Deutsche Postbank: Adjusted BCA equivalent to Baa1;

DVB Bank S.E.: Adjusted BCA equivalent to A2;

DZ BANK AG Deutsche Zentral-Genossenschaftsbank: Adjusted BCA equivalent to A2;

Eurohypo AG: Adjusted BCA equivalent to Ba1;

HSH Nordbank AG: Adjusted BCA equivalent to Ba2 (RLG);

IKB Deutsche Industriebank AG: Adjusted BCA equivalent to Caa1;

Landesbank Baden-Wuerttemberg: Adjusted BCA equivalent to A3 (RLG);

Landesbank Berlin AG: Adjusted BCA equivalent to Baa1;

Landesbank Hessen-Thueringen GZ: Adjusted BCA equivalent to A3 (RLG);

Muenchener Hypothekenbank eG: Adjusted BCA equivalent to A2;

Norddeutsche Landesbank GZ: Adjusted BCA equivalent to A2 (RLG);

Sparkasse KoelnBonn: Adjusted BCA equivalent to Baa3 (RLG);

UniCredit Bank AG: Adjusted BCA equivalent to A3;

Volkswagen Bank GmbH: Adjusted BCA equivalent to A3;

WestLB AG: Adjusted BCA equivalent to Ba3 (RLG).


http://www.zerohedge.com/article/moodys-puts-greek-ba1-24-german-banks-debt-rating-downgrade-review

[C. Flower]

I didn't get an answer, as to whether that was Irish of German borrowings, the €35 billion from the ECB.

C. Gurdgiev said he didn't know.

One for Joan Burton?

Or a direct question to the Department of Finance.

It is, after all, €35 billion.

[PaddyJoe]

I'm sure this is quoted on a bank thread already but by the way of a reminder:

THE Irish Central Bank was providing €17bn in repo loans to the German bank Depfa at the height of the financial crisis, new figures from its parent, Hypo Real Estate, reveal.

The bank got into serious difficulties in 2008 and German bankers grew worried that it could become Germany's Lehman Brothers.

The 2009 annual report for Hypo Real Estate now discloses that the Central Bank here still has a €4bn exposure to Depfa-Hypo.

The Central Bank declined to comment yesterday but it is understood that the funds were provided to Depfa as part of the ECB's eurosystem of liquidity assistance.

Because Depfa was based in the IFSC, the Irish authorities became the conduit for the assistance.
http://www.independent.ie/business/irish/central-bank-had-836417bn-exposure-to-depfa-bank-2183474.html
That 17 billion figure is quite astonishing.

[Captain Con O'Sullivan]

The conduit ... or the tent peg over German banking that was threatening to flap and pull the tent away.... I see Unicredit and Deutsche Bank feature in the downgrade...

[TotalMayhem]

It is understood that the funds were provided to Depfa as part of the ECB's eurosystem of "Screw the Irish".

Because Depfa was based in the IFSC, the good people of Ireland became the sheep to be shorn.

Whoever was involved in the process to issue a license to this rogue gambler Bruckermann should be thrown in jail and the keys 'mislaid'.

[Captain Con O'Sullivan]

Looks obvious to me that Merkel suddenly reversed her policy on bank bailouts just the same way Lenihan did when the grinning bankers told them that if they didn't bail it out the full scale of the fraudulent profile of bank report and accounts across Europe would come to light.

Thats what's scared Merkel and Lenihan into reversing declared policies and suddenly attempting to sweep the affairs under a carpet of public money.

It'll come out in the end. If I'm right about the scale of the problem then what politicians are doing is trying to slice and dice up the massive debts and get the taxpayers to pay for it so that it doesn't come out that both German, Irish, European and global regulators have been doing sweet FA to prevent the banks getting around proper governance.

In fact in a number of jurisdictions because of the revolving door relationship of bankers with financial regulators I would go so far as to say that regulators have facilitated the banks in this. Definitely in Ireland and Patrick Neary can attempt to sue me if he likes. His funeral.

'Good man yourself Willie'

[TotalMayhem]

Depfa still an 'Irish bank'???

David Malone elaborates on this question:

Ireland was Germany's off-shore tart (http://golemxiv-credo.blogspot.com/)

[Captain Con O'Sullivan]

Great article that ... David Malone has been about the most reliable professional commentator on banking in Europe and Ireland (and the deliberate lack of regulation arranged around it) that I've seen.

[wickedfairy]

interesting graph here from one of the comments on Golem's Depfa article, note Iceland's position vis a vis ours!

85

[TotalMayhem]

David mentioned 2 German TV documentaries in his article. Both referring to an international law firm which had arranged the Depfa/HRE deal.

But not only that, the same law firm with headquarters in the UK later drafted the German legislation regarding the nationalisation of the bank.

Here's a press release (http://www.freshfields.com/news/mediareleases/mediarelease.asp?id=1949) from that law firm, boasting how they scr3wed the shareholders:


... recognised as ‘Most Innovative European Law Firm’ at Financial Times awards ... for the firm's role as the strategic adviser to the German government during the credit crunch. In particular, its work drafting initial legislation to the crisis and development of a unique expropriation act to deal with non-cooperative shareholders of Hypo Real Estate bank.

Lovely, f*cking lovely.

And 'international' they certainly are: "The magic circle firm" is also advising Bank of Ireland, AIB, Anglo Irish Bank, RBS, the Irish government, Sweden's SEB, UBS, Bank Austria, Unicredit, ABN Ambro... the list goes on and on and on.

Maybe they drafted the Finance Act 2011, who knows?

[wickedfairy]

bankers host lavish parties in Davos and Gallaghers bakery obituary read tonight. A whole town sunk.

[morticia]

Very interesting article. In many ways, our stupid property bubble has made us the scapegoat for a lot of unrelated shenanigans that has very little to do with us. However, I suspect Bafin (the German regulator) may have tacitly accepted this when it bailed HRE/Depfa out..... we are, at least, not liable for THAT debt.

[TotalMayhem]

I suspect Bafin (the German regulator) may have tacitly accepted this when it bailed HRE/Depfa out..... we are, at least, not liable for THAT debt.

You suspect quite wrong, if you have a look at the graph in the OP it will become clear that Depfa is in fact getting by far the biggest chunk of our bailout money (25% more than Anglo), and there's no end to it. Depfa is still VERY active.

[morticia]

You suspect quite wrong, if you have a look at the graph in the OP it will become clear that Depfa is in fact getting by far the biggest chunk of our bailout money (25% more than Anglo), and there's no end to it. Depfa is still VERY active.

That is ridiculous. i thought the bailout money was only for the guaranteed institutions. How did that one get past us??

I'm aware they account for a lot of ECB bank lending that counts as "bank loans to Irish banks" but they're guaranteed by the German system, not us. We should not be paying for them, and I'm actually not sure that we are, to be totally honest.

[TotalMayhem]

That is ridiculous. i thought the bailout money was only for the guaranteed institutions. How did that one get past us??

I'm aware they account for a lot of ECB bank lending that counts as "bank loans to Irish banks" but they're guaranteed by the German system, not us. We should not be paying for them, and I'm actually not sure that we are, to be totally honest.

Well, we are paying it.

And we better honour "the promises that Ireland as a sovereign has made". Or else we will become the next Zimbabwe (acording to bully Lorenzo (http://www.irishtimes.com/newspaper/world/2011/0115/1224287578339.html))

[TotalMayhem]

By the way, David has just posted the follow up:

Ireland was Germany's Off-shore Tart - PART 2 (http://golemxiv-credo.blogspot.com/2011/01/ireland-was-germanys-off-shore-tart_26.html)

[morticia]

Well, we are paying it.

And we better honour "the promises that Ireland as a sovereign has made". .

That was referring to guaranteed institutions, of which Depfa is not one. We have not ever made any promises with respect to foreign banks; Depfa was taken over by Bafin about a year before everything went snake. Merkel and Co paid over 100bn into HRE in 2008. The UK has bailed Ulster and Bank of Scotland Ireland.

I'm not saying you're wrong...... but I have not seen anything in the mainstream media that implies any of our bailout money is going to Depfa. Sure, they're tallied as an Irish based bank when the monies lent short term by the ECB are calculated. But we are only responsible for the guaranteed institutions in terms of reducing their dependence on the ECB as far as I am aware. All of the stuff in the IT, FT, etc is all about BoI, AIB, Anglo, etc, not the others, surely.

[Frankie Lee]

By the way, David has just posted the follow up:

Ireland was Germany's Off-shore Tart - PART 2 (http://golemxiv-credo.blogspot.com/2011/01/ireland-was-germanys-off-shore-tart_26.html)

Goldman Sachs again.

[TotalMayhem]

Yes, big time, Goldman Sachs was/is acting as arranger and placement agent for Depfa programmes such as this (http://www.ise.ie/debt_documents/depfa%20acs%20Reg_9458.pdf) one.

[Captain Con O'Sullivan]

Great post again from David- notice the AIG Banque Paris affair? By the way I think this article on the Financial Crisis Inquiry report in the states is very relevant;

The US inquiry is on the money but assuming mistakes were made ...

http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html?src=me&ref=homepage

[TotalMayhem]

The biggest mystery in this affair to me is Depfa's US subsidiary First Albany Securities LLC. A bank with a $400bn balance sheet disappears from the face of the earth without anyone taking notice? Lehman's $700bn collapse sent shockwaves around the world.

[wickedfairy]

Well, we are paying it.

And we better honour "the promises that Ireland as a sovereign has made". Or else we will become the next Zimbabwe (acording to bully Lorenzo (http://www.irishtimes.com/newspaper/world/2011/0115/1224287578339.html))

apparently Lorenzo Bini Smaghi is linking in to Primetime tonight, twitter at the ready troops, let the battle begin.

[TotalMayhem]

apparently Lorenzo Bini Smaghi is linking in to Primetime tonight, twitter at the ready troops, let the battle begin.

I'd love to kick this f*cking arrogant b@$t@rd's @r$e all the way to bloody Zimbabwe.

[morticia]

I'd love to kick this f*cking arrogant b@$t@rd's @r$e all the way to bloody Zimbabwe.

If Primetime has any sense, they'll get Joe Higgins on there to oppose him. And Noonan, possibly Joan Burton as well.

Let's see some Govt. in waiting action.

Preparing to be disappointed, however.

[capricorn3]

It's all down to the same thing...banking, political or whatever. We have been invaded by the Germans. They are still the same Nazis that they ever were...looking to dominate Europe. Only this time they have managed to invade Ireland without even firing a single shot...all because of the idiots and greedy corruptors in FF!

[jimmymalone]

Has there been any updates on this story since?

[Captain Con O'Sullivan]

The spectre of Depfa appears to have risen again ... there are reports out of the United States following a losing two year battle by Ben Bernanke US Federal Reserve Chairman to prevent disclosure of the funding provided by the US to foreign banks during the international banking crisis that Depfa in Dublin received $24.5billion from a 'secret reserve' made available by the Fed in and around October 2008.


'Dexia SA (DEXB), based in Brussels and Paris, borrowed as much as $33.5 billion through its New York branch from the Fed’s “discount window” lending program, according to Fed documents released yesterday in response to a Freedom of Information Act request. Dublin-based Depfa Bank Plc, taken over in 2007 by a German real-estate lender later seized by the German government, drew $24.5 billion.

The biggest borrowers from the 97-year-old discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record. The disclosures may stoke a reexamination of the risks posed to U.S. taxpayers by the central bank’s role in global financial markets.'

The Great American Public are about to hit the roof one suspects and this could get interesting with the US's well known reach across the globe. Will this result finally in a Congressional Committee of Inquiry where Depfa and parent bank Hypo and in the final analysis Unicredit get their underpants searched?

Bloomberg article
http://www.bloomberg.com/news/2011-04-01/foreign-banks-tapped-fed-s-lifeline-most-as-bernanke-kept-borrowers-secret.html

[Captain Con O'Sullivan]

One additional article which contains among other things (In German only but will try for a smooth and accurate translation in the morning) it seems to contain the startling news that when our friend Angela Merkel was under pressure to explain why Hypo which took over Depfa pretty sharpish in 2008 and no bondholder haircuts were arranged (leaving the German taxpayer on the hook for the subsequent bailout of crippled Hypo) she choose to use a remarkably similar series of fob-offs that Brian Lenihan used in Ireland.

She told (if I am reading this article right) the German public that the bondholders were little old ladies retirement funds and charities' endowments ... sound familiar? Remarkable that two politicians in similar circumstances should both use the same weary nonsense trying to divert attention from the private wealth funds in bondholder nominee accounts.

This is alarming because if my reading is right then both politicians deliberately misled both their parliaments and their electorate.

Charities and pension funds do indeed invest in corporate bonds thats true but both Lenihan and Merkel went for cover on that front and suspiciously tried to cover the entire financial picnic with that small blanket.

Will try to provide a full translation in the morning so you can see what I mean. Thanks to the eagle eyed poster here who spotted this one...http://www.tagesspiegel.de/wirtschaft/finanz/die-geretteten/1598962.html

[Dr. FIVE]

Ve have turned ze corner

Obama has used that too as it goes.

YouTube - Obama: "We're Beginning to Turn The Corner" On Jobs, Economy

[Captain Con O'Sullivan]

Will try to provide a full translation in the morning so you can see what I mean. Thanks to the eagle eyed poster here who spotted this one...http://www.tagesspiegel.de/wirtschaft/finanz/die-geretteten/1598962.html


Here we go ... a bit of a clumsy translation but the remarkable story given to the German taxpayers by the German government (fed by bankers of course) is one many here will recognise. I'm beginning to wonder whether certain banks contrived this situation deliberately because they knew they were staring at a pan-global derivative bomb and wanted public money on a conveyor belt to cover for that. As it happens I don't think the derivates stuck in limbo over the North Sea and west to Washington can actually be unwound as it seems to me to be a multiple of available international resources. Something very fishy indeed here.

'The Rescue'

Taggespiegel Deutschland 01 April 2011

'In order to save the stricken bank HRE taxpayers money in the double-digit billions were required. But the government withheld the identity of the lender while committing public money to repay the loan. So the citizen must pay but to whom we do not know. We document below a list of those banks rescued who should be repaying the borrowed money.

Japanese farming cooperatives are off the hook once more. Two and a half billion euros propped up the Norinchukin Bank (the Central Institute of Japanese Cooperative Banks), Depfa plc in Dublin, Ireland as it had broken its parent company Hypo Real Estate Holdings (HRE) and brought it to the brink of financial collapse. Without an injection of funds the company would surely have gone under.

The Italian bank Unicredit similarly was left exposed to subsidiary Hypo-Vereinsbank which itself had borrowed from HRE after emerging from that organization and was left struggling with unsecured debt of more than 2billion euros.

And HRE’s creditors had something in common. Deutsche Bank, insurer HUK Coburg, Allianz AG and hundreds of other creditors at home and abroad had lent on an unsecured basis and without collateral or examination lent at rates which promised an attractive return to HRE. HRE borrowed between 83billion and 100billion euros in a relatively short period from a wide variety of institutions.

The list of lenders ranges from U.S. banking giant JP Morgan to the Emden supplementary pension fund for bank employees. They would all have suffered damaging losses if the Federal Government and its taxpayers had not moved tro vail out the bank to the tune of 87 billion euros in new credit lines to HRE, in order that they in turn could pay their creditors. Because the bank suffered enormous losses it then had to be nationalized, in order to avoid defaulting and breaking agreed covenants. The final figures may include a call on the Treasury for a further 20 billion euros.

But was this expensive rescue absolutely necessary? It was these lists of unsecured creditors, based on which Finance Minister Peer Steinbrück (SPD) and Chancellor Angela Merkel (CDU) on Sunday, 28 September 2008, decided to set aside the philosophy of the free market economy and override those regulations in order to make the funds available to cover HRE’s unwise gambling.

The reason given was that the bank was "systemically important", that was too big to be allowed to fail. The losses at other banks had become so great that the confidence in the system overall would have collapsed and there would effectively have been “no German banks left unscathed " German Bank CEO Josef Ackermann warned that fateful Sunday.

It would have to be the citizens and not the bankers who would have to do come to the rescue the Chancellor subsequently announced. And Hannes Rehm, head of the Special Stabilization Fund (Soffin), went so far as to say that "more than 100 billion euro in unsecured funds were at risk", being for the most part represented by pension, social and church investments ".

But rather than lead with evidence for these claims a veil of secrecy enveloped the data on the bank bailouts.

It was all about "operational and commercial confidentiality, the disclosure of which could harm the economy and for which a statutory obligation of secrecy applies, " a spokesman for the Treasury said in support. In fact, the only damage lies with the taxpayer. And the burden of proof on the government to the citizen should be sufficient for an exemption to normal commercial confidentiality requirements.

The information required was possibly not clearly known. The Treasury had not been prepared for this worst case scenario. The Governor of the Federal Bank was left with only hours to assemble data before taking the decision to guarantee up with Berlin.

Nevertheless, the debate about the meaning of HRE-rescue and the distribution of the burden can now be undertaken with reliable data. It is clear, for example, that in the first place "church funds" (contribution: 392 million euros) were saved, but foreign banks and fund managers were left facing a 40 billion hit.

It is also clear that the Bavarian State Government must once again be grateful because their already ailing National Bank were spared a further two billion euro loss.

The question may arise why so many public pension funds or the WDR risked the money of their contributors. And finally now utilising hard numbers, the debate can begin about whether the sums were in fact right and only now can a proper examination of the issue begin.

LIST of unsecured money market borrowings and loan notes on the books of Hypo Real Estate Group as at 26.9.2008 (term less than one year, in million €)

All domestic and foreign investors a total of 83 410

Of these private German banks: 12 853

including Unicredit SA (Hypo-Vereinsbank) 2024
German Post AG, Bonn (Post Bank) 976
DZ Bank AG, Frankfurt 471
German Bank AG, Frankfurt 274
Commerzbank AG, Frankfurt 246
German pharmacists and doctors Bank, Dusseldorf 261

Cooperative Banks 1084

German public banks (excluding banks) 4406

including BayernLB Holding AG, Munich 2125
NRW Bank, Dusseldorf 750
Agricultural Bank pension, Frankfurt 553
KfW Banking Group, Frankfurt 393
Nassau Sparkasse, Wiesbaden 210
LBBW, Stuttgart 198
Lfa Development Bank of Bavaria, Munich 191
HSH Nordbank AG, Hamburg 116
North German Landesbank, Hanover 111
Sachsen-Finanz Group, Leipzig 40

Sparkassen 1311

foreign banks 23 348
(See list of unsecured depositors of Depfa plc)

foreign central banks, multilateral
Development banks, central governments, 4153

Other foreign 15 314

German insurance companies and pension funds 10 498

including HUK Coburg 1486
Allianz SE, Munich (including Dresdner Bank) 833
United Insurance Hanover, Hanover 422
HDI Insurance Association, 275 Hanover
Debeka Koblenz 237
Munich Re AG, Munich 234
AXA SA, Paris 138
Alte Leipziger LV and Halle KV 2

German public entities 8205

including Bayerische supply chambers (BVK) 555
Saxony 500
Munich 418
Land Baden-Württemberg 400
Lower Saxony 400
Land Berlin 288
Regional Association of Westphalia-Lippe 236
Management BG Hamburg 226
Protestant Church 202
Schleswig-Holstein 200
Catholic Church 190
BG Chemical Industry 168
West German Radio 147
Rheinische Zusatzversorgungskasse 135
Retirement Fund of the Federal and State 130
Trust Centre for Bergmann 130 dwellings
Versorgungseinricht. d. Medical Association Sch.-Holst. 120
Federal Office of Defence Technology and Procurement 113
Hamburg 80
Regional Association of Westphalia-Lippe 80
State Medical Association Hessen supply Werk 80
Pension plan of the Chamber of Architects North Rhine-Westphalia 75
Supply Association of Bavarian communities 75
Bayerischer Rundfunk 69
ASHIP Bavaria 62
Community care association as 45-Württemberg
Frankfurt am Main 35
Landkreis Karlsruhe 9
Other German depositors 2238


Holders of unsecured debt securities of the HRE Group as at 26 September 2008 ("Medium Term Notes, 2-10 year term, in million €)

German Bank, London, Frankfurt, Zurich 1541
Barclays Bank, London 815
Unicredit, HypoVereinsbank, Zurich, Munich 707
ABN Amro, Zurich 616
J. P. Morgan Chase Bank, London 511
Credit Suisse, London, Zurich 188
Hong Kong Shanghai Banking Corp., HSBC, London 71
Banco Bilbao Vizcaya 37
Zürcher Kantonalbank 31
Meinl Bank, Vienna 5


Holders of unsecured debt with the HRE Group as at 26th September 2008 ("Registered Notes", 10-40 year term, in million €).

Debeka life insurance company 235
Debeka Krankenversicherungsverein 205
AXA Life 210
German medical insurance 136.5
HDI Gerling Life Insurance 85
DBV Winterthur Life Insurance 80
Emden supplementary pension fund for savings banks 60
Inter Health Insurance 40
Hamburg Pension Fund of 1905 WSR 30
Bavarian doctors supply 22
HDI Gerling companies and 20 private
ARAG 20
Nuremberg life insurance 20
Bayerische pharmacist supply 11
Bavarian Versorgungsverband 11
Bavarian architect supply 5
Supply system of the Medical Association Munich 5
FSD Bank Regensburg 5
Hamburg-Mannheimer Pension Fund 5
German reinsurance 5
Victoria 4 Pension Fund
Retirement Fund of the German Culture 3.5
Retirement Fund of the German stage 3.5
Bavarian lawyer and tax requirements 3
Hamburger pension fund coverage VVA 2.5
Debeka General Insurance 2
Saxon-Thuringian Apothekerversorgung 1.7
Debeka additional requirements 1.5
Inter General Insurance 1
Free choice of doctor and medical office of the members of a

[Captain Con O'Sullivan]

Why is 'Sparkassen' ringing a bell in my mind as I look down the list of bondholders ... wasn't that the name allegedly of an Anglo bondholder?

[DCon]

One IFSC German subsidiary to close its doors soon


THE Dublin subsidiary of Germany's fourth-largest bank, Landesbank Baden-Wurttemberg (LBBW), may be sold or closed within months, the bank announced in its company results.

LBBW Asset Management (Ireland), an IFSC-based investment vehicle of Landesbank Baden-Wurttemberg, may be sold by the end of the month or closed at some point in the future, according to the recently filed results.

A note on the subsidiary website read: "LBBW Asset Management (Ireland) plc is in the process of re-organising its business in Ireland. The website will be updated soon to reflect this change of business focus."


Gardai raided the offices of German bank SachsenLB three years ago as part of a much larger German police investigation into how SachsenLB nearly collapsed on the back of investments made at its Irish operations.

SachsenLB was folded into Landesbank Baden-Wurttemberg for a knock-down price after running into multi-billion euro liquidity problems which forced German banks to come up with a €17bn rescue package.

LBBW Asset Management (Ireland) said in its latest results that it paid a dividend of €25m to its German parent last year, more than four times the dividend paid in the previous year. The was the main reason for profits at the subsidiary slipping to €18.3m from €36.6m the previous year.

http://www.independent.ie/business/european/irish-division-of-troubled-german-bank-is-facing-selloff-or-closure-2667130.html

[C. Flower]

One IFSC German subsidiary to close its doors soon

http://www.independent.ie/business/european/irish-division-of-troubled-german-bank-is-facing-selloff-or-closure-2667130.html

The German banks seem to have had fun in the more or less completely unregulated IFSC.

I wonder how many more of these disasters remain to be reported.

[PaddyJoe]

Questions on Hypo in Germany once again:

GERMANY’S FINANCE ministry has dismissed claims that the final taxpayer bill for rescuing troubled property lender Hypo Real Estate (HRE) will top € 50 billion.
Last year the lender, nationalised after difficulties at its Dublin-based subsidiary Depfa, has shifted assets with a face value of € 176 billion to an external bad bank, FMS Wertmanagement.
The German government has said a loss of about € 3.9 billion is to be expected on these bad bank assets, to be shouldered by the public financial market stabilisation fund SoFFin.
But a German economist who has studied confidential HRE documents has said assets are of a “shockingly bad” quality – and that losses could be more than 10 times higher than previously thought.

http://www.irishtimes.com/newspaper/finance/2011/0806/1224301950533.html

[bokonon]

IFSC-based Sealink Funding Ltd is suing Bank of America and JP Morgan in a story that nicely illustrates the US subprime->IFSC->Landesbank chain:



JPMorgan Chase & Co and Bank of America Corp were hit with new lawsuits by investors claiming losses on USD 4.5 billion of soured mortgage debt, adding to litigation targeting the two largest US banks.
The plaintiff Sealink Funding Ltd said it lost money after buying nearly USD 2.4 billion of residential mortgage-backed securities (RMBS) from JPMorgan and USD 1.6 billion from Bank of America from 2005 to 2007, relying on offering materials that were misleading about the quality of the underlying loans.
According to court papers, Sealink is an Irish entity that oversees risky RMBS that contributed to the near collapse of Germany's Landesbank Sachsen AG.
Another plaintiff, Germany's Landesbank Baden-Wurttemberg, raised similar claims in a separate lawsuit against JPMorgan over USD 500 million of RMBS that it said it bought.
...
Bank of America spokesman Lawrence Grayson said the bank will defend against its lawsuit by Sealink, which "appears to be another sophisticated investor looking for someone to blame" for losses caused by a downturn in the economy.
...
http://www.moneycontrol.com/news/world-news/jpmorgan-bofa-sued-over-mortgage-debt-losses_592789.html




Sept. 30 (Bloomberg) -- Bank of America Corp.'s Countrywide unit was sued by Sealink Funding Ltd. in New York over $1.6 billion of residential mortgage-backed securities the fund purchased between 2005 and 2007.

Sealink filed the suit against Countrywide in New York State Supreme Court yesterday, seeking unspecified compensatory, rescissory and punitive damages. Sealink is a fund created to manage Landesbank Sachsen AG's riskiest assets after the German lender almost collapsed.

“Countrywide was an entity driven by only one purpose --to originate and securitize as many mortgage loans as possible into” mortgage-backed securities “to generate profits for the Countrywide defendants, without regard to the investors that relied on the critical, false information provided to them with respect to the related certificates,” lawyers for Sealink said in the lawsuit.
...
SachsenLB, a state-owned lender, received a 17.3 billion- euro ($23.2 billion) bailout in 2007 to support an investment vehicle that ran out of funding amid the credit crunch. Saxony agreed a week later to sell the bank to Landesbank Baden- Wuerttemberg to avoid closure. As part of the agreement, the state guaranteed to cover as much as 2.75 billion euros in possible losses from investments backed by assets including U.S. subprime mortgages that were placed in Sealink.

http://www.businessweek.com/news/2011-09-30/bank-of-america-s-countrywide-sued-by-sealink-funding.html


There is some Solocheck info on Sealink Funding here:
http://pastebin.com/3sXRN2zX

[Captain Con O'Sullivan]

Just looking at the the Directors names for that Sealink Funding Roger McGreal was appointed as a non-executive director of Irish Nationwide Building Society two years ago and is described as a 'banker'. http://www.businessandleadership.com/appointments/323-roger-mcgreal-irish/

Peter Blessing- 'Peter is a qualified engineer and Chartered Accountant. He spent a number of years working as a computer consultant with KPMG, and subsequently worked for many years in merchant banking having held senior positions in Allied Irish Banks plc and Credit Lyonnais. He serves on the boards of a number of companies. He is a member of the Advisory Committee of the Gensec Venture Capital Fund.' (From the website of Corporate Finance Ireland) http://www.cfi.ie/People/CFI/Navigation.html

and Alan Geraghty; 'Mr. Geraghty joins SPV Management (Dublin) Limited from Dresdner Bank Lateinamerika AG in the Cayman Islands, where he was manager and head of special purpose vehicles. In this position, he managed an extensive portfolio of special purpose vehicles arranged by Dresdner Kleinwort Wasserstein in Frankfurt and London. His role encompassed the provision of a full range of accounting and corporate services. He also served as liaison with all outside parties involved in transactions. Earlier, Mr. Geraghty was an auditor with Coopers & Lybrand in the Cayman Islands and in Dublin.'

Source: http://www.allbusiness.com/company-activities-management/company-structures-ownership/5587930-1.html#ixzz1ZipwKNp9

So these three lads bought $4billion worth of shyte, relying as plaintiffs in the above case, on offer documents which were misleading.

Well done lads. Keep up that sort of analytical performance and you'll soon be headhunted for the Irish Dept of Finance. I'm not surprised one of them was an auditor with Cooper Lybrand. How would you expect a naif like that to smell a rat on $4billion valuations of crap mortgage securities?

[Dr. FIVE]

aaaaargh


Germany has found itself 55bn euros ($78bn; £48bn) richer after discovering an accounting error at Hypo Real Estate (HRE), the troubled bank it nationalised in 2009.

http://www.bbc.co.uk/news/business-15503097



The mistake at "bad bank" FMS Wertmanagement, happened because collateral for derivatives wasn't netted between the asset and liability side, an FMS spokesman said. As a result, FMS will only contribute about €161bn to Germany's debt this year, down from €216.5bn in 2010.


http://www.telegraph.co.uk/finance/economics/8857025/Germany-55bn-richer-than-it-thought.html

[PaddyJoe]

aaaaargh



http://www.bbc.co.uk/news/business-15503097





http://www.telegraph.co.uk/finance/economics/8857025/Germany-55bn-richer-than-it-thought.html

That's just massively reinforced my confidence in the accounting strategies being used by European banks;)

[Dr. FIVE]

error my hole,

probably had to sink underground to be washed in Dublin and sent half way round the world. Only coming home now

[devrajan]

The European Commission makes lofty claims about consumer protection but when it comes to enforcement of Community law, it is based on political expediency.

Further details by visiting

http://www.windlestopsswindle.com/permanent_tsb/european-commission/

Cheers

Srinivasan Devrajan, the common informer

[DCon]

Speaking of German banks..


Germany's government is preparing plans for a potential nationalization of Commerzbank AG (CRZBY, CBK.XE), in case the Frankfurt-based lender isn't able to raise additionally needed capital, German magazine Der Spiegel reports Sunday, citing government sources.

Germany will reactivate its bank bailout fund, SoFFin, to acquire additional shares in Commerzbank if the bank hasn't raised necessary capital by next summer, according to the report.

Germany already took around a 25% stake in Commerzbank to keep it afloat during the financial crisis following its acquisition of Dresdner Bank.

According to the report, it is assumed that the majority of new shares would fall to the government in the event of a capital increase for Commerzbank.

http://www.efxnews.com/story/7676/germany-preparing-potential-commberzbank-nationalization-plan

[TotalMayhem]

Like AIB, Commerzbank is a member of R0thschild's "Inter-Alpha Group of Banking".

[C. Flower]

Speaking of German banks..



http://www.efxnews.com/story/7676/germany-preparing-potential-commberzbank-nationalization-plan

Interesting comments from Keiser and Varoufakis that Germany might hope that a new Northern Euro/Deutschmark and the offloading into oblivion of the periphery (and possibly France) would bring about an inflow of funds into German banks that might succeed in masking their insolvency.

Hmmm.

I can see no more reason why that would work than would the Irish Bank Guarantee.

[Captain Con O'Sullivan]

It has been quite extraordinary watching the gap between the reality that German banks are up to their necks in exactly the same shenanigans that they condemn Greece, Italy and Ireland for with their political narrative of peripheral recklessness.

I can't believe the German political class are managing to keep from their own taxpayers the blatant regulation evasion their major banks were indulging in and the huge debts that German banks are simply treating as 'off balance sheet' transactions.

It is astonishing that the German people are none the wiser or are perhaps in deliberate denial that the German banking sector is more involved in continent wide recklessness on a grand scale than even the Irish or Italian banks.

[TotalMayhem]

The Bundesbank has cleared PricewaterhouseCooper and the HRE management of any alleged wrongdoings regarding a 55.5 billion Euro "accounting error" in HRE's 2010 balance sheet. Instead, HRE's Irish subsidiary Depfa gets the blame.

Source: Spiegel Online (http://www.spiegel.de/wirtschaft/soziales/0,1518,804189,00.html)

[PaddyJoe]

The Bundesbank has cleared PricewaterhouseCooper and the HRE management of any alleged wrongdoings regarding a 55.5 billion Euro "accounting error" in HRE's 2010 balance sheet. Instead, HRE's Irish subsidiary Depfa gets the blame.

Source: Spiegel Online (http://www.spiegel.de/wirtschaft/soziales/0,1518,804189,00.html)
That's the famous 55 bilion oversight that appeared a week before the Irish DOF 'fessed up to another 3.6 billion 'accounting error.
Hmm. I don't read German and Google Translate is as clear as mud but it's all very strange.

[TotalMayhem]

As I read it, HRE wrongly reported 55.5 billion Euro losses which affected the German sovereign debt and budget.

[PaddyJoe]

As I read it, HRE wrongly reported 55.5 billion Euro losses which affected the German sovereign debt and budget.
Yep, It goes back a good few weeks now. I can't figure out how Defpa in Ireland is getting the blame though:

It turns out that Germany is €55.5 billion ($78.7 billion) richer than it previously thought after discovering a calculation mistake made by the so-called "bad bank" of nationalized mortgage lender Hype Real Estate (HRE), the Finance Ministry admitted. Though the welcome error means that Germany can now lower its ratio of debt to gross domestic product by 2.6 percentage points, down to 81.1 percent from the original forecast, the boon remains a blot on the country's financial credibility.

The bookkeeping blunder occurred at FMS Wertmanagement, Germany's largest bad bank, set up to handle HRE's toxic assets after it was nationalized in 2009. It will likely affect international trust in Germany's ability to help manage the ongoing euro crisis, Rocholl said. "Of course it comes at an unfavorable time," he added.

"Apparently it was due to sums incorrectly entered twice," a Finance Ministry spokesman told Reuters on Friday. Of the total amount miscalculated at FMS, €24.5 billion less debt was found for 2010, while borrowing for 2011 was lowered by €31 billion.
On Sunday a reportedly angry Finance Minister Wolfgang Schäuble (http://www.spiegel.de/international/europe/0,1518,794970,00.html) called on the heads of both HRE and FMS, along with the responsible auditing company PwC, to meet with him on Nov. 2 to clarify the incident, while financial newswire Bloomberg reported that a telephone conference would be held in advance on Monday.

http://www.spiegel.de/international/germany/0,1518,794994,00.html

[TotalMayhem]

That they don't say. Only that the error originated at Depfa in 2010 and then snowballed at HRE in Germany.

[d.vader]

Good article by Conor Mc Cabe posted yesterday in irishleftreview.org entitled 'Frances Ruane, The ESRI, Depfa Bank and the IFSC'. Always knew the ESRI was impartial.

[Dr. FIVE]

Thanks for the heads up.

Here tis

http://www.irishleftreview.org/2012/01/13/frances-ruane-esri-depfa-bank-ifsc/

[TotalMayhem]

Depfa Bank, which was based in the IFSC and which collapsed in 2008, costing the German taxpayer, via its forced ownership of Hypo Real Estate, well over 100 billion euro.

Correction: Depfa is still based in the IFSC and very much in business. And if Barclays Capital is to be believed, Depfa cost the Irish taxpayer heavily.

[PaddyJoe]

34 million between 13 directors:eek:
Note the IT says that Anglo directors got just over 9 million that year and they were the biggest earners in the domestic banking sector.

[Captain Con O'Sullivan]

Poor dears. Terrible to see them getting by on a mere hairshirt 9mil between them. Can't anything be done for these poor people?

In truth they should be face down in a ditch.

[PaddyJoe]

Bye bye, WestLB

(Reuters) - German state-backed lender WestLB was broken up in time to meet an EU-imposed July 1 deadline, with its former owners hoping to draw a line under years of losses and controversy at what was once the country's biggest landesbank.
"We are removing a large bank from the market," said Norbert Walter-Borjans, finance minister of the German state of North Rhine-Westphalia, which had been a major WestLB stakeholder.

http://in.reuters.com/article/2012/07/01/westlb-breakup-idINL6E8I15SR20120701

[PaddyJoe]

Detailed piece by Derek Scally in the IT today on SachsenLB

The prelude to the Irish crisis began at 10am on August 24th, 2007, at a closed-door meeting of German bankers in the Bundesbank in Frankfurt.

Jochen Sanio, then head of banking regulator BaFin, launched a scathing attack on bank executives present from SachsenLB bank, based in the eastern German state of Saxony. The bank faced ruin, Sanio said, because of a “shatteringly large discrepancy” between its equity and the value of assets managed by its Dublin subsidiary, SachsenLB Europe.


Fairly incredible figures:

In 2002, SachsenLB’s board backed a new strategic plan to expand the Dublin operations. A former SachsenLB Europe executive told prosecutors there was a recognition “at all levels at the bank . . . of [Dublin] as a good possibility to generate revenue”.

SachsenLB Europe’s off-balance sheet structure, the audit says, helped the German bank “avoid accounting and consolidation obligations which would have triggered equity capital obligations and large credit limits that possibly would have worsened SachsenLB’s own credit rating”.

By the end of 2006, SachsenLB’s final year as a standalone entity, the Dublin off-balance sheet activities had a portfolio value of €41 billion – 60 per cent of the bank’s total value that year.

In the four years to the end of 2006, the Dublin operation contributed about 82 per cent of total group profits.

Germany’s smallest landesbank was now, the audit asserts, a “capital markets-dominated bank for whom the domestic business [in Germany] was nothing more than a revenue-reducing millstone around its neck”.
Pat Farrell spinning his usual nonsense while the CB refuses to discuss any potential investigation:

Pat Farrell, chief executive of the Irish Banking Federation, insists the Irish regulatory system functioned at all times.

“There is no issue that emerged in IFSC specifically that can be used to stack up the, as far as I know unattributed, ‘wild west’ assertion,” he said.

The Central Bank says no settlement was reached with SachsenLB Europe but declines to comment on whether any investigation took place or is planned into the bank’s special-purpose vehicles under its regulatory mandate.
http://www.irishtimes.com/newspaper/finance/2012/1130/1224327298203.html

[disability student]

The interesting piece there is off the balance sheet, which Enron had extensively used it prior to their collapse.

It could mean various things such as leasing, securization of the assets, subsdiaries companies accounts not accounted for so on.

It mentions there - a stand alone company which suggests that their accounts wasn't incorporated into parent's company accounts.

IASB (International accounting & standard board) have been taken a hit and a lot of criticism was directed at them earlier this year. Their standards were planned by the big four with no independent watchdog etc.

Gimme more would be very proud re Farrell's spinning.

[PaddyJoe]

And Pat Farrell knows damm well that the 'Wild West' reference comes from this New York Times piece in 2005;)

UBLIN, March 31 - Inside a sprawling complex of emerald-green glass towers, where derelict shipyards once lined the River Liffey, financiers have helped transform this city into one of the world's most innovative insurance providers. They have also turned Dublin into an unlikely hot spot in a growing insurance scandal that has toppled chief executives and even pulled the investing legend Warren E. Buffett into its orbit.

Regulators around the world have followed several trails of suspect financial transactions back to Ireland, which more than a decade ago instituted accommodating tax and regulatory standards aimed at encouraging insurers to set up shop here. At the center of those investigations is the General Re Corporation, a unit of Berkshire Hathaway, a holding company that includes Mr. Buffett's insurance operations.
http://www.nytimes.com/2005/04/01/business/worldbusiness/01irish.html?_r=0

[Captain Con O'Sullivan]

I recall the Dublin Stock Exchange being referred to as the 'Wild West' back in the 80's. I'm pretty sure it was in a Financial Times article and centred around oil shares such as Bula.

This reinsurance caper in which at least two major German reinsurers are mentioned in the article smacks of the derivatives capers off the stock market.

[disability student]

I recall the Dublin Stock Exchange being referred to as the 'Wild West' back in the 80's. I'm pretty sure it was in a Financial Times article and centred around oil shares such as Bula.

This reinsurance caper in which at least two major German reinsurers are mentioned in the article smacks of the derivatives capers off the stock market.

O Bula had a chequered history with a certain FF figure, who's expertise was feeding the dogs.

Of course it's a 'wild west' as Australian financial regulator was investing a certain businessman named Houldsworth.

Link:

Last Name Houldsworth
First Name John
Disqualification Disqualified
Date Effective 11/10/2004
Act & Section Insurance Act 1973, s25A(1)
Entity Cologne Reinsurance Company (Dublin) Ltd
Press Release Thursday 14 October 2004 No. 04.37
URL http://www.apra.gov.au/MediaReleases/Pages/04_37.aspx


Financial regulator here allowed him to work in the IFSC ,while the Australians have barred him for life.

It only confirms that it's a 'wild west' for them to play with monies at stake..

It's documented re Fintan O Toole's book.


Mr Houldsworth was a member of GR’s Alternative Solutions Group, the Chief Executive Officer of Cologne Reinsurance Company (Dublin) Limited and played a key role in negotiating a reinsurance transaction with FAI that he knew had the purpose of misleading. Mr Houldsworth is currently employed at Cologne Reinsurance Company (Dublin) Limited as Chief Underwriter – P&C International Finite.

[DCon]

is the mask starting to slip?



Deutsche Bank failed to recognise up to $12bn of paper losses during the financial crisis, helping the bank avoid a government bail-out, three former bank employees have alleged in complaints to US regulators.



“Self preservation can be a powerful motivator,” said Jordan Thomas, head of the whistleblower practice at the law firm Labaton Sucharow, who is representing Mr Ben-Artzi.

“During the financial crisis, many financial institutions faced an existential threat and the evidence suggests that Deutsche Bank crossed the line by substantially inflating the value of its credit derivatives portfolio – the largest risk area in its trading book.”

http://www.ft.com/intl/cms/s/0/f03eb1d6-3efd-11e2-a095-00144feabdc0.html#axzz2EDVj32Gk

[C. Flower]

is the mask starting to slip?


http://www.ft.com/intl/cms/s/0/f03eb1d6-3efd-11e2-a095-00144feabdc0.html#axzz2EDVj32Gk


Massive.

Reminds me of the way McCreery said that Irish banks were regularly allowed to trade when insolvent "back in the day."

All they have had to do is hold on and let the periphery borrow more from them, at higher interest rates.

[Captain Con O'Sullivan]

That Deutsche bank item is the first mention I've seen of the nuclear mushroom cloud of derivatives German banks were playing with when the music stopped. I wonder also is it the first mention of the German accountancy trick of marking loss making derivatives held offshore as 'neutral' on the home bank's books as long as the trades remain unwound.

I'm convinced there is a huge 'suspense' account hanging around somewhere with a lot of German derivative debt in it and never repatriated to the balance sheets of their home banks.

I suspect Merkel's government has arranged some dodge there which the German taxpayer does not know about. Those state level investigations through Frankfurt seem to have gone very quiet as well.

[TotalMayhem]

Ah, the DEPFA fraudsters are still at it... and in fine company:

UBS, Deutsche Bank, JPMorgan, Depfa Convicted in Milan Case (http://online.wsj.com/article/BT-CO-20121219-706890.html?mod=WSJ_qtnews_wsjcomp)

[PaddyJoe]

Ah, the DEPFA fraudsters are still at it... and in fine company:

UBS, Deutsche Bank, JPMorgan, Depfa Convicted in Milan Case (http://online.wsj.com/article/BT-CO-20121219-706890.html?mod=WSJ_qtnews_wsjcomp)

Are the Irish domestic banks the only ones that haven't been convicted of wrongdoing at this stage? ;)