Money laundering, a resurgent epidemic, China’s threat, Turkey’s financial crisis The environment is that Toxic to banks.
For Wolf Street, by Nick Corbischel:
The Stocks 600 Banks Index, which covers major European banks, fell set.1 per cent to close at .11.1 on Monday, just a smidge from a multi-decade low of set in March. The last time that the index was before March was in February 1988 at the time of the sale after Black Monday in October 1987, when it also fell below 79. The index is down 85% from its peak. Here are the supernatural European bank stocks going back to May 2007 after quadrupling in the previous 12 years:
Not even the promise of more industry consolidation, facilitated by the Shuttagon merger of large, struggling banks with smaller struggling banks, has pushed the slide of European banking stocks further. Three weeks ago, Spain’s third-largest lender, Caxabank, announced plans to buy a majority state-owned bankia, with much of the money provided by the state, forming what would become Spain’s largest local bank. In response Spain’s MSCI rose slightly and is now lower than it was.
Today, it wasn’t just banking stocks that had a rough day. European stocks fell 9.9 percent overall on concerns of a second wave of coronavirus. But the banks were hit particularly hard.
One of the reasons for this route was the release of a report on the lender by the international consortium Investig f Investigative Journalists, which facilitated 2 trillion in suspicious transactions. HSBC, Deutsche Bank, Standard Chartered, JPMorgan Chase and Bank of New York were trapped. In almost two decades, five banks had “enriched”[ed] They and their shareholders facilitate the work of terrorists, kleptocrates and drug kingpins, ”the report said.
Here is a sample of how the bank’s stock reacted:
- ING: -9.27%.
- Dutsh Bank: -8.76%
- BNP Paribas -6.37%
- Santander: -6.22%:
- Unicredit: -6.17%
- HSBC: -5.26%
Deutsche Bank appears to have facilitated more than half of the leaked tr 2 trillion transactions. The government saluted the flag but is rarely read by investigators, let alone act accordingly Duts she vale. Experts say some banks treat suspicious activity reports (SARS) as “a kind of get-out-jail-free card”, “filing numerous reports on the same customers, detailing their suspected crimes over the years.” Business is welcome. ”
HSBC alleges that WCM777, a particularly risky Ponzi scheme, allowed the business to move more than છતાં 15 million despite being banned from operating in three states. The scam involved a provision of at least $ 80 million from investors, mainly Latino and Asian immigrants, while the owner of the company used the looted funds to buy two golf courses, a 7,000-square-foot mansion, a 39.8-carat diamond and mining rights in the Sierra. Leon. ”
Recent allegations have led to the closure of US Bank and HSBC’s business in the US. Dutsh Bank has been embroiled in a number of scandals since the financial crisis. This subprime mortgage crisis has its front line role, its manipulation of interest rates, services provided by Jeffrey Epstein, and its involvement in numerous money laundering scams.
HSBC’s position is fragile, although it has been in the U.S. for the past eight years. Along with the Department of Justice, three delayed plaintiffs can sign a contract (DPA), the official type of investigation. But patience has waned, especially since the bank’s decision, in June, to accept the Chinese Communist Party’s sarcasm over Hong Kong, which prompted U.S. Foreign Secretary Mike Pompeo to accuse China of aiding “political repression” in Hong Kong.
HSBC’s relationship with the CCP is also strained. How many negotiations the bank has given to Beijing may be excluded as a punishment for blowing up Huawei against US authorities for violating US sanctions on Iran last year, eventually leading to the arrest of Sabaree Meng Wenzhou, Huawei’s finance director in Canada. .
This week, fresh reports have surfaced that China could put the bank on a list of “unreliable entities”, a punishment seen by the Chinese government for compromising national security with foreign companies. Given HSBC’s massive reliance on the Chinese market, which has a lion’s share of its profits in conjunction with Hong Kong, if it were to happen, it would seem fictional, the impact on the giver would be enormous. Shares of HSBC are now at their lowest level since 1995, down 52% so far this year.
Other banks have performed similarly this year, pushing the Stoxx 600 Bank Index down 43% this year:
- Spain’s Santander (-59%) and BBVA (-58%)
- Society of France Genarelle (-63%).
- Italy’s Intesa Sanpolo Olo (-32%), who recently took over its local rival UBI Bank;
- Switzerland’s UBS (-17%) and Credit Suisse (-30%). They also, in order to create a European megabank, the U.S. No one is able to compete with the huge American lender, thinking about merging;
- Deutsche Bank (-3.5%), the largest European bank to perform this year, after its shares fell last year and Commerzbank (-29%) collapsed this year. Shares of both the banks are 94% and 99% below their respective peaks in 2007 and 2000 respectively.
Risks continue to accumulate for Europe’s banking sector, the last two crises – the global financial crisis and the euro debt crisis – which have never recovered properly, and by pushing its policy rates and many bonds, seriously by the ECB’s ever-aggressive monetary policy Has weakened. Largely unintended consequences for banks such as abolishing their interest limits and destroying their ability to generate healthy profits result in negativity.
Europe’s doom loop – when shaky banks grab so much of their country’s volatile government debt, when one of them stumbles threatens to infect the financial system – the epidemic has actually raised 210 billion dollars, according to a new S&P Reported by
Another risk that appears to be evolving is the outsourced exposure of some European banks – particularly Spain – to the struggles of emerging economies, including Turkey.
But the biggest dangers are at home. Although Europe’s furlough plans and tolerance programs have helped alleviate the pain, it cannot be left forever.
To give banks a little breathing room, the ECB has relaxed the benefit requirements of banks till next July. The ECB’s plan to keep Europe’s banking system afloat is to push ahead with a massive wave of consolidation that will knock out many weak, small banks and strengthen many large banks, many of which are weak.
“Before the Covid crisis, the need to adjust costs, eliminate overcapacity and restructure the banking sector was very important,” said Luis de Gindoz, vice-president of the ECB. Banks need to mobilize “quickly and urgently,” he said. The hope is that with less competition, they will be able to survive in the unfavorable interest rate environment created by the ECB for banks. By Nick Corbishley, for Wolf Street.
For Turkey, it was cheaper to borrow in dollars and euros until then. Reading Concerned about Turkey’s financial health, the lira moved to New Law, Turkey’s sovereign insurance price almost doubles
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