350Z's 2007 I Fund Thread

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German Banks next?

Germany's central bank confirmed Thursday that the group of people involved in the recent discussions about IKB Deutsche Industriebank AG's (IKB.XE) financial crisis will discuss the topic again in a meeting Thursday.
A person familiar with the matter told Dow Jones Newswires that the meeting is to discuss "additional details" on the IKB rescue that weren't discussed two weeks ago when the rescue plan was decided.
IKB has been hit by indirect exposure to the crisis in the U.S. subprime market.
Later Thursday, WestLB denied speculation it is facing a liquidity problem.
"There can't be said to be a liquidity crisis," a WestLB spokesman told Dow Jones Newswires Thursday, saying that this statement applies to both WestLB and Brightwater Capital Management.
The bank has hardly any subprime lending exposure, he added.
The BaFin spokeswoman said the Bundesbank meeting has begun, and a representative from the German regulator is attending. She didn't identify who the representative is and said she couldn't say when the meeting would end.
A Deutsche Postbank AG (DPB.XE) spokesman Thursday reiterated the bank doesn't expect to be affected significantly by the subprime issue or the IKB crisis.
A Deutsche Bank AG (DB) spokesman pointed to a comment made by the bank's Chief Financial Officer Anthony di Iorio at the analyst conference Aug. 1 that " any subprime exposure we have is currently relatively flat." The spokesman said the situation hasn't changed since the comment was made.
Regulator Web site: http://www.bafin.de
-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500; ulrike.dauer@ dowjones.com
(Niels Sorrels in Berlin contributed to the story.)
 
Yet fund managers and credit analysts said they fear more unpleasant disclosures from German banks and mutual funds, several of which appear to have been enthusiastic gamblers in this risky market.
"It's a bit like discovering Easter eggs," said Boris Boehm, a money manager at Nordinvest in Hamburg. "There are a lot of eggs hidden around here. You'll be hearing more and more about these problems."
To be sure, several of Germany's largest financial institutions have played down their exposure to the subprime market. Deutsche Bank even profited from the chaos by selling mortgage loans with derivatives contracts that appreciated as the United States housing market slumped.
Commerzbank said its exposure to the subprime market accounted for a tiny fraction of its balance sheet, as did three of Germany's largest insurers, Allianz, Munich Re, and Hannover Re.
But the problems, analysts said, are likely to crop up in smaller institutions like IKB, which until last week operated in comparative obscurity as a lender to mid-size German companies.
"The general impression was that they were quite a conservative bank," said Simon Adamson, a banking analyst at CreditSights, a research firm in London. "The mistake they made was they thought they were safe investing in high-grade paper. They didn't reckon on the huge difference between the view of the ratings agencies and the value in the market."
Adamson said he would not be surprised to see more IKBs: banks, which, because they have little experience in these markets, rely heavily on credit rating agencies.
Investor confidence in Europe is being further eroded by the fact that the bad news is flowing out in dribs and drabs.
"The big problem is the lack of disclosure," Adamson said. "Since it's hard to be sure of anything, the market quite understandably fears the worst. It is going hunting for banks with exposure and losses." http://www.iht.com/articles/2007/08/06/business/gbank.php
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oreo said:
Does this have anything to do with the rumor from yesterday?

http://money.cnn.com/2007/08/09/markets/goldman_fund/index.htm?cnn=yes

Two Goldman Sachs funds in trouble
Click to expand...

The rumor may play a tricky role in the whole thing. Since most of the quant funds are using similar programs to do their trading, it wouldn't be too wild of an idea if the rumor was meant to cause some selling, only to create a domino effect of triggering the stop loss programs to sell even more. Also, now that the funds realize that there is a little flaw in their computer models, they might want to drop some of their risky assets while they reprogram their computers.

Ebb, the quant funds need you! :)
 
12%ayear said:
no, that was put to rest. Now it seems, everyone is afraid of who is next. They are many lenders hiding the problems they are saying now. This is a global problem not just here.
Click to expand...


12% -

Thank you. I don't get look at the site continuously during the day but I recalled seeing something about it yesterday. I appreciate the info.

oreo
 
China another timebomb ready to tumble off this subprime. This lady on CNBC is pimping the Hong Kong market. Doesn't she know, if consumers cut back on spending, they will fall very hard. Although, they have guidelines on sub-prime. When the world is sick, they will be redeeming all the capital they can. Hing Kong is the most over-priced market out there.
 
Wow -- the DJIA ended up down about 380 points. At least according to my calculations, we're looking at a -fv no matter which index they use.
 
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