Financial Crisis EU round - Banks Tumbled

[condom_loong]

http://www.theaustralian.com.au/bus...ean-stockmarkets/story-e6frg91o-1226135308151

Banks tumble in European stockmarkets

Barbara Kollmeyer
From: Dow Jones Newswires
September 13, 2011 5:49AM

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EUROPEAN stockmarkets ended lower on increased fears that Greece is headed for default, as French banks led losses on speculation they could be downgraded over their exposure to that troubled euro-zone nation.

"This is an environment in which normal rules don't hold anymore," said Peter Dixon, strategist at Commerzbank. "This is fear, uncertainty and all the other nasty things associated with market panics. You can forget fundamentals, valuations."

The Stoxx Europe 600 index slid 2.5 per cent to close at 218.93.

The market closed down 2.6 per cent on Friday, rattled by news that Juergen Stark, a member of the European Central Bank's executive board and governing council, will step down by year's end.

Mr Stark cited "personal reasons," but news reports pointed to discord over the ECB's bond-buying program. The Stoxx 600 lost 3.7 per cent for the week overall.

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European sovereign-debt worries continued afresh in the latest session, driving Asia stocks lower, while Wall Street opened lower as well.

The French CAC 40 index, which dropped 4 per cent to close at 2854.81, bore the brunt of the latest losses with BNP Paribas plunging 12 per cent, and Credit Agricole and Societe Generale each falling more than 10 per cent.

Insurer AXA slid 9.7 per cent.

Societe Generale released a statement, trying to reassure investors over its exposure to Greek debt.

The firm also said it will free up 4 billion euros ($5.3bn) in capital by 2013 via business asset disposals.

Chief executive Frederic Oudea said that a possible downgrade by Moody's "won't change the outlook of the bank".

Also in France, one person was killed and three injured at a blast at a French nuclear waste treatment site in the south of the country.

Meanwhile, fears that Greece may not meet the terms of its aid package have been growing and the cost of protecting European bank and government debt against default surged.

Media reports said German officials have been meeting to figure out how to protect the nation's banks from a potential Greek default.

The German DAX 30 index fell 2.3 per cent to close at 5072.33, with shares of Deutsche Bank sinking 7.3 per cent. Commerzbank fell 8.3 per cent.

Jitters rattled throughout Europe's banking sector, with Italy's Unicredit down 11 per cent and Banco Santander dropping 4.7 per cent in Madrid.

Italy's FTSE MIB index 3.9 per cent and the Spain IBEX 35 index declined 3.4 per cent.

"Investors currently value European banks at levels last seen when Lehman Brothers Holdings collapsed," said Stephen Pope, managing partner at Spotlight Ideas.

"One cannot overstate the fear that exists over a Greek default and a following debt contagion escalation. An index of European banks has 46 lenders trading at 0.58 times book value; cheapest since the post-Lehman lows of March 2009," he said.

The Athens General Index fell 4.4 per cent, with losses of nearly 8 per cent for National Bank of Greece.

Also in banking news, shares of ING dropped 8.6 per cent.

The Federal Reserve reportedly scrutinised the proposed acquisition of ING's US online-banking business by Capital One Financial Group.

The Wall Street Journal reported that the Fed sent a two-page letter on August 29 to Capital One asking for details about the "nature and dollar volume" of financial activities in which both financial organisations are involved.

Banks also fell in London as overall European bank sector weakness weighed, though generally losses were less severe.

The FTSE 100 index fell 1.6 per cent to settle at 5129.62.

A report on Reuters said HSBC has launched a sale of its non-life insurance business. A spokesman from the investment bank declined to comment.

Royal Bank of Scotland Group fell 3.4 per cent.

The UK's Independent Commission on Banking said in its final report that the annual pre-tax cost of banking-sector reforms could be up to 7 billion pounds ($10.9bn) and it recommended a lengthy deadline for implementation of its proposals.

Analysts said the report was mostly well-flagged.

Resource stocks weighed on the London index, as commodities sold off across the board on macroeconomic worries and fears about Europe's sovereign debt crisis.

Among heavy hitters weighing on the index, Royal Dutch Shell sank 1.4 per cent and Rio Tinto fell 1.5 per cent. BHP Billiton dropped 1.4 per cent.

 

[condom_loong]

http://www.economist.com/blogs/charlemagne/2011/09/euro-crisis

European politics
Charlemagne's notebook
The euro crisis
Time is running out

Sep 12th 2011, 18:39 by The Economist | BRUSSELS

WHEN Russia worries publicly about the financial stability of the European Union, as opposed to the other way around, you know the euro is in real trouble. There is a sense in Brussels that the defenders of the euro zone have run out of ammunition and out of ideas.

One reason is that the politicians cannot keep up with the markets. The euro zone has yet to implement the decisions of July’s summit, but the next shock wave has already struck. Another is that the performance of Greece under the EU-IMF programme has been so poor that every quarterly assessment to approve the next tranche of loans becomes a cliff-hanger.

So each episode of market panic is worse than the previous one, the weapons in hand look inadequate, contagion spreads, while governments and institutions lose their nerve.

The proposed increase in the firepower of the main bail-out fund, the EFSF, will not be enough to protect Italy should it go under, as it has threatened to do in recent weeks. As one German official put it to me: "Italy will have to deal with its problems on its own." The ructions at the European Central Bank exposed by the resignation of its German chief economist, Jürgen Stark, raises concern about how much longer the ECB can keep buying up the bonds of vulnerable euro-zone states. The German constitutional court has not blocked the temporary bail-out system, but appears to have all but killed off the idea for now of issuing joint Eurobonds, the one idea that might have arrested the crisis in the short term (though lots of people think they might make the long-term problems worse).

German politicians now talk openly of cutting off Greece’s lifeline and letting it fall out of the euro, causing another seizure in the markets, where French banks have now come into the firing line.

Greece's departure from the euro, if it happens, will be painful for both Greece and the rest of the euro zone, as Jean Pisani-Ferry, director of the Bruegel think-tank, points out. And there is the question nobody can answer: will Greece's exit remove the source of contagion, or ensure it spreads? Until now, nobody has dared test the proposition.

It is not impossible that the euro zone will be able to muddle along a bit longer: Greece may have done just enough in its latest plan to cut spending and raise revenues to receive the next tranche; the German parliament may be coaxed into approving the July decisions; the revamped EFSF may then be able to take up the bond-buying task from the ECB and a problem may be found to the problem of Finland’s demand for collateral. Then what?

The situation is so dire that any bit of bad news would easily cause another collapse in the markets. So at the same time as Germany is talking of giving up on Greece, it is also talking about redesigning the euro zone. Done right, a new European architecture may ensure that such a crisis does not recur.

But as Barry Eichengreen points out, the problem is now, not tomorrow. It will take years to renegotiate and ratify new treaties, even assuming there is no blockage of the sort that beset the Constitutional Treaty. But the euro zone faces critical days and weeks.

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[Cestbon]

Greece then Spain coming to default . Nothing can prevent them from falling. Just let it fall only wasting time and money just prolong the problem. Let the market decide.

 

[red amoeba]

not only the markets...the voters will get fed up with bailing the PIGS.

France will elect a new president nxt year..Sakorsy will look over his shoulders and at his own financial health before committing too much...If France also gets in the shit, it will be catastrophic.

realistically, only France and Germany can give aid....if France fall, left only Germany...Battle of Deutchland...LOL...

 

[refulgence]

The demise of the euro and of the EU Treaty is simply a matter of time. It is inevitable.