The EU debate - Part III

They won't but it will be on their terms unless we're prepared to give up half of our trade market.

That's the bit that the Little Englanders can't or won't grasp. No one cares that we had an Empire or won a war 70 years ago.

 

https://www.theguardian.com/busines...hn-cryan-denies-asking-german-government-help

Europe's banks 'not investable' says top banker amid Deutsche Bank crisis
Credit Suisse chief issues warning as German government denies claims it is preparing to bail out country’s biggest bank

One of Europe’s most senior bankers has said the embattled sector is “not really investable”, in remarks that underline the difficulties the continent’s big banks could face if they have to raise new funds.

Tidjane Thiam, chief executive of Credit Suisse, issued the warning about the problems the sector faces as the focus remained on Deutsche Bank and its battle to reduce a $14bn (£10.5bn) penalty from the US authorities for mis-selling mortgage bonds.

On Wednesday the German government raced to deny a report that it was preparing a bailout plan under which it might take a 25% stake in Deutsche Bank, which is the country’s biggest bank. With assets half the size of the German economy it is regarded as the bank that poses the biggest risk to global financial stability.

Shares in Deutsche Bank have plunged to near-30-year lows this week amid reports – which were then denied – that it had asked for German government intervention to help reduce the punishment from the US Department of Justice (DoJ). Their decline was arrested on Wednesday, when the bank sold a UK insurance company for €1bn; they closed 2% higher at €10.76.

Thiam told a Bloomberg conference that Europe’s banks were in a “very fragile situation” and said there was doubt that European banks still had a viable business model. Concerns about rock-bottom interest rates and how much capital banks should hold meant returns to investors were too low, making banks “not really investable”.

Credit Suisse is among a number of other banks, including Barclays, facing a penalty from the DoJ.

Fears that Deutsche Bank might have to tap its investors for cash are among the reasons its shares have plunged, and raised fears that it could present a Lehman Brothers-style moment for the markets. However, top bankers and policymakers all played down the prospects of a repeat of the collapse of Lehman in 2008.

John Cryan, the Briton who has run Deutsche Bank for 15 months, spoke out to insist he had not asked Angela Merkel, the German chancellor, for help in dealing with the DoJ in an attempt to arrest the decline in the bank’s shares.

“At no point did I ask the chancellor for support. Neither did I suggest anything like that,” he said. Such a request would be “out of the question” and he could not understand how “anyone could claim that”. The claims were raised last week in a German magazine.

Within hours of his remarks to Bild newspaper a report in Die Zeit set out a two-stage plan being prepared by Merkel’s government for the “worst case scenario”, under which the DoJ settlement is not reduced and Germany’s biggest lender fails to raise enough capital.

In an article to be published on Thursday, Die Zeit claims that the first stage would involve attempting to find a solution, with Deutsche Bank selling parts of its business to a German or foreign company, and the state issuing guarantees for potential losses.

The second stage, which would only apply if such a private solution were to fail, would involve a state-backed bailout.

According to Die Zeit, the German government is “debating a state takeover of as much as 25%” of the bank. This might facilitate a merger with Commerzbank, which is 15% state owned.

The reportwas denied by the German finance ministry and financial regulator. Martin Jäger, a spokesman for the German finance ministry, said: “The German government is not preparing a rescue plan and there is no reason for such speculations.”

Cryan gave the interview as Deutsche Bank sold its Abbey Life insurance business, with 735,000 UK policyholders, for €1bn (£860m). This will generate an €800m loss for the German bank, but improve its financial strength by making it smaller.

The bank also told its staff that it was not planning to raise capital or in need of state aid, although speculation about possible options for its future included a bid from a new Turkish national wealth fund. Bloomberg reported that Yiğit Bulut, a chief adviser to the Turkish president, Recep Tayyip Erdoğan, had suggested Germany’s largest lender should be made into a Turkish bank.

Christine Lagarde, managing director of the International Monetary Fund which has ranked Deutsche Bank as the world’s riskiest bank, said state help was not needed. Speaking to CNBC, Lagarde said: “I don’t see that particular institution as ... at a stage where state intervention is absolutely called for at the moment. I would hope that the right measures are taken internally so that the whole financial sector in Germany is solid and that systemic players [are] strengthened.”

Axel Weber, the chairman of UBS and former president of the German Bundesbank, said fears of a rerun of the 2008 banking collapse were misplaced. He said banks had between seven and 10 times more capital than eight years ago. The deputy Bank of England governor Minouche Shafik also played down any comparison.

Weber told Bloomberg TV: “There is a much more stable system. In my view the system is much more stable now. I think we are very far in how solid banks are now, from where were in 2007 and 2008.”

 

https://www.bloomberg.com/view/arti...ld-make-you-worry-about-europe-s-other-giants

Shares of Deutsche Bank, Germany’s largest bank, have lost more than half their value in the last year, and have been subject toexceptional volatility. Its bonds have also had a rough ride.

The decline is fueling lots of speculation about the adequacy of the bank’s capital cushion, its strategic positioning, the need to dispose of non-core units and its relations with the German government. More generally, the bank’s struggles hold important lessons for investors in the European banking sector, as some institutions continue to struggle to overcome the legacy of the global financial crisis.

Deutsche bank is battling three simultaneous headwinds that also are roiling other financial institutions:

• Ultra-low interest rates, including negative ones on a significant portion of European and Japanese government bonds, are undermining the ability of the bank to generate steady income from traditional intermediation activities.
• A persistently sluggish economy is putting pressure on the creditworthiness of some of the banks’ borrowers.
• Financial-market distortions, including interventions by central banks that were deemed improbable not so long ago, together with tighter regulation, have eroded the scope for revenue generation from capital market activities.

These headwinds are not going to die down soon. As a result, banks must have, and must be perceived to have, robust capital cushions to avoid the kind of rough treatment by markets that Deutsche Bank continues to experience. This is particularly true of the European banking system, where, unlike its U.S. counterpart, comprehensive efforts to overcome past slippages were hampered at times by the urgent need to address a sovereign debt crisis that even threatened the integrity of the euro zone.


Market volatility is amplified by the more fluid capital structure brought about by the influence of new “hybrid” instruments, such as CoCos (contingent convertible bonds that turn into equity at a pre-specified price level). These were designed to counter the systemic effects of strains in the banking sector, including by reducing the need for costly government rescue plans. Yet they can also raise additional concerns about shareholder dilution when markets are already under pressure.

Bank investors have also been reminded that legal issues remain, most recently by the $14 billion penalty claim against Deutsche Bank announced earlier this month by the U.S. Department of Justice. This disclosure, along with the cross-selling scandal at Wells Fargo, is a further setback for banks that are still struggling to regain the public’s trust and respect.

It's no wonder that European bank chiefs -- including, this week,Credit Suisse Chief Executive Tidjane Tiam -- have highlighted the challenges facing the sector in the months ahead. Banks must not only realign their businesses to compete in a tough economic and financial environment, they must contend with a regulatory system that, responding to past excessive risk taking, is focused on a multi-year effort to push these companies into a less-exciting “utility model.” And all this while trying to regain public confidence.

Deutsche Bank may be an extreme case but its travails are indicative of a broader reality for the European banking sector as a whole. Unlike their U.S. counterparts, some European institutions haven't regained a sufficiently firm post-crisis footing. That means investors will need strong stomachs as they seek to differentiate among companies and opportunities in a sector that will inevitably remain vulnerable to bouts of unsettling market contagion, volatility shocks and reputational risk.

 

Of course not, but as individual nations their exposure is far smaller than ours is to them as a collective.

They therefore hold the chips.

A tariff system would hurt us more than them as individuals, not only in terms of our competitiveness in our largest export market, but also in terms of the supply chain issues that would result from customs delays.

 

You're the one who's mentioned the empire - not me.

I've just countered your original comment that the EU won't care about us by saying of course they will because they trade with us.

If they indeed hold all the cards then they would look to exploit us rather than leave us.

 

They will exploit us, correct. We've given them that opportunity and mandate.

Rule Britannia.

 

As I've always said - its now down to our politicians to get the best deals available.

Until those deals are made and Article 50 is dealt with we really don't know what position we're going to be in.

We have no deals to analyse currently.

 

Do you think it's ominous that the EU politicians engineered the public humiliation of our number 1 politician this weekend?

 

You are really tedious.

 

http://www.express.co.uk/finance/ci...t-banks-could-topple-the-entire-WORLD-economy

Europe’s crisis-hit banks could topple the entire WORLD economy

SOME of Europe's biggest banks are a key risk to the world economy, with Italian firms posing the biggest worry, a top think tank has warned.
By LANA CLEMENTS

The drive to put Greece back on the road to recovery intensifies this week when auditors representing the indebted country’s creditors arrive in Athens for their latest review of the Greek economy.

Fourteen months after being bailed out to the tune of €86bn (£77bn) – Greece’s third financial rescue since 2010 – representatives of the EU and the International Monetary Fund fly in on Monday to review progress on economic reforms promised by the government in exchange for rescue funds.

The creditors’ visit is taking place against a backdrop of ongoing economic difficulty for the nation. Seven years into its worst slump in post-war history, the eurozone’s weakest link is saddled with anaemic growth, stubbornly high unemployment, poor export growth, consumer pessimism and debt of more than €330bn.

The Bruegel Institute, the Brussels-based economics thinktank, warned last week that Athens would need a fourth bailout when its current lifeline ends in 2018. “Greece will not be able to borrow from the markets,” said Zsolt Darvas, a senior economist at the institute. “Therefore there will be a fourth financial assistance programme.”

Dr Angus Armstrong, director of macroeconomics at NIESR, said: “Balkanisation of EU finance comes at a time of financial fragility in the Eurozone banking system.

"This has added to the financial pressure on some of the largest European banks and the whole banking sector in Italy.

"As a consequence, growth in the Eurozone is revised down from 1.7 to 1.3 per cent in 2017."

It comes as experts warn contagion from Italy could easily spread through the banks in Europe.

At the same time investors fear central banks don't have enough ammunition to tackle another financial crisis.

Share prices in top European banks have plunged this week as panic increases.

Michael Hewson, chief market analyst at CMC Markets UK, said: "Investors are slowly realising that with every spin of the central bank policy chamber the magazine is getting emptier, and in the absence of any will or ability of politicians to step up, central bank policy will continue to move into the realms of the more experimental with every passing day.

"If last week’s European bank stress tests were designed to bolster confidence in the European banking sector it is becoming quite clear that they have failed abysmally.

"Far from boosting confidence they appear to have helped undermine it by focussing attention on what wasn’t tested, as opposed to what was."

 

But accurate.

 

Is this directly related to Brexit?
Sorry on my phone so research is difficult.

 

Microsoft haven't said it is but what has effectively happened is they have priced for the European market and so our devaluation makes their prices considerably higher for us.

 

and to make more money out of the UK

 

Blimey, a lot of doom and gloom today.
It's OK, I've given dignitas a quick ring and told them to expect additional enquiries.

 

Nope, they make the same money as they are converting what we pay into dollars.

 

Microsoft blamed it on other things when they hiked their prices for the southern hemisphere by the self and same amount earlier this year.

 

Fair enough, but at least the gov will take more in tax from them.

 

EU'll lose out! 'Hard' Brexit would cost other member states £8BILLION a year more than the UK
http://www.dailymail.co.uk/news/art...exit-cost-member-states-8BILLION-year-UK.html