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Post by unlawflcombatnt on Aug 21, 2007 4:20:34 GMT -6
from Market Watch: www.marketwatch.com/news/story/bank-chief-warns-german-banking/story.aspx?guid=%7B4C9FE094%2DEAB3%2D47F7%2DB327%2D6E087AB1D5EE%7D&dist=morenewsAnother German Bank Needs Bail-OutBy Steve Goldstein, MarketWatch " (MarketWatch) -- The chief executive of one of Germany's largest state-backed banks (WestLB CEO Alexander Stuhlmann) warned that foreigners were increasingly loath to extend credit to financial institutions in Europe's largest economy, which could spark a crisis....
His comments come days after a German lender, SachsenLB, said it required a credit line of 17.3 billion euros ($23.2 billion) because of the investments it had made in securities affected by the U.S. subprime mortgage crisis. IKB Deutsche Industriebank.... required a similar bailout. Both SachsenLB and IKB operated companies called conduits that issued short-term paper and then reinvested the proceeds in higher-yield, longer-term debt -- such as the residential mortgage-backed securities that have declined in value as poorer Americans default on risky mortgages.
SachsenLB and IKB were all or partly under government control, and that's one of the problems in Germany.
Germany is widely perceived as an "overbanked" country: there are more banks in Germany than in the U.K., France and Italy combined.
In turn, private-sector banks such as Deutsche Bank...or state-backed institutions such as SachsenLB look overseas or to aggressive trading strategies for profit..."
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Post by unlawflcombatnt on Aug 21, 2007 13:07:10 GMT -6
From the Financial Times: WestLB chief highlights credit worries8/21/07 " The turmoil in the US subprime mortgage market is making it difficult for German banks to get credit lines from their foreign partners, the chief executive (Alexander Stuhlmann) of state-backed lender WestLB said late on Monday.
Underlining the severity of the impact of US subprime woes on German banks....(was) the near-collapse of lender IKB this month....
German banks’ rescue of small-company lender IKB had raised the impression abroad that the entire German banking sector was facing problems.
IKB last month unveiled a shock profit warning after running into problems with its investments linked to the market for risky mortgages in the United States.
A consortium of German banks forged a €3.5bn ($4.7bn) rescue of IKB but the problems sent shockwaves through the credit markets as investors speculated that other German and European banks would be affected.
Since then, fellow state bank SachsenLB has also run into subprime-related problems and had to be propped up by fellow banks with a €17.3bn credit line.
WestLB itself has said it has over €1.2bn in overall US subprime exposure...."
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Post by jeffolie on Aug 21, 2007 16:03:42 GMT -6
How is the German banking system treating the mortgage backed securities? Are they marking them to market? Does the German banking system 'buy' them and thus monetize them? How is the EU treating the German bailout actions for German banks?
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