Will Dexia Bank become Europe's Lehman Brothers?

We were all spared the "Mayan misery" pessimists had prepared us for at this year's winter solstice - so what can the EU now manage to deliver upon us as a substitute? How about a European version of the Lehman Brothers' bank collapse? That should start the New Year amid suitable gloom and chaos!

Crunch day for the next episode, in the sorry saga that the Belgian/Franco Dexia Bank has recently become, has moved a step closer today with this release from the EU Commission's Press Office. EU Competition Commissioner, Joaquin Almunia, has approved the rescues undertaken to date. In what could well be a coup de grâce for many small savers and communal municipalities, conditionality has been attached, not least, I would imagine, as to where all the necessary money will be found. Dexia depositors, who ignored the old maxim "higher yields = greater risks", may still eventually realize that the reported backers for the remaining presumed assets will not rapidly appear from Germany. How much more of this can the ECB front given the dreadful news from Spain's similarly troubled Bankia only yesterday? 

To get some perspective go to this link to the Europolitics web site and read the stark facts in nice round numbers. €85 billion is to be spent to allow the "orderly resolution" of the problems at Dexia Bank; thus avoiding, we are informed, the potential "disorderly consequences" of resolving the problems at this bank and "allows for the controlled winding down of the largest bad bank in the EU with over €300 billion in assets".

I have been blogging on the farce and fiasco that is the Dexia Bank crisis for much more than a year now, and if the EU Commission determines this week that all has been in accordance with EU competition rules and policy, hollow laughter will be heard across Europe.

Consider if you will for a brief moment the 2008 Annual Report of this bank, linked here in pdf format. No need to peruse column after column of figures, nor table after table of the detail, or indeed paragraph after paragraph of the text. Just scroll to page 196 (page 198 of my pdf reader) and at the foot of the page on the bottom right read note E, which states:

§§§

E. Carrying amount of financial assets 

with renegotiated terms that otherwise 

should be past-due or impaired

No major operation is concerned by this point as Dexia is 

mainly active in the public sector.

§§§

How about that for a gem of a disclaimer, which for this reader at least seems to make complete garbage of every other fact and figure put across in all the remainder of the 250 odd pages of the document, signed in Antwerp in April 2009.

Warnings of the utmost suspicion of all coming out of Dexia were clearly picked up by the ECB, as any quick read of the Bloomberg Business News Report, linked here, dated 14th October, 2011, will show.

One other item of interest for those who have not been following this matter is the role of the Chairman of the Board of Directors, whose statement on the results is on page 8 and 9, namely one, Jean-Luc Dehaene. Mr Dehaene's name is mentioned in one of my earliest "Ironies Too" postings on Dexia, linked here, as once having received the European "Vision for Europe" award!

19/2/11 "Can it be any surprise to learn that Trichet is the latest recipient of the ‘Vision for Europe’ award? Previous laureates have included Jacques Santer, Jean-Claude Juncker, Jean-Luc Dehaene and Helmut Kohl, a depressing and dreary collection of functionaries in the ‘leadership’ of Europe. This award is granted ‘in recognition of outstanding achievements in taking Europe into the future’; self-evidently an exercise in fatuity.The first recipient of this self-congratulatory award was Jacques Santer, former EU President, forced from his extravagant sinecure by Paul Van Buitenen’s devastating accusations of corruption and fraud.

Mr Dehaene might be better remembered by English speakers as having been the nominee for President of the EU Commission, who was blackballed by then British PM John Major, only to be replaced by fellow Benelux candidate, Jacques Santer - now notorious for being the victim of the sole democratic act ever undertaken by the European Parliament, namely, the sacking of his entire Commission!

The Bust Banks of the EU

So the IMF has forced the farce over Greece finally into the open. Repayment of funds already advanced to Greece will be pushed further back into the distant future with all aware that means never, the interest rate paid will be reduced to less than one per cent with the clear understanding that following the German elections this too will get ever closer to zero with actual payments of any installments a figment of fantasy.

So much for moral hazard!

In Spain the horror of Bankia continues to be treated as other than it clearly is, read some questions raised by the Wall Street Journal from here and various earlier postings on this blog as to how that situation was allowed to develop.

In Britain we have RBS, Northern Rock, Lloyds HBOS etc while France and Belgium so far share Dexia with others no doubt waiting in the wings. The entire Greek farce of recent years has after all been designed to protect German, French and other too big to fail financial institutions from the consequences of their own decisions.

First thing this morning I tweeted that we needed a collective noun for the kind of filth who have been involved in making these obscene and disastrous policy errors as follows:

Martin Cole ‏@IroniesToo

We need a collective noun for the members of the three main political parties who have sold off our democracy and their morals: #SULLIED??

On reflection #SULLIED seems rather mild

Dexia Bank still exposed to €11.7 Billion in Italy

The WSJ just now reporting the possible sale of its Turkish subsidiary to the Russians concludes its article with the following two rather harrowing paragraphs:

The fates of several large parts of Dexia still need to be settled. Dexia is finishing the sale of Dexia Municipal Agency, its Paris-based public-finance business, to two savings banks controlled by the French government, and it recently launched the sale of its Luxembourg-based asset management business. 
Once the process is completed, Dexia will be left as a holding company for illiquid loans and sovereign debt from the troubled euro zone periphery. Dexia's largest southern euro-zone exposures are €11.7 billion of Italian sovereign debt and €1.6 billion of Portuguese debt, the company said recently.

Dexia Banks again needs capital to avoid collapse!

The report from Reuters is linked here, the following being the key quote:

Bailed out Franco-Belgian bank Dexia urgently needs fresh capital to stay afloat, Belgium's central bank governor told a parliamentary committee on Wednesday, according to a lawmaker who attended the sitting.

Dexia should be OK now, says Belgium's bemused Banker!

Luc Coene is the head of Belgium's Central Bank and sits on the board of the ECB, so he clearly is clueless on matters to do with real money in general and what is happening at the disaster in Dexia in particular.

Here is a recent report that could tend to bear out the opening paragraph of this posting. Here is a link that does spell out the horrendous losses incurred by the Franco-Belgian Dexia Bank to date.

Don't you just fall down crying at these clowns? Yet will any of this be in the MSM tomorrow?

Financing Dexia's rescue costs causes concerns

Reuters fourth and most recent update on this problem causing difficulties between France and Belgium is linked here.

French Mayor of St Etienne seeks meeting over Dexia exposure!

The ongoing uncertainty of the fate of French deposits with Dexia (many belived to be held by local authorities) continues tonight with Le Figaro reporting that the socialist Mayor of St Etienne, Maurice Vincent, is seeking a meeting at Bercy (the Finance Ministry), about his authorities investments (€5 million out of total reserves of €24 million) undertaken by his predecessor from President Merkel and PM Fillon's UMP party. A report in french from Le Figaro, is linked here.

Update 1950 CET: Bloomberg reporting from here.

Dehaene resigns from Dexia's Belgian remains hanging in with the French!

Jean-Luc Deahaene, on whom I blogged earlier today, will not continue as Chairman of the rescued Belgian portion of the wreckage. So far it appears that the French portion will continue to be lumbered with this prime example of the rotten workings of the EU's old boys network! Reuters report from here.

Dexia Bank on the skids!

The share price tumbles and Forbes reports the supposedly profitable Luxembourg subsidiary is about to be sold off.

Update: 1603 CET The shares of Dexia were suspended.