Italian bank loses €4.51 Billion but claims no ill effects

Founded in 1472, Italyy's Monte dei Paschi di Siena, the world’s oldest running bank, has survived a few ups and downs but toady must have been among the strangest. According to a report in the Washington Post, linked here:

(This limited quoted is assumed to comply with AP's copyright restrictions)

The Italian bank, which was founded during the Renaissance in 1472, said the losses were mainly due to charges taken to deal with the impact of Europe’s debt crisis and the economic slowdown. It wrote down the value of its assets by €4.51 billion, including €1.3 billion in bad loans.

Because the write-down is an accounting move, it will have no impact on cash-flow, liquidity, or future earnings potential, the bank claimed.

What a miraculous affect the appointmentment of the magical Mario Monti former EU Commissioner and perhaps even Merlin himself (in a former life,) has had on that formerly rather dodgy looking country. Now vast losses can be incurred by Italian banks (and perhaps with a little help from the similarly magical magician Mario Draghi,) tricky concepts with which the bank must have been struggling for 640 years, like credit and debit or profit and loss, totally disappear!

I wonder who in Italy will lose another few €billion tomorrow, without consequences whatsoever? It will not be any Euro Zone taxpayers!

Italy spreads over bunds breaks 450 bp, Draghi's ECB buying Italian Bonds!

The following quote from Gary Jenkins in the FT ,here, has its amusing side when one reflects Jean-Claude Trichet, named by this blog "The turd in the punch bowl" has finally departed, leaving Europe, not just the EU, in the complete and utter chaos that this blog always predicted over many, many years.

“They have created a situation where the only people buying Italian debt are themselves.”

Of course, when one of the Italians being so obliging, is the new head of the European Central Bank, on his first day at work, it probably has its brighter side, other than just the relief at the departure of the one man walking disaster that was Jean-Claude Trichet.

Unhappily the other Jean-Claude, this time the Luxembourger, Juncker , head of the Euro Group of Finance Ministers, is still on the scene, thus other matters are still going haywire! Even those beyond the chaos in Greece? Italian interest rates have smashed above 6.3% this afternoon, read here.

Merkel and Sarkozy have spoken on the phone and may meet tomorrow. Sarkozy has called an emergency meeting for late this afternoon and more importantly the Greek Cabinet is scheduled to meet at 1600 GMT today!