09/22/2008

Are European Banks in danger ?

This is what a short analysis of CPES is saying

"So far European banks have been spared the convulsions that are ravaging the
US financial system. This is surprising because some of the major European
banks have leverage ratios (often over 30, in some cases close to 50) that must,
under current market conditions, be considered a disaster in waiting. The
experience over the last year has shown that given the automatic feedback
loops in a system of mark to market and ratings, any slight doubt about the
solvency or liquidity situation of such highly leveraged institutions (see Figure
1) can lead to their demise in a matter of days"

comment : So I think that if they are saying they will be selling what they don't need because it ain't their corebusiness, they will be selling a lot to get ratios that - if you believe this article - is more in line with expectations during such dangerous times. And secondly KBC looks not good in this analysis....

 

len5

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