risk - Page 5

  • Is Fortis speculation a dump and jump scam ?

    Friday EUROPE MOST ACTIVE BY VOLUME (Bloomberg.com)
     PRICE% CHANGEVOLUME
    VODAFONE GROUP126-1.41195898256
    UNICREDIT SPA3.26-4.12182889796
    FORTIS5.36-16.51167608377
    ROYAL BK SCOTLAN208-5.67160489044
    TELECOM ITALIA S1.132.54125785119
    INTESA SANPAOLO4-3.1595652586
    BANCO SANTANDER10.85-0.7393062410
    LLOYDS TSB GROUP251-8.1473559125
    GLITNIR BANKI HF15.7-0.9570540029
    BARCLAYS PLC366.5-0.9569112349

    The question will be if the solution will be enough, if it will be convincing enough. It seems that not only the governments, but also the European Central Bank and the European Commission seem to have understood that this first full-scale attack on an European Bank has to be stopped and that they can only do this together. The question to ask is if at the time of the opening of the asian markets, the measures will be enough or better, the defenses put into place will be enough to respond to speculative waves of selling of stock.

    We could maybe call this 'dump and jump' scams instead of the 'jump and dump' scams. In the last one the tactic was to hype up a stock (mostly unknown but so called promising) through spam and to dump it at its highest price just before it is known to be a scam. In this case you dump as much as you can and try to get others to do the same, just to jump in and buy stock at a much lower price when you can expect governments and private partners to step in to salvage the stock or financial institution and get a much higher price for it.

  • Fortis gone, who is next ? (read the study)

    http://belsec.skynetblogs.be/post/6279246/can-the-big-european-banks-be-saved

    http://belsec.skynetblogs.be/post/6274699/are-european-banks-in-danger- look here at the table

    for the moment no one has contradicted this study and the Belgian/so called European reaction to the final showdown around Fortis has not shown any indication that the political and financial regulators and authorities have understood that only an European re-action will help to stem the tide. Meanwhile every country will start to have to take its own actions to safeguard its own banks that are sliding into danger zone. This is for example the case in the UK. It would be disconcerting if they are not showing any intentiona t this time they have to set up reaction and safeguard plans in case any of their major banks come under attack. It is true that Fortis made some great tactical mistakes but they shouldn't accept the discourse of bankers that everything is in order and that there are no economic reasons to worry or to do something special. Bankers think that in the end everything will fall back into place.

    Market watchers and people who have seen already before the disastrous effects of a market driven speculation coupled with a total inertia and incompetence of the victim to respond with an efficient crisis communication (and not a communication in crisis) know that this is the endgame. It is psychology, yes driven by online media and offline media (all the newspapers here have firstpages headlines about the endgame around Fortis, all the newsprogrammes on TV and Radio talk about it in these terms, people talk about it and get their money out) but that is the reality each big firm has to live with and prepare for (get a cyberwatch and respond (also legal) team together now and not tomorrow).

    There are appeals that don't wash in these times. THe government and some newspapers ask the people to keep their money on the bank but in the same paper you will read that there ain't much money in the fund that should guarantee your money. The prime minister says that the government will guarantee the rest of the money for each EURO. But an hour later the same government says that they have big problems with getting their own budget together.

    So Fortis is out, gone and finished. If you look at the study there are other possible victims in the waiting who can start preparing themselves for as long as they have a timegap to use. The first and most important question is, are the numbers right and the second question is, are the European political and financial leaders and regulators (it appears that the European Commission is still thinking in terms of market share and concurrence and not in terms of saving what can be saved of the financial market in Europe) willing and able to act together like a Financial NATO as they did to stop the speculation against their different currencies before the EURO ?

    These are dangerous times that ask for real leadership. Every leader will now have the opportunity to show that he or she is worth every cent of the enormous sums of money they are making. This in the names of all the little people who have all they have on their banks and financial institutions. And which feel betrayed that some people have played such dangerous game of poker and seem to have lost all. It is time to indicate objectively which other banks and institutions can become victims of the same situation and prepare, prepare and prepare (and do not listen to bankers, listen to the market because when the market moves the market has to be stopped and bankers don't understand the psychology of the market to stop it).

    It is - as a closing thought - a very cynical thought that the financial meltdown that Lippens of Fortis predicted some weeks ago started in the Euro zone with his own bank.

  • A fortis reminder for the weekend

    From doomberg "  Sept. 26 (Bloomberg) -- Wachovia Corp. and National City Corp. slumped after negotiations on the government's financial bailout stalled and Washington Mutual Inc. was seized by regulators and sold to JPMorgan Chase & Co.

    Wachovia dropped $3.84, or 28 percent, to $9.86 at 1:20 p.m. in New York Stock Exchange composite trading, and Cleveland-based National City fell 40 percent, leading banks lower. National City and Charlotte, North Carolina-based Wachovia have plunged more than 80 percent in the past 12 months.

    ``Washington Mutual showed that one of the big ones can go down, and if you are looking at who else in the top 10 is facing the most pressure, Wachovia is right there,'' said Stan Smith, a banking professor at the University of Central Florida in Orlando. "

  • Ex Fortis CEO was once a celebrated figure in Belgium

    Fortis' Votron is European Business Leader of the Year

    Jean-Paul Votron, CEO of Belgian-Dutch banking and insurance group Fortis was elected European Business Leader of the Year. The European Business Leader of the Year title rewards the most successful companies and their leaders from the 25 European Union Member States. The jury awarded Votron because of his "extraordinary leadership and exceptional vision, which has led to Fortis's remarkable performance".

    http://invest.belgium.be/en/news/fortis-votron-european-business-leader-year

    len7

     

  • the problems of a bank up against Doomberg thinking

    I am no financial specialist and not one of these postings should be interpreted this way. I just look upon it from a risk and crisis communication look of way, both of which are very important at this moment. This article is Not for republication, linking or citation under the present circumstances as I don't know what the intention of the rest of your article would be and I don't want to be part of that.

    First it is not necessary to see long lines of people before a bank to know if people are transferring money. It are the totals of daily transactions that count - including online transactions. Seeing no long lines before a bank doesn't mean people are not transferring money.

    Secondly you don't need a SMS or a rumor (like the mails about Fortis last week) to get people thinking. People are not that stupid that they act as cattle on a message. For some people the continuing messages of the financial market and its indicators are clear enough to take some precautions. I am not saying they should be doing that. I just say that aside from the rumors which can be prosecuted and so on, Fortis should review its communication policy and also take some - even drastic steps - to restore confidence with the little people who have most to lose. If Fortis wants to diminish the anguish of its little people, it should try to stabilize its shareprice at the market (just as is done with currencies). That would be the strongest message to its little people and the market afterwards. If the little people see that everything calms down and gives their bank some leverage (time that is) the market will also calm down and look for another victim to speculate against.

    Thirdly it looks like the Fortis crisis is a bit becoming a self-fulfilling prophecy and is in the eye of the storm. It is very hard to break this circle and it will need every support it has and every signal it has at its disposal to stop it. It should not wait for long with these signals. Simple declarations are not enough.

    Fourth. There is a deadline (what a word in such circumstances). For those old enough to remember the speculation against the currencies, it is the weekend. Responsable people in responsable financial positions won't take a holiday this weekend I presume.

    Fifth. They should remember the other banks that just as with currencies before the EURO or with US banks that the other European banks are also part of the Domino's and that they at least should stick together for the time being. It could end up costing the other European banks more if one of them fell than to intervene together and support each others stock and creditlines.

  • Belgian government acts and reacts on financial crisis

    The prime minister and the minister of Finance have declared together that

    * the responsable institutions are following the situation very closely and that all measures have been taken (also on the European level)

    * the money of the people on the Belgian banks is safe and that there is state guarantee for these disposits (how much)

    * that no Belgian bank (including Fortis) has a problem of solvability (is the CEPS study wrong than ?)

    * they will prosecute people who spread rumors (fine they have been identified by name in the newspaper and no one from Fortis to contradict or silence them)

    would anyone learn them the basics of crisis communication ? Do not answer on some of the questions. Answer them all correctly in full and without any hesitation. It is the only way to respond to Doomberg (bloomberg)

  • Fortis the story of the day

    The lukewarm communication even in this crisis situation is just astonishing.

    follow live what is happening on the floor

    http://www.standaard.be/Info.aspx?topic=economie.koersen.frame&page=60011766

  • this sounds familiar, in belgium ?

    sometimes events outside are that big that they will have a global impact and so on IT and so on the way we treat risk and security - as a concept and in the way we use it. I must say I have now some problems have any attention for a computer virus or new sql script. There is so much at stake.

    from the new york times  "Even as Washington moves to bail out financial institutions, the fortunes of Washington Mutual have spiraled downward. On Wednesday, Standard & Poor’s, a major credit rating agency, downgraded Washington Mutual’s debt further into junk territory, citing the increased chance that the company might have to be split up to facilitate a sale.

    Washington Mutual insists that it is well-capitalized and has adequate access to funding and noted “the rating actions do not affect the safety of customer deposits, which are insured up to the limits allowed” by the federal government.

    Brad Russell, a Washington Mutual spokesman, declined to comment on speculation about a possible sale. Still, shares fell 94 cents, or 29 percent, to $2.26 a share on Wednesday, leaving them down 83 percent this year."

    I only have to change the name of the bank....

    a few hours later it was taken over by the feds and handed over to another bank... this is how fast things can go nowadays

    I have seen this before in my life when the different European currencies were under attack and one after another fell. It was only stopped when all the central banks said enough is enough and set up a strong line of defense that held. We now have the Euro. But there is no European defense of our banks and financial institutions. They are all on it on their own and it is each country for itself, even if their national banks are now bigger than all the financial reserves they each have individually.

    We made the Euro to defend against valuta speculators. We now need an European Financial defense system to defend against financial-institution speculators. In fact we need to punish and outlaw that kind of speculation if you ask my opinion.

    Bloomberg is showing a red headline 'credit quake' because new numbers show that banks don't even lend money to banks anymore (they take control of it, they don't lend money) and you have analysts coming on all the time who are all doom. When Lippens (Fortis) said a few months ago that there would be a financial meltdown when they took those drastic actions, he was being called all kinds of names. He was more right than even the worst predictions that were made a few months ago. And now Fortis is trying to sell whatever it can still sell. There is no problem they say but it is better to have more own cash at hand if needed. Because the markets don't lend anymore to anyone and the European Financial infrastructure has not foreseen this. They surely didn't foresee what Bloomberg now calls 'CREDIT QUAKE'

    It sounds as firms on the internet. You are on your own. Don't count on anyone else.

  • the weekend of all dangers and it ain't a film

    It seems that people are playing chinese theater and high noon in Washington while all over the world markets and investors are watching - with rumors of another American bank on the brink of collapse (washington Mutual).

    This ain't the time.

    this ain't the message to send.

    people who work with risk calculation know what they have to do now.... they don't wait. They don't gamble either.

    They better have a deal by monday at the latest or..... nobody else knows what....

  • High time for belgian/european stock/financial authorities to react

    this is getting serious

    people that had a lot of money have already spread their accounts over several different banks

    the events around Fortis and KBC - and the rumormongering and speculation - will have to be dealt with swiftly in the coming days or the people with no money (to lose) will take their money and run and that will make a bigger difference than the stock market

    time to get into action and everybody knows there are actions to be undertaken and that time is running out if there is no action taken. Doing something can be a risk but doing nothing can be even more risky.

  • Can the big European banks be saved

    http://blogs.wsj.com/economics/2008/09/22/...-big-to-rescue/

    European banks face greater capital shortages than their U.S. counterparts, but have become too big for any one European country to save, according to an article published Saturday by European economists Daniel Gros and Stefano Micossi on the Centre for European Policy Studies’ Web site

    source The “overall leverage ratio” - a measure of total assets to shareholder equity - of the average European bank is 35, compared with less than 20 for the largest US banks, the economists say, and relatively small writedowns on their assets could have a devastating impact on a bank's capital.  “If ever they were forced into a firesale, they could go very quickly into insolvency,” said Gros, who is director of the Centre for European Policy Studies

    More comments from the authors  Given that solutions for the largest institutions can no lounger be found at the national level, it is apparent that the ECB will need to be put in charge. It is the only institution in the euro area that can issue unlimited amounts of global reserve currencies. The authorities in the UK and Switzerland –- who cannot rely on the ECB – can only pray that no accident happens to the giants they have in their own garden

    but there seems to be little contradiction to the study, which is worrying in itself. Because if nobody says that they are wrong in the present newscycles, they are right ? Or aren't they ? Because if they are right, their opinions have enormous consequences. If they are wrong, they could be responsable for being an element of panick.

    It is clear however that some have overstretched their risks and risk taking us all with them in their downfall.We shouldn't be surprised if we will be seeing Belgian banks for example trying to sell all kinds of stuff they have invested in for no obvious reason at all (and for which some received beautiful amounts of money).

    The most beautiful thing happening is that the financial sector is going back to being normal banks with normal financial products and normal risk ratio's. These guys looked so old fashioned before, so be-gone aside the wealthy glamorous inventors of new financial products (as if it was Shampoo).

  • 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

  • Dexia, Fortis and the fight against rumors and speculation

    There was a time that I worked for a currency speculator before the Euro (for one of his other media projects). By chance I had the 'chance' to see 'live' how currency speculation took place against the French, Belgian and English currencies and how speculators always won. They were with too many with too much money (looks like DDOS to ITpeople). The only way that it was stopped was when all the national banks created a front of resistance together and held that line, cost what cost. It helped. Now we have the Euro in Europe and that time seems more or less a history long ago.

    When i read the last days the newspapers and I change the names of the currencies with the names of Big Belgian banks than there is in fact nothing that has changed - except that there is no central coordination between those private banks to help each other against such (DDOS) speculation attacks. It is each for himself and all against each other. Fortis and Dexia have lost about half of their market value and there is no security that such attacks won't happen again.

    Only the world has changed dramatically since than. First everybody has bought investment stuff from anywhere (what do Belgian banks have to do with US mortgages anyhow ?). Secondly buying and selling is done electronically and by mathematical models and risky riskcalculating (the same kind of calculations that gave us the present creditcrisis anyway). Third the internet has given a forum to lots of forums and speculations that can be used to jump and dump stock or to win on short-sell strategies.

    One important banking consultant said that it is in fact unacceptable that speculators buy banking stock (the fundamentals of our financial infrastructure and the livehood of our economy) with the option that the value will go down, they launch rumors and when the stock effectively starts sliding or running down, they sell their options and win. There is no way for the bank to win this.

    They should invest more money and resources in Internet observation and have a quick communication reaction taskforce ready around the clock. No rumor should be left unanswered.

    But even than financial sites and forums will have to ask themselves in how far they can be used as a launchpad for these speculative attacks done by false or anonymous sources.

  • some reminders for business doing business in the US

    This edition of the Securities Litigation, Enforcement, and White-Collar Criminal Defense Newsletter opens with an overview of recent trends in enforcement of the Foreign Corrupt Practices Act, an area in which we expect to see more government action.  We then turn to a primer on recently announced guidelines for the appointment of independent corporate monitors, which are often a feature of non-prosecution or deferred prosecution agreements with corporations.  Next, our colleague and legendary trial lawyer, Jim Brosnahan, reviews ten things you can do to steer clear of potential criminal problems.  We follow with an update on a recent Ninth Circuit case involving SEC and Department of Justice cooperation—and the unusual events surrounding a request for an en banc hearing.  We close with a report on the progress of an advisory committee to the SEC that is looking for ways to reduce the number of restatements

  • How credit rating companies look very unprofessional in this report

    The SEC published their report as to why the credit rating companies not only missed but totally screwed up before and during the subprime crisis (which could last another year after it has been declared over already a few times).  

    the Staff’s examinations revealed that:

    • there was a substantial increase in the number and in the complexity of RMBS and CDO deals since 2002, and some of the rating agencies appear to have struggled with the growth;
    • significant aspects of the ratings process were not always disclosed;
    • policies and procedures for rating RMBS and CDOs can be better documented;
    • the rating agencies are implementing new practices with respect to the information provided to them;
    • the rating agencies did not always document significant steps in the ratings process -- including the rationale for deviations from their models and for rating committee actions and decisions -- and they did not always document significant participants in the ratings process;
    • the surveillance processes used by the rating agencies appear to have been less robust than the processes used for initial ratings;
    • issues were identified in the management of conflicts of interest and improvements can be made; and
    • the rating agencies’ internal audit processes varied significantly.
    • source

  • Heathrow and risk taking

    If you are living between books about risk management and security project planning and stuff like that, you sometimes don't know what you are reading when you are looking at the news.

    Heathrow was investings billions of Euro's or pounds in a new terminal and had invited journalists from all over the world in a massive PR operation that would place Heathrow on the map of the European Hub of modernity, technology and some other buzzwords.

    In 2007 excessive delays and concerns about the airport's sprawling layout could threaten London's status as one of the world's leading financial centres. It had became one of the least favored airports of Europe but British Airways said that the new terminal would solve all that.

    It seems they had one of the most modern and whatever buzzwords system for the handling of the baggage but according to some accounts the personnel that had to use the system didn't had any training to use it, so even after only 30.000 pieces of baggage the system just broke down and flights were cancelled. Oh just teething problems they said, it will all come into order. But we are now already several days further away and there are still 15.000 pieces of baggage waiting to be reunited with their owners and every day dozens of flights are just cancelled.

    Nobody heard of testing before and training and stuff like that ?

    Now it is called another time a PR disaster for England, London and British Airways. Especially with the live reports of those hundreds of journalists that were invited from all over the world to report live the opening and found themselves amid anger, frustations, protesters and incompetence.