Moodys to downgrade France's credit rating?

[idun]

I have just seen this headline and wondered why?

AND Sarko, he knows that people are struggling and has had a  £70K oven put in his plane what an imbecile.

[AnOther]

A slightly exaggerated title.

The potential downgrade is to three specific French banks, BNP Paribas (who incidentally were the first major financial institution to flag a liquidity crisis way back in 2007 http://cryptogon.com/?p=1142 ), plus CA and Soc Gen, and is based on their exposure to Greek debt.

http://economicsnewspaper.com/policy/spain/moodys-downgrade-raises-solvency-of-french-banks-33964.html

Sarkos profligacy is to compensate for his lack of inches, silly [:D][:D][:D]

[idun]

Wasn't 'my' title or headline, but in a british news paper today. We are with the BNP may they rot, maybe we should get our money out now.

[NormanH]

I was wondering whether to put the little I have in a Livret A with LaPoste instead of Crédit Agricole.

The worries of capital [;-)]

[Rob Roy]

Isn't it amazing what you can read? We had a free (unsolicited) copy of "The Connexion" delivered this morning and I was browsing through it and saw a small item which started thus:

"Four leading French banks have come out of the EU financial "stress" tests with flying colours and should be able to withstand the most severe financial crisis. BNP Paribas, Societe Generale, Credit Agricole and BPCE (Banque Populaire-Caisse d'Epargne) passed the tests with an average top-class Tier One shareholder fund ratio of 7.5%. The regulator looked at the banks' books with an eye to the future, to see whether they were strong enough to stay solvent and withstand losses, and to survive even if the economy nosedived."

It continues a bit more, but you get the idea. That article would suggest that these banks are in a strong position, but the OP posting seems to suggest something different, or am I not understanding this correctly?

 

[idun]

It wasn't me who mentioned these banks, the headline said France. I was watching the press revue on tv late last night and that was a headline, that along with the oven fiasco.

[breizh]

[quote user="Rob Roy"]

Isn't it amazing what you can read? We had a free (unsolicited) copy of "The Connexion" delivered this morning and I was browsing through it and saw a small item which started thus:

"Four leading French banks have come out of the EU financial "stress" tests with flying colours and should be able to withstand the most severe financial crisis. BNP Paribas, Societe Generale, Credit Agricole and BPCE (Banque Populaire-Caisse d'Epargne) passed the tests with an average top-class Tier One shareholder fund ratio of 7.5%. The regulator looked at the banks' books with an eye to the future, to see whether they were strong enough to stay solvent and withstand losses, and to survive even if the economy nosedived."

It continues a bit more, but you get the idea. That article would suggest that these banks are in a strong position, but the OP posting seems to suggest something different, or am I not understanding this correctly?

 

[/quote]

Looks more like a BdF press release[;-).

If you go to the original EBA data. They all scraped in, falling in the 5-6% Tier 1 capital range (5% was the pass mark). The EBA stress test allowed Sovereign Debt at 100% value. Anyone want to guess what the really value of Greek debt is?[:D] Also, only looked at the Asset Books of the various banks, so anything you didn't want the EBA to see you just transferred into the Trading Book for the day. Effectively the banks bought it's own debts for the day out of their customers' money.

It's old news anyway, you've only got to look at how the markets have hammered their share prices over the last few weeks. They have all got very nasty skeletons in their cupboards. BPCE owns Natixis, which specialises in lending to Southern European countries for infrastucture projects. Very nasty, and why BdF threw BPop and Cd'E together in the first place[:-))]. BNP has Dexia, which does the same[:-))] SocGen and CA just got greedy, and in too deep.

Why do you think Sarko was so eager not to include compulsory haircuts on privately held Sovereign Debt? Answer: French banks would need to be nationalised, and recapitalised. And he hasn't got that sort of cash lying around[;-)]

The German banks faired just as badly.

Bizarrely, it was the Brit and Swede banks that did best. Probably because they have already taken their medicine[:D]

What must be even more galling to the Dwarf is yesterday's IMF report on France, which wasn't very complimentary to the Govn. (to put it mildly). Report signed off by a certain Christine Lagarde[:D]

[idun]

Thanks Breizh. Interesting post.

[The Riff-Raff Element]

[quote user="breizh"]

Also, only looked at the Asset Books of the various banks, so anything you didn't want the EBA to see you just transferred into the Trading Book for the day. Effectively the banks bought it's own debts for the day out of their customers' money.

[/quote]

Can't get away with that sort of thing any more - auditors are more clued up than they used to be  [;-)]

But I wouldn't disagree with anything else you've got to say. Sarko & Merkel are well aware, I imagine, of how precarious the banks are in their respective domains and are just trying to brazen it out by being all statesmenlike while hoping desperately that improvements in the economic landscape (particularly in PIIGS) appear in time to save their bacon.

The three card trick is all very well at dog tracks, but I'm not sure it can be reliably applied to national economies. Guess we'll find out  [:D]

[breizh]

[quote user="The Riff-Raff Element"][quote user="breizh"]

Also, only looked at the Asset Books of the various banks, so anything you didn't want the EBA to see you just transferred into the Trading Book for the day. Effectively the banks bought it's own debts for the day out of their customers' money.

[/quote]

Can't get away with that sort of thing any more - auditors are more clued up than they used to be  [;-)]

[/quote]

Agreed. It was a lot more subtle, but the end result was the same, give me a bit of literary licence. I'm a humble Credit Manager, I look for these sort of things, I'm not brave enough to try to beat the rules, just IF I was going to do it, this is HOW I'd do it.............................[:D]

Let's just pray the Hausfrau and the Dwarf are right.

Can politicians beat global market forces?

(PS ZERO bad debts in the last 5 years......................I'm good, really good[:D])

[The Riff-Raff Element]

[quote user="breizh"]

Can politicians beat global market forces?

[/quote]

Provided the market is functioning fluidly then it is seldom in politicians' interest to try to do so, even if - short term - the market makes their life difficult. The danger for the market comes when the number of players in it drops (through mergers or attrition) to the point where they routinely abuse their positions or acquire monopolistic or parastatal qualities. Think Standard Oil. In that case the potential fallout from a government interfering in a market was no worse than not doing so, and Standard Oil found itself broken up.

It must always be remembered by the markets that governments can legislate and legally shoot people. In that sense they can always beat the market. [:D]

How close we are to such an abusive situation in the financial markets I could not say. In the oil markets (my background) I reckon we're getting pretty close.

That's my tuppence worth.

[Richard51]

[quote user="The Riff-Raff Element"]

But I wouldn't disagree with anything else you've got to say. Sarko & Merkel are well aware, I imagine, of how precarious the banks are in their respective domains and are just trying to brazen it out by being all statesmenlike while hoping desperately that improvements in the economic landscape (particularly in PIIGS) appear in time to save their bacon.

The three card trick is all very well at dog tracks, but I'm not sure it can be reliably applied to national economies. Guess we'll find out  [:D]

[/quote]

Riff-Raff & breizh - I completely agree with you and have been saying this on here for a while (as Mrs R51, Scooby and Hastobe)

[allanb]

[quote user="Rob Roy"]That article would suggest that these banks are in a strong position,

but the OP posting seems to suggest something different, or am I not

understanding this correctly?[/quote]

The EU test criteria are different from Moody's criteria.

I don't think it's any more complicated than that.  Both of them are trying to estimate risk, which is very difficult.  It would be amazing if they both had exactly the same opinion.