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Italian banks battle through, German banks in trouble

Following stress-tests, state organised mutual bailouts and recapitalisations Italian banks struggle through whilst clouds darken around banks in Germany.

Daniele Pozzati

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Bruised, but not broke. Having failed the EU-wide stress tests, the Monte dei Paschi di Siena (MPS) has obtained the go-ahead for its rescue plan from the European Central Bank (ECB).

MPS is expected to sell a whopping 9,7 billions euros worth (so to speak) of bad performing loans, and, by the end of the year, to increase its capital by 5 billion euros.

Italy’s fourth largest bank – and the world’s oldest – now has its road map our of the crisis. But fresh questions have arisen as to where exactly the money will come from.

“The net value of the bank is currently 800 million euros,“ notes Panorama, a leading Italian weekly, “a capital increase of 5 billions represents a 6-fold increase of the net value of the bank. This implies asking the public to subscribe the remaining five sixth of new net value.“

Has everybody else done their maths? Don’t hold your breath.

Stress Tests: Germany fared worse

Last Friday the European Banking Authority (EBA) released the results of the stress tests, involving 51 European banks. The tests measure the capital solidity of each bank, and their ability to cope with challenges arising from a baseline and an adverse scenario. The tests have given banks indications as to their need to raise capital, reduce bad loans, etc.

German media were hardly enthusiastic about their banks performance. “And the stress for bank investors goes on,“ read a sarcastic headline by Frankfurter Allgemeine Zeitung. “Deutsche Bank and Commerzbank among Europe’s weakest banks,“ wrote Der Spiegel, “They would be severely affected by a new financial crisis“.

Commerzbank proved the point by issuing a profit warning on Tuesday. This sent European stock exchanges into a roller coaster before it’s Oktoberfest. For Commerzbank, however, the only way seems down: it shares have lost 44% of their value since beginning of the year.

Angela Merkel has so far kept quiet. She still has to reply to Renzi’s remark that “if MPS crisis is one, then Deutsche Bank is one hundred“. In fact, for every million the MPS has in bad loans, the Deutsche Bank has one billion in derivative exposure.

So, Renzi’s remark to Merkel was wrong, after all. The ratio of MPS bad loans to Deutsche Bank’s derivative exposure is not 1:100. It is 1:1000

On Atlas’s shoulders

Steering away from a state-funded bail-out was key to obtain the ECB’s go-ahead. But Italy was just as keen on avoiding the new EU-brokered Bail-in procedure. “MPS has issued 5 Billions euros of subordinated bonds [a high performing, but low-ranking debt in case of liquidation of a bank],” wrote l’Espresso, another Italian weekly, “these bonds, in case of a Bail-In, risk not being reimbursed”

Besides, since April Italy has successfully implemented its own bank-rescuing devices. Four small banks have been saved, all saddled, just as MPS now, by poor performing loans. The Italian Treasury created an alternative investment fund financed – here’s the trick – not by the taxpayer, but by large Italian banks. 

Aptly called Atlas, the rescue fund financial shoulders were able to relieve small banks of 2 Billions euros in bad loans. Technically, Atlas would buy as many bad loans as needed to give the banks involved a new lease of life. The operation was victim of its success. By the time the four banks were rescued, Atlas’s financial shoulders had shrunk to half its initial capacity.

Bring on Jason, aka Atlas 2

To rescue the Monte dei Paschi in the same fashion, i.e. by relieving it from most of its bad loans, a new, dedicated “Fondo Alternativo d’Investimento“ was needed. By July, news begun circulating of an incoming, Treasury-engineered “Jason“ or “Atlas 2“.

The Golden Fleece is the money needed – without state help, and without the daunting Bail-in procedure – to recapitalize the MPS bank. Atlas 2 investment fund will buy most MPS’s bad loans, just as its predecessor did to rescue four local banks.

This double-pillar rescue plan is in line with ECB’s demands: recapitalization and cleaning up of most bad loans. The real issue now is where to find fresh private capital. We are talking of selling bad loans afterall, even if traded at a fraction of their original value. The investors buying it, usually specialized credit-recovery companies, will make a profit if they can recover a larger fraction of the loan than the one at which the loans traded.

Yet Rome remains confident. “In Italy there is no systemic crisis, and our banks, at least those reviewed by the Stress Tests, have done well,” Pierpaolo Baretta, undersecretary for the Economy ministry, told La Stampa, “This is important because it allows us to deal with crisis points with more lucidity. The MPS rescue plan we have agreed with the BCE, once implemented, would put MPS in the middle of the Stress Test ranking”.

No such plans have yet been devised in Germany to rescue the Deutsche Bank. And the ECB Stress Tests did not consider derivative exposure. It is really no wonder that Angela Merkel is, for once, keeping quiet about the rescue deal Rome has just brokered with the ECB.

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Putin, Trump meet in Helsinki for first bilateral summit

The Helsinki summit is the first ever full-fledged meeting between Vladimir Putin and Donald Trump. Their previous encounters were brief talks on the sidelines of the G20 and APEC summits in 2017.

Vladimir Rodzianko

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Russian President Vladimir Putin and US President Donald Trump are meeting in the Finnish capital of Helsinki for their first bilateral one-on-one meeting.

Trump arrived in the Finland capital a day early, while the jet of Putin, who wrapped up his nation’s hosting of the World Cup Sunday, touched down around 1 p.m. local time and the Russian president’s motorcade whisked him straight to the palace where the two world leaders are meeting.

Trump signed an August 2017 law imposing additional sanctions on Russia. The law bars Trump from easing many sanctions without Congress’ approval, but he can offer some relief without a nod from Congress.

Almost 700 Russian people and companies are under U.S. sanctions. Individuals face limits on their travel and freezes on at least some of their assets, while some top Russian state banks and companies, including oil and gas giants, are effectively barred from getting financing through U.S. banks and markets.

The agenda of the summit hasn’t been officially announced yet, though, the presidents are expected to discuss global crises, such as the Syrian conflict and Ukraine, as well as bilateral relations.

Stay tuned for updates…

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“Foreign entity, NOT RUSSIA” hacked Hillary Clinton’s emails (Video)

Rep. Louie Gohmert (R-Tx): Hillary Clinton’s cache of 30,000 emails was hacked by foreign actor, and it was not Russia.

Alex Christoforou

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A stunning revelation that hardly anyone in the mainstream media is covering.

Fox News gave Louie Gohmert (R-Tx) the opportunity to explain what was going on during his questioning of Peter Strzok, when the the Texas Congressman stated that a “foreign entity, NOT RUSSIA” hacked Hillary Clinton’s emails.

Aside from this segment on Fox News, this story is not getting any coverage, and we know why. It destroys the entire ‘Russia hacked Hillary’ narrative.

Gohmert states that this evidence is irrefutable and shows that a foreign actor, not connected to Russia in any way, intercepted and distributed Hillary Clinton’s cache of 30,000 emails.

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Via Zerohedge

As we sift through the ashes of Thursday’s dumpster-fire Congressional hearing with still employed FBI agent Peter Strzok, Luke Rosiak of the Daily Caller plucked out a key exchange between Rep. Louie Gohmert (R-Tx) and Strzok which revealed a yet-unknown bombshell about the Clinton email case.

Nearly all of Hillary Clinton’s emails on her homebrew server went to a foreign entity that isn’t Russia. When this was discovered by the Intelligence Community Inspector General (ICIG), IG Chuck McCullough sent his investigator Frank Ruckner and an attorney to notify Strzok along with three other people about the “anomaly.”

Four separate attempts were also made to notify DOJ Inspector General Michael Horowitz to brief him on the massive security breach, however Horowitz “never returned the call.” Recall that Horowitz concluded last month that despite Strzok’s extreme bias towards Hillary Clinton and against Donald Trump – none of it translated to Strzok’s work at the FBI.

In other words; Strzok, while investigating Clinton’s email server, completely ignored the fact that most of Clinton’s emails were sent to a foreign entity – while IG Horowitz simply didn’t want to know about it.

Daily Caller reports…

The Intelligence Community Inspector General (ICIG) found an “anomaly on Hillary Clinton’s emails going through their private server, and when they had done the forensic analysis, they found that her emails, every single one except four, over 30,000, were going to an address that was not on the distribution list,” Republican Rep. Louie Gohmert of Texas said during a hearing with FBI official Peter Strzok.

Gohmert continued..

“It was going to an unauthorized source that was a foreign entity unrelated to Russia.”

Strzok admitted to meeting with Ruckner but said he couldn’t remember the “specific” content of their discussion.

“The forensic examination was done by the ICIG and they can document that,” Gohmert said, “but you were given that information and you did nothing with it.”

According to Zerohedge “Mr. Horowitz got a call four times from someone wanting to brief him about this, and he never returned the call,” Gohmert said – and Horowitz wouldn’t return the call.

And while Peter Strzok couldn’t remember the specifics of his meeting with the IG about the giant “foreign entity” bombshell, he texted this to his mistress Lisa Page when the IG discovered the “(C)” classification on several of Clinton’s emails – something the FBI overlooked:

“Holy cow … if the FBI missed this, what else was missed? … Remind me to tell you to flag for Andy [redacted] emails we (actually ICIG) found that have portion marks (C) on a couple of paras. DoJ was Very Concerned about this.”

Via Zerohedge

In November of 2017, IG McCullough – an Obama appointee – revealed to Fox News that he received pushback when he tried to tell former DNI James Clapper about the foreign entity which had Clinton’s emails and other anomalies.

Instead of being embraced for trying to expose an illegal act, seven senators including Dianne Feinstein (D-Ca) wrote a letter accusing him of politicizing the issue.

“It’s absolutely irrelevant whether something is marked classified, it is the character of the information,” he said. Fox News reports…

McCullough said that from that point forward, he received only criticism and an “adversarial posture” from Congress when he tried to rectify the situation.

“I expected to be embraced and protected,” he said, adding that a Hill staffer “chided” him for failing to consider the “political consequences” of the information he was blowing the whistle on.

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Donald Trump plays good cop and bad cop with a weak Theresa May (Video)

The Duran – News in Review – Episode 55.

Alex Christoforou

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US President Donald Trump’s state visit to the UK was momentous, not for its substance, but rather for its sheer entertainment value.

Trump started his trip to the United Kingdom blasting Theresa May for her inability to negotiate a proper Brexit deal with the EU.  Trump ended his visit holding hands with the UK Prime Minister during a press conference where the most ‘special relationship’ between the two allies was once again reaffirmed.

Protests saw giant Trump “baby balloons” fly over London’s city center, as Trump played was his own good cop and bad cop to the UK PM, outside London at the Chequers…often times leaving May’s head spinning.

Even as Trump has left London, he remains front and center in the mind of Theresa May, who has now stated that Trump advised her to “sue” the European Union to resolve the tense negotiations over Brexit.

Trump had mentioned to reporters on Friday at a joint press conference with Theresa May that he had given the British leader a suggestion that she found too “brutal.”

Asked Sunday on the BBC’s Andrew Marr Show what that suggestion was, May: “He told me I should sue the EU. Not go into negotiation, sue them.” May added…

“What the president also said at that press conference was `Don’t walk away. Don’t walk away from the negotiations. Then you’re stuck.”‘

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris summarize what was a state visit like no other, as Trump trolled the UK PM from beginning to end, and left London knowing that he got the better of a weakened British Prime Minister, who may not survive in office past next week.

Remember to Please Subscribe to The Duran’s YouTube Channel.

Via CNBC

It wasn’t exactly clear what Trump meant. The revelation came after explosive and undiplomatic remarks Trump made this week about May’s leadership — especially her handling of the Brexit negotiations — as he made his first official visit to Britain.

In an interview with The Sun newspaper published Thursday — just as May was hosting Trump at a lavish black-tie dinner — Trump said the British leader’s approach likely “killed” chances of a free-trade deal with the United States. He said he had told May how to conduct Brexit negotiations, “but she didn’t listen to me.”

He also praised May’s rival, Boris Johnson, who quit last week as foreign secretary to protest May’s Brexit plans. Trump claimed Johnson would make a “great prime minister.”

The comments shocked many in Britain — even May’s opponents — and threatened to undermine May’s already fragile hold on power. Her Conservative government is deeply split between supporters of a clean break with the EU and those who want to keep close ties with the bloc, Britain’s biggest trading partner.

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