German State-Owned Banks on Verge of Collapse

[RobertB]

WORST FINANCIAL CRISIS SINCE 1931?
German State-Owned Banks on Verge of Collapse

By Wolfgang Reuter

The German government has had to bail out state-owned banks with taxpayers' money after their managements recklessly gambled away billions on subprime investments. But if a state-owned bank were to go under, the consequences could be disastrous for the whole economy.

The future is far from bright for Germany's banks.
Ingrid Matthäus-Maier, a member of the center-left Social Democratic Party (SPD) and the CEO of the state-owned KfW banking group, is undoubtedly in one of Germany's highest earnings brackets. Although her annual salary of €418,000 ($614,000) is substantially lower than that of her counterpart at Deutsche Bank, Josef Ackermann, who earns a tidy €13 million a year, she does earn more than twice the salary of German Chancellor Angela Merkel, who has to make do with a mere €200,000.

http://www.spiegel.de/international/business/0,1518,536635,00.html

[antsinmypants]

I don't think that's the whole of the problem.

Unfortunately Der Spiegel is about like "the Times"... kind of out there and you have to cross check all references.

I'd not heard a thing about this on our regular news, and I'm having to listen now as homework to better improve my German..


I asked my DH and he said there is really only one bank that seems to be having difficulty, and if I recall hearing correctly last month it was Citibank and those that deal with it that are having issues. Not all the banks here deal with them... and credit use is seen as a 'no-no' out here... One Debits against their account but doesn't use a true credit like we do in the US..

What we do have going on is major tax evasion issues with some ultra rich folks, and the fall out in that Lichtenstein (another country between Austria and Switzerland -- also German Speaking) is now trying to find and imprison the informant who let the German government know that some of it's citizens has been skirting taxes in the country....

The news I am getting on this issue however is that "Rating Agencies Take Blame for Subprime Crisis" (http://www.dw-world.de/dw/article/0,2144,3126738,00.html), and no mention of the banks being on verge of collapse..


On the tax evasion front:


In Tax Evasion Scandal, Focus Shifts to German Private Banks (http://www.dw-world.de/dw/article/0,2144,3141226,00.html)

Adding a new twist to an increasingly juicy scandal, German private banks and other financial services are said to be involved in an ongoing investigation into massive tax evasion by hundreds of wealthy Germans....

EU Must Get Rid of Liechtenstein Loophole (http://www.dw-world.de/dw/article/0,2144,3140665,00.html)
...Liechtenstein offers plenty of opportunities for greedy tax evaders. The small Alpine state enriches itself with money that is illegally taken away from other countries. It makes the lawbreakers anonymous and protects them and their millions.
This is reprehensible....

Who's to Blame for Germany's Massive Tax Evasion Scandal? (http://www.dw-world.de/dw/article/0,2144,3137075,00.html)
...Some believe that the tax haven, which has built its reputation on bank secrecy, is simply thumbing its nose at its European neighbors. Others regard the problem as at least partly home-grown.

That a problem exists is indisputable. Tax evasion is estimated to cost the German state around 30 billion euros ($44 billion) a year, said Dieter Ondracek, head of the German Tax Union. Between 6 billion and 8 billion euros of this money is believed to end up in Liechtenstein. ...

Deutsche Post Gets New Boss Amid Growing Tax Evasion Scandal (http://www.dw-world.de/dw/article/0,2144,3134517,00.html)
...The supervisory board of Deutsche Post on Monday picked Frank Appel to lead the mail and global logistics company after his predecessor resigned last week amid charges of evading taxes to the tune of one million euros.



Appel, 46, has been a member of the management board since 2002, and is currently in charge of the group's international mail and logistics division. Appel, a long-time protégé of Zumwinkel, said he would continue the policies of his former boss.

Deutsche Post delivers mail in Germany and is a major worldwide player in the express delivery and logistical services business through its DHL unit...

I'll keep looking though...

[antsinmypants]

Ok I did find this...

French Bank's CEO Under Fire After Rogue Trade Scandal (http://www.dw-world.de/dw/article/0,2144,3095100,00.html)
1.29.2008
The French government has pressured Societe Generale's CEO to step down in the wake of a multi-billion-euro rogue trading scandal that has thrown the 144-year-old bank into turmoil and raised speculation of a take-over.....

German Bank Announces Billion Euro Loss (http://www.dw-world.de/dw/article/0,2144,3080400,00.html)
1.21.2008

A Germany bank announced it will post a 1 billion euro ($1.46 billion) loss for 2007, due to exposure to the subprime crisis in the United States. German stocks continued their slide over worries about the US economy.

Just a few months ago WestLB issued a statement assuring investors that its exposure to subprime securities in the United States was "relatively limited."....

European Leaders Call for Increased Market Transparency (http://www.dw-world.de/dw/article/0,2144,3096317,00.html)
1.29.2008

Europe's economy is fundamentally sound, but requires more transparency after recent international market turmoil, political leaders from Britain, France, Germany and Italy said after talks in London.

"The fundamentals of the European economies remain sound," British Prime Minister Gordon Brown said, reading from a statement after talks with his counterparts on Tuesday, Jan. 29.

But he added: "We are calling for greater transparency (to create) better informed markets."...

Economist Plays Down Effect of Summit on Financial Market (http://www.dw-world.de/dw/article/0,2144,3097010,00.html)
1.30.2008
Key European leaders met recently to discuss the ongoing financial crisis, ending with a call for greater market transparency. But this is too little, too late, economist Thomas Straubhaar said...


Berlin to Lead Massive Bail-Out for Subprime-Hit Bank
(http://www.dw-world.de/dw/article/0,2144,3126544,00.html)
2.14.2008
...German Finance Minister Peer Steinbrueck said on Wednesday, Feb. 13, that the rescue package involved 1.5 billion euros in financial aid, of which the federal government would take on one billion euros. He said he was counting on German banks to put up the remaining 500 million euros.
...to prop up a casualty of the subprime loan crisis in the US which has buffeted banks in Europe since last summer....


That's about all I can find on it... :idunno

[RobertB]

There is an article here: http://www.businessweek.com/globalbiz/content/feb2008/gb20080221_423252.htm