[A-List] Germany & the imperialist chain: financial sector

["Michael Keaney" <michael.keaney@xxxxxx>]

As said earlier, priority one for the German state and its capital sponsors
is the financial system, which, despite the note of alarm expressed last
week re Commerzbank, is in stronger shape than certain US ratings agencies
might like to think. We ought also to remember how pissed off with the likes
of Moody's and Standard & Poor's is the Japanese ministry of finance:

see http://archives.econ.utah.edu/archives/a-list/2001/msg05985.htm

State assistance for the banking sector should ease the financial pressure
on the Mittelstand. If successful, then this powerful interest group should
not be so disaffected with Schröder come the next election 4 years from now.


Officials attempt to stem German bank fears
By Bettina Wassener in Frankfurt
FT.com site; Oct 09, 2002

Senior finance officials sought to calm investor nervousness about Germany's
beleaguered banking sector with a series of reassuring comments.

Rolf Breuer (pictured), the head of the BdB banking association and
supervisory board chairman at Deutsche Bank, said there was no reason to
fear a liquidity crisis in Germany's banks, adding that recent sharp falls
in the share prices of leading German banks were exaggerated.

The country's finance ministry also came to the sector's defence, saying it
was an exaggeration to talk of a "crisis", though conceded it was closely
watching the deteriorating situation.

"The current exaggeration in the market, especially the prevailing doubt
about the liquidity of German institutions, is entirely beyond my
comprehension," said Karl-Burkhard Caspari, vice-president of FAFin, the
German financial regulator.

"There is no reason whatsoever to assume that by the end of this year,
German banks might fail to meet the international capital adequacy
requirements."

The comments came as the Dax fell another 1.2 per cent to 2,590, taking its
losses since the start of the year to nearly 50 per cent.

Meanwhile Moody's, the rating agency, lowered the main credit rating for
Dresdner Bank to Aa3 from Aa2, and its senior debt rating for its parent
compnay Allianz by two notches to Aa2 from Aaa.

However there was better news for Commerzbank, one of Europe's most
unprofitable banks, which last week raised risk provisions for the second
time this year and is set to announce further job cuts. After two days of
declines, its shares recovered 7.5 per cent to ý5.70 on Wednesday.

However the need for the verbal backing, however, highlighted the extent of
investor nervousness about banks operating amid barely perceptible economic
growth, steady stock market falls, and escalating insolvencies and bad
loans.

Comments from Otmar Issing, chief economist at the European Central Bank,
meanwhile, reflected the difficult situation. Mr Issing was reported as
saying that, while the banking system was not "in crisis," the situation
could be described as "dramatic."

Similarly, Bundesbank council member Edgar Meister said the German financial
system was stable in the face of considerable problems, but acknowledged
that further failures of small banks - such as Schmidtbank of Bavaria and
Gontard & Metallbank earlier this year - could not be ruled out.

Private bank Sal Oppenheim, meanwhile, cut its rating for German banks to
underperform and advised clients to avoid the sector.

BAFin, however, rejected a report that it had begun intensified supervision
or otherwise stepped up its oversight of Commerzbank.

The regulator is launching a preliminary investigation into whether
Commerzbank's shares price was being manipulated by "false media reports,"
which have aggravated the shares' sharp falls in recent weeks.

Commerzbank itself has denounced the speculation about its financial health
as a deliberate provocation by rivals, insists it has no financial problems
and that it will not have to make major writedowns on its shareholdings in
the third quarter.