Are Kaupthing and Icesave too risky?

ianmr65

Griffboy wrote: »

Can anybody get an update on this as it was a month ago? I must say, all this gloom is making me wobbly.

1. Kaupthing 833.3
2. Kazkommerts 766.7
3. Glitnir Bank 757.5
4. IKB 612.4
5. Landsbanki 604.6
6. Banca Italease 397.0
7. VTB Bank 332.5
8. Anglo Irish Bank 322.7
9. HBOS 236.7
10. Sberbank 221.3
11. West LB 212.5
12. UBS 209.0
13. Natixis 205.0
14. Bank of Ireland 202.5
15. Allied Irish Banks 195.8
16. Dexia 195.0
17. RBS 191.7
Source: Bloomberg (17/03/08)

From the FT 8/4/2007

....Full-blown investigation by Iceland’s Financial Supervisory Authority into an alleged speculative attack by hedge funds on Iceland’s currency, banking system and stock market. Jonas Jonsson, director-general of Iceland’s FSA, says the authorities are “searching whether some parties have systematically been distributing negative and false rumours about the Icelandic banks and financial system in order to profit from it.

Details of the investigation are confidential, but the authorities are expected to pay close attention to movements in the credit default swap markets for Iceland’s banks. Spreads in these markets – a proxy for investors’ fears the banks will collapse – have ballooned from about 50 last August to more than 1,000, indicating a very high level of fear about their viability.

The suspicion is that speculators exerted undue pressure on the illiquid CDS market in the knowledge that the wider the spread went, the more fear of a banking collapse would contaminate the stock and currency markets.

There are also concerns about the way rumours were spread about the alleged reliance of Iceland’s banks on internet deposits, which triggered reports in UK newspapers that such deposits could be withdrawn rapidly.

The chief executives of the three main banks, Landsbanki, Glitnir and Kaupthing, made clear in interviews last week there is no evidence this is the case, despite the negative publicity about Iceland. They firmly believe such rumours were started deliberately in order to spark fears of a run on their overseas deposits.

read the full article here:

http://www.ft.com/cms/s/0/20b359f4-0...0779fd2ac.html


as i've said in a previous post using the cds figure to rank a banks potential for failing, is like prediciting the number of seats a party will get at the next general election using william hill odds as the base numbers.

You're much better off looking at a banks fundementals, the ability, and willingness of it's central bank to support it, it's liquidity and it's exposure to the property market, and derivatives markets.

earlgrey_3

ianmr65 wrote: »

The chief executives of the three main banks, Landsbanki and Kaupthing, made clear in interviews last week there is no evidence this is the case, despite the negative publicity about Iceland.

As Mandy Rice Davies said, they would say that wouldn't they. To be honest I think you'd be better listening to views other than the less than unbiased statements given out by the actual banks concerned and their PR departments.

Which bank has ever said "We're about to go down the tubes, get your money out quick while you can"? Have to admit I certainly can't remember Northern Rock saying that nor any collapsing bank before them. It was more along the familiar lines of 'everything is fine chaps' iirc.

ianmr65 wrote: »

You're much better off looking at a banks fundementals, the ability, and willingness of it's central bank to support it, it's liquidity and it's exposure to the property market, and derivatives markets.

Do you just happen to know anyone with the inside knowledge and suitable qualifications to do that? (Without wishing to be rude, the word is "fundamentals".)

earlgrey_3

Double post deleted

Lavendyr

earlgrey wrote: »

As Mandy Rice Davies said, they would say that wouldn't they. To be honest I think you'd be better listening to views other than less than the unbiased statements given out by the actual banks concerned and their PR departments.

Like who? The Daily Mail? Ian has, time and again, pointed out articles from the FT and Bloomberg which have provided reassuring and unbiased reading. Unlike the Torygraph and the Mail who have, time and again, provided articles that reek of bias.

earlgrey wrote: »

Which bank has ever said "We're about to go down the tubes, get you money out quick while you can"? Have to admit I certainly can't remember Northern Rock saying that nor any collapsing bank before them.

It should reassure people that Northern Rocks' business model has been demonstrated to be extremely risky. Landsbanki's business model is nowhere near as risky, ditto Kaupthing. The majority of their loans to customers are funded by customer deposits, unlike Northern Rock (I believe the figure is something like 70% compared to NR's 28%). Their dependence on the money markets is therefore far less than NR.

SaverRanger

My money's on a "British" bank being next to hit the skids. Right now, unless "Johnny Foreigner" has followed the less than reliable British banking business models, they're the safest bet outside of National Savings & Investments.

ianmr65

earlgrey wrote: »

.Do you just happen to know anyone with the inside knowledge and suitable qualifications to do that?

well eg, being as gordon brown is on a one man mission to get all the UK and global banks to open up the details of thier balance sheets, and they all seem reluctant to do this, getting to the insider knowledge type nitty gritty is somewhat challenging.

All everyone else can do, including other bank analysts, and reaserchers is to pay careful attention to what's in the public domain, reports, and annual statements. Then what they do, what they say, what happens to their share prices, and other indicators - and what is reported about them. crunch the numbers, reaserch the markets they operate in, and the banking structures, Try to filter out all the vested intrest, and one sided commentary, whislt trying to get behind what motivated it - and put it into some sort of order in your mind.

Then you weigh it all, and come to some conclusions.

Now if i were investing millions of dollars on behalf of my employer, i'd be spending a bit(lot) more time on the number crunching and reaserch elements: mainly cos my knackers would be on the block, if i got it wrong.
But i'm not, and they aren't - the rest is fairly simple if you put your mind to it, and are willing to do a bit of digging - And you can come to suprisingly accurate forecasts about what is likely to happen.

NB sorry if my spelling upsets you. when martin puts a spell checker in i'll use it, till then life's too short.

ianmr65

SaverRanger wrote: »

My money's on a "British" bank being next to hit the skids. Right now, unless "Johnny Foreigner" has followed the less than reliable British banking business models, they're the safest bet outside of National Savings & Investments.

Surprsingly today's emergency dole out of £15bn of repurchase agreements by the BoE was only subscribed 1.01 times, then it may be that the banks that really need it aren't allowed to participate... still it's a ray of hope for HBOS, who are onbvioulsy in better shape than we thought.

Griffboy

ianmr65 wrote: »

NB sorry if my spelling upsets you. when martin puts a spell checker in i'll use it, till then life's too short.

There's always Firefox.