by David Malone
Piraeus Bank, Greece’s forth largest lender, said today its profits for the first 9 months of this year were down 94%!
Earlier this year Piraeus was one of Greece’s poster boys for the strength of their recovery and the certainty of growth – so much so that Piraeus was bidding to take over the government’s stake in two even more ailing Banks, ATE Bank and Hellenic Postbank. Needless to say that offer has been withdrawn.
The 94% collapse in profits is due, they said, to increasing losses on bad debts. Those would be the bad debts that Greece had sorted out and the European Bail out had double sorted out. Look boys and girls 15% is an increase. 60 % is a rude shock. 94% is slamming into a concrete block.
But it’s just Greece right? Like Ireland is ‘just’ Ireland.
Let’s look at who Piraeus has close links to – its major correspondents. They are, from their own paperwork:
Germany – Deutsche Bank, Commerzbank plus two Landesbanks – the Hessen and the Beyerische. The latter should make you wince.
France – Societe General
Ireland – Bank of Ireland
GB – RBS, Nat. West, HSBC
Italy – Unicredit ( actually it is through Unicredit Austria but therein lies a sordid tale. Unicredit Austria also appears again on the list via its ZAO Unicredit Bank in Russia – you join the dots)
USA Bank of New York, JP Morgan Chase.
There are others from other countries – Danske Svensca, Sumitomo.
So will the problem at Piraeus spread or be contained? I leave you to decide. Also worth a brain cell is the question m- is it likely that Piraeus is the only Greek bank whose profits are dying?
And if you think the answer to that is ‘no’ then what of the epic mythology of Greek growth?
Greece is sinking. It’s banks are bleeding like naked fat men rolling in rusty razor blades, its fiction of growth is in tatters and its austerity measures are not going to hold. While at the other periphery Ireland is similar trouble. And between them sit THE SAME German and French, Italian and Austrian Banks who are exposed to BOTH of them
Oh yeah sure it’s all contained!
This article is reproduced with thanks to David Malone. He is the author of the book Debt Generation. You can read and listen to excerpts from his book here: http://www.debtgeneration.org/index.php