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European Banks’ Credit Quality Revisited

August 11, 2011

We had written a piece  five months back – Deutsche Bank Creditor Concerns. 

https://crediteye.wordpress.com/2011/03/29/deutsche-bank-creditor-concerns/

We had raised a number of issues in that short piece.  Those concerns are true for all major European Banks.  Only when they address the issues in a transparent way, will creditor concerns dissipate.  The absolutely wrong strategy is the one adopted by Soc Gen’s CEO yesterday, when he blamed rumor mongering for his troubles.  In an earlier piece, we had described what a solvent bank facing rumors should do.  That, we feel is the only way out for Soc Gen and banks in the same boat.

https://crediteye.wordpress.com/2011/07/07/is-liquidity-of-assets-relevant-to-a-bank-creditor/

Talking about Soc Gen, we recollect a piece we had written on the bank a long while earlier.  It had nothing to do with the bank’s solvency or otherwise.  But it identified a symptom of the bank’s trouble- overly relying on quant models and less relying on common sense.  Perhaps, it is a good day to revisit that note, whose link is given below:

https://crediteye.wordpress.com/2011/01/19/try-using-soc-gens-model-for-pricing-tier-ii-bonds/

 

 

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From → Credit Analysis

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