Forget too-big-to-fail, new concern is that many banks are too-weak-to-survive

Firms with over $11 trillion in assets would remain troubled even if interest rates rise, IMF says in new report

A third of biggest banks in the world’s richest countries are so weak their problems could not be solved even by a recovery and rising interest rates, the International Monetary Fund said in a new report released Wednesday.

About a third of European banks, with $8.5 trillion in assets, and a quarter of U.S. banks, with $3.2 trillion in assets, are in this too-weak-to-recover category, the IMF said. Continue reading

The largest U.S. coal company just filed for bankruptcy

Obama’s war on coal is succeeding as he’s making good on his threat to kill the industry:

 

Peabody Energy, the world’s largest private-sector coal producer, filed for bankruptcy on Wednesday in a U.S. court, citing “unprecedented” industry pressures and a sharp decline in the price of coal.

The company said it will continue to operate while in bankruptcy, while working to reduce debt and improve cash flow. Continue reading

Bundesbank Warns German Banks To Expect At Least 50% Losses On Austrian “Black Swan”

Just over a month ago, on March 1, the Austrian financial world was shaken by news that the first bank bail-in following Cyprus would not take place in Greece as many had expected, but in Vienna: judged by the rating agencies to be one of the safest places in the world, where the bad bank that was created to help with the wind-down of the defunct Austrian lender Hypo Alpe Aldria, would itself be unwound, with creditors suffering the bulk of the pain in the form of the first official “core Eurozone” bail in.

Truly a “black swan” event.

This, together with the revelation of the sordid state of Heta’s books which was only revealed after the bail-in fact, was certainly a shock to bondholders, who had been treating Heta bonds as money good as recently as last summer, only to face losses as large as 50%.

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