It’s not just Deutsche. European banking is utterly broken

As was said in an earlier post, the fines imposed by the DoJ are ironically what the balance sheet looks like for Deutsche Bank, Volksagen et al. It’s economic warfare in that case.

 

Nine years after the initial eruption, it still rumbles on, with the epicentre now moved from the US to Europe. Only it’s not the same crisis; in large measure, it is completely different.

Today’s mayhem is not so much the result of reckless bankers and people asleep at the wheel of regulation, but rather of the public policy response to the last crisis itself – that is to say, regulatory overreach and central bank money printing.

All eyes are naturally focused on the specific problems of Deutsche Bank, but Deutsche is in truth no more than the canary in the coal mine.

Beware the great 2016 financial crisis, warns leading City pessimist

Albert Edwards joins RBS in warning of a new crash, saying oil price plunge and deflation from emerging markets will overwhelm central banks, tip the markets and collapse the eurozone

The City of London’s most vocal “bear” has warned that the world is heading for a financial crisis as severe as the crash of 2008-09 that could prompt the collapse of the eurozone.

Albert Edwards, strategist at the bank Société Générale, said the west was about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them. His comments came as analysts at Royal Bank of Scotland urged investors to “sell everything” ahead of an imminent stock market crash.

Bank of England stress tests to include feared global crash

 

The Bank of England is to impose a series of tests on major UK banks to establish whether they are able to withstand a dramatic slowdown in China, a contraction in the eurozone, the worse deflation since the 1930s along with a fall in UK interest rates to zero.

The Co-operative bank – which failed last year’s tests – is no longer included in the annual assessments of the industry’s financial strength as it is too small, leaving six banks and the Nationwide building society to be tested.

Bigger ECB asset-buying expansion planned

The much-awaited expansion of the European Central Bank’s asset-buying, or quantitative easing (QE), program will be larger-scale than expected, according to Royal Bank of Scotland, which says the objective now is to head off mounting deflationary pressures in the euro zone.

RBS, in a research paper published this week, says the ECB will expand its balance sheet from €2.2 trillion ($3.2 trillion) now to €4.5 trillion, and not the €3.1 trillion previously envisaged. This suggests a further €2.3 trillion of bond purchases, which is more than twice the amount so far mentioned by ECB officials.

RBS to cut 30,000 jobs by slashing its investment banking division

The bank, 81 per cent owned by the taxpayer, has already axed 40,000 posts since it was bailed out by the government in 2008

Royal Bank of Scotland is gearing up for further job cuts as it prepares to focus on the high street and withdraw from riskier investment banking activities.

…

It now aims to cut up to 30,000 more posts by offloading parts of its international business and slashing its investment banking division.