Submitted by Beppe Grillo – The Beppe Grillo Blog
“Two days ago, Deutsche Bank, a bank with assets worth more than Italy’s GDP, has declared the need to adjust the results for the third quarter of 2015 to reflect losses of almost 6 billion euro.
70 thousand billion in derivatives
Details of the reasons for these losses are not yet available but it is well known that the bank has an anomalous concentration of derivatives in its portfolio: 75 thousand billion dollars (about 65 thousand billion euro!), equivalent to 20 times Germany’s GDP. It seems that Deutsche Bank has really not learned much from the 2008 crisis, even though America’s Securities Exchange Commission (SEC) in May of this year, penalised its structured finance dating back to the time of Lehman Brothers, with a fine of 55 million dollars.
And yet Deutsche Bank passed the European Banking Authority’s stress tests without any particular censuring. However, the US stress tests carried out by the Federal Reserve before the summer, definitely found the German bank to have done badly and classed it among those that would not survive another financial crisis.
So perhaps those that said the European stress tests put too much emphasis on the spread of the yield of government bonds among the various member countries, were not wrong. It’s a phenomenon that has become dangerously familiar to us, to such an extent that now, very few are aiming to tackle the root causes of the problems.
MPS and Deutsche Bank
Even with us, derivatives continue to wreak havoc on the commercial banks (example: MPS) and on the coffers of the State. But let’s take things one at a time, starting with the commercial banks and then the public sector. MPS has recently concluded a transaction with Nomura after having concluded another one last year with Deutsche Bank to put an end to the episode involving Alexandria and Santorini derivatives. Regardless of the details of the transaction, it’s difficult not to connect these losses with the “Monti Bonds” and the various capital increases that pulverized the share values and impoverished the small-scale shareholders to the extent of billions of euro, as well as destroying the country’s third largest bank. We know that the government has pulled out of the game; it has already implemented (in an excess of virtue!) the new European regulations regarding bank bail-ins that will come into force next year and thanks to which losses will be offloaded directly onto the poor current-account holders, as well as others, including the minority shareholders.
We know that the Milan Prosecutors Office has started a number of indictments on this issue and it is also investigating matters arising form the time of Alessandro Profumo and Fabrizio Viola, but we know that even for the Italian Securities and Exchange Commission (CONSOB) and the Bank of Italy, up until now, everything has been basically OK. As usual, accounting issues come to the notice of “Supervisory bodies“ when the prosecutors decide to take action. It’s a shame that bodies like the Bank of Italy and CONSOB exist to prevent mismanagement and not to pretend to intervene when the prosecutors arrive.
What’s happening in Italy
160 billion in derivatives and more than 40 billion in potential losses. One thing is clear that we learned from this year’s investigation. These measures were not aimed at providing cover but they were purely speculation at the expense of the citizens! And that’s how they generate profits or losses. Unfortunately for us – since we bet on the wrong side – they turned out to be losses. And as though that were not enough, as well as saddling us with the disastrous losses that these contracts can generate, they even deny us access.
In fact we have used all possible methods and in all possible places, and we have asked to be able to see THE CONTRACTS that are underlying these figures so that we can have them analysed by people that understand these things. The Movement has so many quality resources that it can access independently.
What was the reaction? What response was given by the State and by the government to our transparency operation? They have in fact imposed “State Secrecy”.
Derivatives: State omertà = State secrecy
In fact, just 2 days ago the two-chamber committee for access to government documents DENIED us the possibility to view the contracts. This latest slap in the face of transparency seems to us to be in revenge for our denunciation to the Rome Prosecutors Office foromission of official actions in relation to our access to the official documentation relating to the derivative contracts of the Ministry of the Economy and Finances (MEF) presented about 10 days ago. Thus, in this case, the government is involved but it is not acting to aid transparency but to make things more murky, even though only a few months ago, Renzi himself declared that the derivative contracts would be published on the Internet – on the Ministry’s website.
What are they hiding from the citizens?
Even more early closures that we are not allowed to get information about until they happen and that will perhaps generate losses to be offloaded in the forthcoming Stability Law, as happened at the end of 2011 when there were losses of more than 2 billion euro (as well as the stunning new council tax – called IMU and also the FORNERO LAW).
Obviously we hope that we’re wrong. Anyway, the highest common denominator in these stories is the LACK OF CLARITY. No one knows how it is that Deutsche Bank can suddenly have losses of 6 billion, just as it’s not yet known today whether the MPS accounts are or are not being honestly presented and nor is it known how much of that potential loss of 40 billion in derivatives is actually happening.
Stay tuned. We’ll keep on going with this issue.” Carla Ruocco, M5S spokesperson in the Lower House