?m currently shooting for $2bn lost, versus about $4bn made during th 1990s). Less sure about Deutsche Bank, although it?s been common knowledge for a while that emerging market debt trading was the only bit of its Deutsche Morgan Grenfell subsidiary that made money (a scary duo called Rick Haller and Paul Luke). Last time I looked, Russia?s bank debt was US$75.8bn -- the higher figure may be for total indebtedness including bonds. And the writeoff deal is a little bit more generous --10% cash, plus 30% medium term bonds (more or less worthless), plus 40% floating-rate bonds (slightly less worthless).
$13 trillion in assets only equates to around $1trn in capital, so the Russian loss will make a bigger hole than suggested -- though still not enough to significantly impair credit creation capacity.
I?d suggest that the mightiest and best managed banking system on the planet is that of the UK , with HSBC and Lloyds TSB being the biggest hitters, followed by the best of the Americans, then UBS and Credit Suisse, then the rest.
dd (who does this stuff for a living, God help me)
On Mon, 8 Mar 1999, Doug Henwood wrote:
> >The EU banking system is the mightiest and best-managed on the
> >planet
>
> Is that why they've lost so many euros in Asia and Russia?
With $13 trillion in total assets, the EU banks have the reserves to handle Russia's $130 billion debt, not to mention the SE Asia crisis, without breaking a sweat (remember, even that mighty Chinese economy is only slightly bigger, in GDP terms, than the economy of Spain). This is a fairly decent performance, compared to Japan's banking crisis, or that of the US banking industry, which weighs in at around $4.5 trillion in assets. Also, the EU banks tend to have a long-term perspective on investments; Deutsche Bank recently accepted a Russian repayment plan, which basically amounts to a 95% write-off on certain forms of debt. The bankers don't care, because (1) they're insured by the state, and (2) they know they can never, ever fully compensate the Russians for the devastation of WW II. It's smart, long-term politics to forgive the debt and keep Russia afloat; the long-term returns will more than pay for the costs of such short-term crises.
Compare this with how US banks have utterly trashed Latin America. Need we say more?
- -- Dennis
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