Germany's credit rating downgraded
Germany's Aaa credit rating outlook
has been lowered to negative by Moody's.The rating agency cited "rising
uncertainty" about Europe's debt crisis.Risks that Greece may leave the
euro and the "increasing likelihood" of help for Spain and Italy also
caused the downgrade."Given the greater ability to absorb the costs
associated with this support, this burden will likely fall most heavily on more
highly rated member states if the euro area is to be preserved in its current form,"
Moody's said. Germany's vulnerable banking system, which Moody's deems exposed
to the most stressed euro countries, could leave them open to further deepening
of the crisis.However, it will retain its Aaa rating because of the country's "advanced
and diversified economy" with high productivity and strong demand for
German products.Finland held on to its top ranking, getting a stable outlook
from Moody's.
Deutsche Bank's Internal Libor Investigation Finds Deutsche Bank Mostly Innocent
Great news, you guys. We can go
ahead and scratch at least one bank off the list of egregious interest-rate
manipulators. That's because this bank has heroically determined that it is
totally innocent. Almost totally, anyway.Deutsche Bank, the biggest German
bank, has carefully investigated its own role in the habitual, fraudulent,
global rigging of Libor, the most important interest rate in the world. And you
might want to sit down for this, but Deutsche Bank has determined, to what we can only imagine is its own profound relief, that Deutsche
Bank was only barely involved in the scandal. Hardly any involvement, really.
If you blur your eyes a bit, it even kind of looks like Deutsche Bank wasn't
involved at all. Certainly not in its top executive ranks. That's the way
Deutsche Bank would like you to see it, anyway.Hmm, one small problem, though: Handelsblatt is reporting that Deutsche Bank is bracing for "a huge fine" in the Libor
scandal, setting aside between $300 million and $1 billion -- the middle point
of which would be higher than the $450 million Barclays paid. Does that sound
like a bank that really expects to get out of this without any mud getting
splashed on the C-suite?Anyway, we can only imagine that if Deutsche Bank is
indeed planning on paying such a huge fine, then it is only doing so out of the
goodness of its heart, a sense of civic duty really. Because it turns out,
according to Deutsche Bank's investigation, that every bit of Deutsche Bank's
involvement in the constant, gleeful rigging of
Libor for years came down to just two very bad
Deutsche Apples, who were fired last year. Both of those, let's call them,
slimeballs apparently were part of the global Libor-rigging cartel that involved nearly every large bank in the world. But they're gone
now, and we can only imagine that their desks have been taken out back and
chopped into dust, that their pictures have been photoshopped out of all the
company's birthday-party photos, and that their names are no longer spoken
around Deutsche Bank's offices in any tones other than scorn or maybe shame.A
Deutsche Bank internal probe has found that two of its former traders may have
been involved in colluding to manipulate global benchmark interest rates but
there was no indication of failure at the top of the organization, three people
close to the investigation said.No indication of failure at the top of the
organization! This will be a tremendous relief to spanking-new Deutsche Bank
chief Anshu Jain, who is already on thin ice with the Germans because he came
up from the bank's investment-banking arm. Germans don't much like investment
bankers. To make matters worse, it was Jain's investment-banking arm that
happened to be in charge of these bad-apple traders that were fiendishly
rigging Libor. A major scandal that originated in Mr. Jain's area of the bank
could damage his chances to continue on as sole CEO of the bank after co-head
Jürgen Fitschen's contract expires in three years.Thank goodness for Jain that
such a risk is apparently all gone now, according to Deutsche Bank's
unflinching review of its own leadership. In fact, Reuters seems to imply that
Deutsche Bank will likely avoid the sort of unpleasantness that beset Barclays,
where the chairman, CEO and chief operating officer all walked the plank as a
result of that bank's admitted Libor manipulation. And we can only imagine that
the ongoing investigations by "regulators and governmental entities"
in the U.S. and Europe, including German markets regulator BaFin, are now a mere formality.
All that's needed now is to bring those two pesky scapegoats to justice, and
Deutsche Bank can get back to doing the Lord's work.
Italy pushes for Sicilian recovery plan
Italian Prime Minister Mario Monti
imposed a compulsory plan to restore financial stability to the cash-strapped
Sicily region and overhaul its bloated public administration, a government
statement said today.The statement, issued after a meeting between Monti and
regional governor Raffaele Lombardo, said the leaders had agreed "a plan
for financial recovery and reorganisation of the region's public
administration, with a binding timeframe and objectives".The statement
stopped short of saying that Sicily would be placed under special
administration but made it clear that the programme would be monitored from
Rome and that it would insist on cuts to the region's notoriously swollen
payroll."The programme is to be finalised in the coming weeks and will be
formally signed by the regional and national governments," the statement
said.Sicily, which accounts for about 5.5% of Italy's gross domestic product,
has been at the centre of growing concerns over the financial stability of
Italy's regional and city governments after Monti said last week there were
serious concerns about the possibility that it could default.The autonomous island
region has some 5.3 billion euros in debt, a long history of waste and
mismanagement and an outsized public sector payroll that critics say has been
used by successive governments to buy votes.Officials have since played down
fears of an immediate crisis with Interior Minister Annamario Cancellieri
saying on Monday that there was no risk either of default or of a special
government administrator being appointed.Worries about Sicily come as Italy
itself moves to the forefront of concerns in the euro zone crisis, with the
cost of servicing huge debts jumping on contagion fears for the bloc's third
biggest economy linked to the worsening plight of Spain.Following the meeting,
Lombardo repeated his own insistence that Sicily had sound and sustainable
finances and dismissed talk of default as "rubbish" but confirmed he
would resign by the end of the month as previously agreed.He also said the
government had released 240 million euros to help cover funding gaps in the
health system, one of the regional administration's key responsibilities.While
the plight of Italy's regional and municipal authorities has not reached the
levels seen in Spain, where several regions have been reported to be close to
asking for state aid, there have been growing signs of strain from successive
cuts to government transfers.On Tuesday, mayors from around Italy held a
demonstration outside the Senate to protest against the cuts which they say
will force them to curtail vital local services.The Corte dei Conti, Italy's
top public finance watchdog, has made a damning series of criticisms of the
regional administration in Sicily, which has overseen a steady deterioration in
the island's finances over the past decade.With an unemployment rate of 19.5%,
almost twice the national average, Sicily is among the regions hardest hit by
the recession but its public sector payroll has been constantly increased, particularly
in the health sector.
