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’Plus ça (accounting) change at Goldman
What’s this? Something you haven’t seen before in Goldman Sachs’ results?
Net revenues in Investing & Lending were $2.14 billion for 2011. Results for 2011 included a loss of $517 million from the firm’s investment in the ordinary shares of Industrial and Commercial Bank of China Limited (ICBC) and net gains of $1.12 billion from other investments in equities,
Is Basel 2.5 hitting the bond market?
What can be confusing about the carnage in eurozone sovereign bond prices, is that there are so many factors at work all pushing the same way.
There are technical and fundamental factors on top of the blind panic and fear.
Greek bond accounting, encore (et enfin?)
Or, more fun with Greek bond impairments as Rome (or Athens) burns.
BNP Paribas has sold billions of euros of Italian and Spanish bonds, with a few (€362m) losses according to its Q3 2011 results.
Building a better bank recap, discount curve edition
At some point on Wednesday, eurozone governments will say they want banks to find an unspecified amount capital, based on revised sovereign haircuts which… we still don’t know a lot about.
We know that sovereign bond positions will be marked down,
The pictorial UBS beat
UBS beat profit forecasts with their Q3 results on Tuesday, coming in with a SFr 1.02bn ($1.13bn) of net profit.
In the absence of unauthorised gains to offset them, unauthorised (er) losses from the trading scandal cost the group SFr 1.85bn.
Writing down Greece at Deutsche, encore
Deutsche Bank’s third-quarter results, 2011:
- A €777m profit, double forecasts but down from €1.1bn in the second quarter (excluding charges from the Deutsche Postbank merger)
- Sales and trading revenue €1.9bn (Q2:
Dear ESMA … about those Greek debt impairments
From Tuesday’s FT — some letter-writing:
Some European financial institutions should have taken bigger losses on their Greek government bond holdings in recent results announcements, according to the body that sets their accounting rules.
How to value a Greek bond like a CDO, part two
Ce contexte spécifique et la liquidité très faible du marché de la dette grecque a conduit le groupe Crédit Agricole S.A. à valoriser, au 30 juin 2011, ces instruments en « mark to model » et à les classer en niveau 3,
Another way to impair Greek bonds
Another way to swap them too?
Interesting fact: Commerzbank’s Greek bond exposure is almost all positioned in maturities after 10 years. Ostensibly, the current IIF financing offer for Greece targets bonds maturing before 2020.
How to value a Greek bond like a CDO
There are two fun things about BNP Paribas’ €534m Greek bond impairment (sat right at the top of its second-quarter results press release…)
First, less than half of the bank’s total gross Greek bond exposure is subject to the impairment provision because of the debt not being eligible for the IIF bond offer,
Greece as a test for auditors
Much like the rating agencies, many auditors have suffered a crisis of creditability in recent years.
That will make their reaction to the IIF’s proposed financing offer for Greece all the more interesting.
Ready, set, impair those Greek bonds!
Hey European banks! Have you seen this?
[International Accounting Standards IAS39 - Paragraph 59] A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if,
A peek at private placements
We know that private placements have become a popular method of European bank funding recently.
Though smaller, the deals do allow issuers access to cheaper, more flexible funding — or even money that might not otherwise have been available to them given recent eurozone sentiment.
Italian volatility, l’accounting differenza
Because some day you might want a detailed breakdown of how Europe’s banks are accounting for their Greek, Spanish — and even Italian — bonds, here’s a helpful table from Deutsche Bank.
It comes from Mohit Kumar and Abhishek Singhania,
The unstressed tests, and Italy bonds
We’re getting the results of the European bank stress tests later (at 1700 London time) and while we’ll discover who has failed, or nearly failed, the raw data on sovereign exposures, as Jonathan Weil notes,
Under-reported – and non-performing – assets at US banks
A sudden regulatory and accounting push on banks’ “extend and pretend” practices means we’re about to get a peek at one form of renegotiated loans come the third-quarter — so-called Troubled Debt Restructurings.
Europe’s non-performing loan zones
Here’s PricewaterhouseCoopers’ (theoretical) non-performing loan (NPL) barometer:
If you’re a banking system, you want to be in Quadrant A — with a low percentage of NPLs that are relatively well-provisioned for,
The foreigners are frightened
Ouch.
China’s B shares index, which contains 53 Chinese companies that foreigners are allowed to own, has finally succumbed to those fraud and accounting scandals, losing 12.8 per cent last week alone.
New strategy – AIG will buy European junk instead of its own
AIG is back on Wall Street.
Fresh from failing to acquire its own portfolio of dodgy deals from the Federal Reserve — AIG’s Mortgage-Backed Securities (MBS) were acquired by the US central bank during
How to tinker with bank risk-weightings
Risk-weightings for bank assets are still relatively new things.
Codified in the Basel II rules first published in 2004, they were meant to shift financials away from set levels of required capital,
Dupe de Group(on) – some very special accounting
You gotta love new accounting principles — especially ones drummed up by IPO-ing tech firms.
From Groupon’s S-1 filing:
We measure our business with several financial metrics. The key metrics are gross profit,
Greek ‘reprofiling’ and Orwellian accounting
Gotta love this straight-shooting piece of research from Alliance Bernstein.
The word “re-profiling” comes straight from “Newspeak”, the communication model employed by the Ministry of Truth in Orwell’s 1984.
The extend and pretend exposé – coming to a bank near you
In March, the US Securities and Exchange Commission fired off a few letters asking a number of America’s regional banks to clarify their loan modification practices. In particular the SEC is reportedly looking into “troubled debt restructurings”
To avoid Greek restructuring losses – an accounting loophole for banks
“We previously expressed the view that, ‘unless the government concerned was prepared to suffer significant economic costs (and in effect, restore bond holders to the position they were in before credit concerns arose) there is no way for holders to avoid having to book losses in their financial statements’.”
Roubini’s guide to a Greek debt restructuring
Cut, paste and mail to your favourite holder of Hellenic debt:
It’s a ‘how-to’ manual for a Greek debt restructuring from Nouriel Roubini (plus Arnab Das, Jennifer Kapila, James Mason, David Nowakowski,
Choose your own MBS accounting
Basel III. Accounting. Mortgage-Backed Securities. Yawn.
But wait — Basel III’s attempt to incentivise banks into managing their interest rate risk could be about to permanently alter the way banks handle some $1,480bn worth of MBS,
Citi’s Basel-dodging, capital-avoiding, accounting switch
Citi doing weird accounting manoeuvres? Perish the thought!
From the bank’s first-quarter results press release:
In the first quarter 2011, Citigroup transferred $12.7 billion of assets in the Special Asset Pool in Citi Holdings from HTM to trading.
Centralised price discovery!
Behold a central pricing solution for illiquid assets… stuff like TruPS CDOs or, err, Irish bank loans.
Now that comes from independent valuation consultancy firm PF2 Securities Evaluation, so there’s more than a little self-interest here.