Banking liquidity update

This chart from an Espirito Santo report shows a 2-D matrix of liquidity (i.e. liquid assets as a % of wholesale funding assets), versus reliance on wholesale funding - the one component in European interbank markets which is now completely dead. Needless to say red is bad. And if Dexia is in trouble then it is time to call a priest for Soc Gen, BNP, Raiffeisen, and DnB Nor.

Siemens' bank run: 500 million euro withdrawn from unidentified French bank

If someone had doubts that banks in Europe are the next nightmare well it is time to consider alternatives.
Financial Times reports that Siemens, pulled €500 million form a large French bank, which is not BNP so that leaves just SocGen or Credit Agricole and deposited the money straight to the ECB.
The implications of this are stunning, as it means that even European companies now refuse to work directly with their own banks, and somehow the ECB has become a direct lender of only resort to private non-financial institutions!
As Bloomberg reports further on the FT story, in total, Siemens has deposited between 4 billion euros and 6 billion euros, mostly through one-week deposits, with the ECB, FT says.
It isn’t clear from which bank Siemens withdrew its deposits, per the FT... but it is hardly difficult to figure out.
BNP Paribas isn’t the bank involved, FT reports, according to an unidentified person familiar with the bank.
This story will have a major impact on markets.

Market crash 'could hit within weeks', warn bankers

From The Telegraph:

A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.
Insurance on the debt of several major European banks has now hit historic levels, higher even than those recorded during the 2008 financial crisis.
Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender's bonds against default is now £343,540.
"I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank. 

read more HERE
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