That Anglo Saxon Capitalism

Makes the banks so terribly fragile doesn\’t it?

IMF data shows that European banks have used leverage even more aggressively than US banks to boost profits. Their Tier 1 capital base is half the US level.

“They are terribly over-leveraged,” said Matt King, credit strategist at Citigroup. “They are going to have to raise $400bn in fresh capital, four times as much as they have done so far. Unlike the Americans, they still haven’t come to terms with their structural problems,” he said.

Citigroup said the ratio of tangible equity to total assets is just 1.2pc for Deutsche Bank and 1.3pc for Deutsche Postbank, making them some of the most leveraged banks in the world.

Hmm, but not as fragile as that Rhineland version of capitalism does perhaps. Calling Willy Hutton?

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