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The ongoing debacle of Italy’s Banca Monte dei Paschi (BMPS) took a turn for the worst today. The bank’s largest shareholders (MPS Foundation) approved (read – forced through) a delay in a EUR 3 billion capital raise, which the bank needs to avoid nationalization, until May. The delay (which will cost the bank EUR 120 million in interest) allows MPS more time to liquidate their 33.5% holding before their stake is massively diluted. Management is ‘considering’ resignation and is “very annoyed,” but the city Mayor is going Nationalist with his delay-supporting comments that “we cannot let the third biggest bank in this country fall prey to foreign interests.” So Europe is recovering but they can’t even raise a day’s worth of POMO to save the oldest bank in the world?
Italy’s third-biggest bank Monte dei Paschi di Siena was forced to delay a vital 3 billion euro ($4.1 billion) share sale to raise capital until mid-2014 because of shareholder opposition, plunging its turnaround plan into uncertainty.
The bank’s chairman and its chief executive may now resign after their plan to launch the cash call in January was defeated at an extraordinary shareholder meeting on Saturday due to the vote of Monte Paschi’s top shareholder.
The world’s oldest bank needs to tap investors for cash to pay back 4.1 billion euros in state aid it received earlier this year and avert nationalization
Simple game theory really – why would the largest shareholder “guarantee” losses now when it can try and liquidate more of its exposure over time?
But the cash-strapped Monte dei Paschi foundation – whose stake in the bank is big enough to veto any unwanted decision – forced a postponement until at least mid-May to win more time to sell down its 33.5 percent holding and repay its own debts.
Antonella Mansi, a feisty 39-year-old businesswoman recently appointed head of the Monte dei Paschi foundation, said her insistence on a cash call delay did not amount to a no-confidence vote in the bank’s management.
But she said that carrying out the capital increase in January would massively dilute the foundation’s holding, leaving it with virtually nothing to sell to reimburse debts of 340 million euros.
“We have a precise duty to ensure (the foundation’s) survival. You can’t ask us to let it collapse,” she said.
Management is “very annoyed”…
Chairman Alessandro Profumo, a strong-willed and internationally respected banker who was formerly the chief of UniCredit, said he and CEO Fabrizio Viola would decide in January whether to step down.
“These are decisions one takes in cold blood and in the right place,” Profumo said at the meeting.
“What I have on my mind is a 3 billion euro cash call because we need to pay back 4 billion euros to taxpayers. Today this is uncertain and at risk,” he told a press conference.
Viola, sitting at his side, told reporters he would do everything “so that the ship does not sink”, but that he could not take responsibility for mistakes made by others.
Of course, there is risk either way…
“It’s important to carry out the capital increase as early as possible,” said Roberto Lottici, fund manager at Ifigest. “The risk is that the bank finds itself rushing into a cash call later at a lower price than what it could achieve now.”
“It’s hard to think that the third largest Italian bank can’t find a pool of banks able to support the cash call after May 2014,” said Antonella Mansi, the president of the MPS foundation, at the shareholders’ meeting.
and given the number of jobs involved… local officials are now reacting in favor of the delay (hoping for domestic savior)…
But in Siena, where the bank is known as “Daddy Monte” and is the biggest employer, fears that the cash call might sever the umbilical cord between the lender and the city run high.
Siena mayor Bruno Valentini, whose city council is the top stakeholder in the Monte dei Paschi foundation, said on Friday a postponement might help keep the bank in Italian hands.
“We cannot let the third biggest bank in this country fall prey to foreign interests,” he said. “Monte dei Paschi is not just an issue in Siena, it is a big national issue.”
So, even after all the lqiuidty provision; yields and spreads on European debt back near record lows; calls from US asset managers that Europe is recovering and will be the growth engine; and hopes that Europe’s AQR stress test (and resolution mechanism) will be the gold standard for confidence in their banking system… they still can’t find a group of greater fools to pony up EUR3 billion in real (not rehypothecated) money to save the world’s oldest bank – that’s a day’s worth of Fed POMO!!!!
On an odd side note, we did note a major surge in ECB margin calls this week…
A month ago, regulators in Europe began their investigation into manipulation of the “London gold fixing” (and we explained the methods here). While the complete history of gold manipulation goes a lot deeper than just banging the close on this crucial benchmark (which goes back to first world war); the decision by Germany’s financial regulator (BaFin) to probe Deutsche Bank signals greater concerns over the precious metals markets. As The FT reports, BaFin has demanded emails and documents from Deutsche Bank as part of an investigation into potential manipulation of gold and silver prices.
Germany’s financial regulator has demanded documents from Deutsche Bank as part of an investigation into potential manipulation of gold and silver prices.
Deutsche Bank is one of five banks that take part in the twice-daily “London gold fixing”, and one of three banks that take part in the equivalent process for silver.
Some bankers believe BaFin has come under pressure to show it is willing to get tough on suspected market manipulation. It was widely seen to have been slow to respond to the concerns over possible manipulation in the forex market expressed by other regulators around the world earlier this year.
Although the gold and silver fixings are, like Libor, set by small groups of banks, they contrast with the process for setting Libor in that they are based on trading activity rather than theoretical quotes.
The visit to Deutsche offices signals that BaFin now has greater concerns over the precious metals markets. Officials have asked to observe documents and processes related to precious metals trading as well as to interview bankers, the person said.
The other banks that take part in the gold fixing are Barclays, Bank of Nova Scotia, HSBC and Société Générale. The other banks involved in silver fixing are Bank of Nova Scotia and HSBC. As the only German member of either fixing, Deutsche is the only bank to come under BaFin’s remit.
Of course, despite day after day of closing price smackdowns (and the very occasaional vertical ramp), we are sure the regulators will find no wrong doing… for, as we noted here,this manipulation is by design, not malfeasance…it’s for your own good…
Overnight repo rates are spiking once again in early trading as the typically smaller banks that are more desperate bid aggressively for whetever liquidity they can find. 5Y Chinese swap rates have also reached a record high as the Yuan reaches its highest since Feb 2005. Chinese authorities are clearly stepping up the rhetoric:
- *CHINA SHADOW-FINANCE RISKS WILL SPREAD TO BANKS, FANG SAYS
- *VERY BIG CHANCE ONE OR TWO SMALL CHINA BANKS WILL FAIL: FANG
- *SOME CHINA TRUST INVESTMENT FIRMS MAY FAIL, SELL ASSETS: FANG
- *CHINA MUST PLAN FOR BANK-FAIL SCENARIOS TO MANAGE RISKS: FANG
- *CHINA NEEDS TO PAY MORE ATTENTION TO CORPORATE LEVERAGE: HU
The gambit between the PBOC’s liqudity provision and the growing dependence on their “spice” is clear – the question is, of course, will banks send a message (via the markets) to the PBOC or will they self-select (on first-mover’s advantage) eradicating the weakest.
5Y Chinese Interest Rate Swaps have reached a record high (implying expectations priced into the market of rising interest rates)…
and short-term liquidity is problematic again as overnight repo jumps to 5.00% in early trading..
What everyone is wondering is – with the failure of 1 or 2 banks seemingly guaranteed – how will the contagion be contained? How will the interbank market respond when no one knows who is it? We know what happened in the US in 2008…
The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.
The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”
A customer selects two hundred denomination Czech koruna currency notes from her wallet in Prague, Czech Republic. Photographer: Martin Divisek/Bloomberg
Nov. 11 (Bloomberg) — Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, talks about the U.S. and the Australian dollars, and global trading strategy. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)
Nov. 11 (Bloomberg) — Peter Rosenstreich, head of market strategy at Swissquote Bank SA, talks about the outlook for the Australian dollar and the U.S. dollar. He spoke Nov. 8 from Geneva. (Source: Bloomberg)
A pedestrian passes advertisements for koruna currency coins in Prague. The Czech National Bank drove its koruna down by 4.4 percent versus the euro on Nov. 7, the most since the single currency’s creation in 1999, when it intervened to spur inflation. Photographer: Bartek Sadowski/Bloomberg
The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega, seen here, in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.” Photographer: Peter Foley/Bloomberg
“It’s a very real concern of these countries to keep their currencies weak,” Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 telephone interview. ECB President Mario Draghi, “persistently since earlier this year, has been trying to talk down the euro,” Merk said.
With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that may hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies.
The moves threaten to spark a new round in what Brazil Finance Minister Guido Mantega in 2010 called a “currency war,” barely two months after the Group of 20 nations pledged to “refrain from competitive devaluation.”
“We’re seeing a new era of currency wars,” Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon in London, said in a Nov. 8 telephone interview.
The ECB lowered its benchmark rate on Nov. 7 by a quarter-point to a record 0.25 percent, a reduction anticipated by just three of 70 economists in a Bloomberg survey. Draghi said the cut was to reduce the risk of a “prolonged period” of low inflation and the euro’s strength “didn’t play any role” in the decision. Euro-region consumer-price inflation has remained below the ECB’s 2 percent ceiling for the past nine months.
The euro slumped as much as 1.6 percent against the dollar on the day of the rate cut, the most in almost two years, before ending the week at $1.3367. It rose 0.2 percent today to $1.3390 at 10:01 a.m. in London.
The shared currency pared gains versus a basket of nine developed-market peers this year to 5.6 percent, from as much as 7.2 percent at its Oct. 29 peak, Bloomberg Correlation-Weighted Indexes show.
“There are places in the world where economies are generally quite weak, where inflation is already low,” Alan Ruskin, global head of Group-of-10 foreign exchange in New York at Deutsche Bank AG, the world’s largest currency trader, said in a Nov. 8 phone interview. “Japan was in that mix for 20-odd years. Nobody wants to go there” and “the talk from Draghi shows they’re taking the disinflation story very seriously. The Czech Republic is the same story.”
The Czech National Bank’s drove its koruna down by 4.4 percent versus the euro on Nov. 7, the most since the single currency’s creation in 1999, when it intervened to spur inflation. Governor Miroslav Singerpledged to keep selling koruna “for as long as needed” to boost growth.
The IMF last month cut its forecast for global economic growth to 2.9 percent in 2013 and 3.6 percent in 2014, from July’s projected rates of 3.1 percent and 3.8 percent. It also sees inflation in developed economies remaining short of the 2 percent rate favored by most central banks.
Growth in global trade may slow to 2.5 percent in 2013, the new head of the World Trade Organization said after a Sept. 5-6 summit of G-20 nations in St. Petersburg, Russia, down from the organization’s previous estimate in April of 3.3 percent. Even so, the G-20 participants agreed to “refrain from competitive devaluation” and not “target our exchange rates for competitive purposes.”
“The idea that central banks are setting policies to weaken their currencies has always been overstated,” Adam Cole, Royal Bank of Canada’s head of G-10 currency strategy in London, said in a Nov. 8 phone interview. “In most cases they’re happy to see their currencies fall, but they’re not going out of their way to induce weakness.”
German airline Deutsche Lufthansa AG cited the strong euro last month when its profit estimate fell short of analysts’ forecasts, while French luxury-goods maker LVMH Moet Hennessy Louis Vuitton SA said on Oct. 16 that the currency’s gains versus the dollar and Japanese yen shaved 6 percent off third-quarter revenue.
Lufthansa said on Oct. 22 this year’s operating profit will be 600 million euros to 700 million euros, below an estimate of about 918 million euros by analysts surveyed by Bloomberg.LVMH, whose Louis Vuitton brand’s founder built his reputation as a luggage-maker for the wife of Napoleon III, said it has hedged 90 percent of its euro-yen exposure for this year and about 66 percent for next year.
“Do I think the euro-zone central bank wanted to engage in a currency war?” Lane Newman, a director of foreign exchange at ING Groep NV in New York, said in a Nov. 8 phone interview. “I think, post facto, yes. Because they cut rates knowing it was going to put the euro on the back foot.”
While the ECB hasn’t said it’s explicitly targeting the euro, comments from policy makers signal they consider exchange rates in their decisions. An ECB spokesman declined to comment when contacted on Nov. 8.
“As you know, the exchange rate is not a policy target for the ECB,” Draghi said at a press conference on Oct. 2. “The target for the ECB is medium-term price stability. However, the exchange rate is important for growth and for price stability. And we are certainly attentive to these developments.”
At the same time the ECB is easing, the U.S. Federal Reserve said it will keep printing enough dollars to buy $85 billion of bonds each month because the economy is still too weak to stand on its own. The Bank of Japan is also employing a policy of quantitative easing.
Reserve Bank of New Zealand Governor Graeme Wheeler has cited the risk of slow inflation and currency gains as reasons for not raising the nation’s official cash rate from a record-low 2.5 percent this year. That’s even with the need to tackle what he has described as an overheated housing market. The kiwi rose 4.5 percent in the past four months, Bloomberg Correlation Indexes show.
Australia’s dollar is 27 percent overvalued against the greenback, according to a gauge of purchasing-power parity compiled by the Paris-based Organization for Economic Cooperation and Development.
The Reserve Bank of Australia lowered its growth estimate for next year to 2 percent to 3 percent, compared with 2.5 percent to 3.5 percent three months ago. South Korea’s finance ministry said last month it may act to counter “herd behavior” in the currency, as the Bank of Korea lowered its outlook for the economy.
The Fed said in October it needed to see more evidence of a U.S. recovery before it trims the Treasury and mortgage-bond purchases it uses to pump money into the financial system.
Analysts surveyed by Bloomberg last week predicted the Fed would delay tapering until March even though a Labor Department report on Nov. 8 showing employers added a larger-than-forecast 204,000 workers in October.
“People aren’t as content as they once were about being on the end of dollar weakness, and hence an appreciation of their own currencies,” Bank of New York’s Mellor said. “We’ve had a change in tone from South Korea, Australia and New Zealand.”
Testosterone Pit – Home – What Will It Take To Blow Up The Entire Japanese Banking System? (Not Much, According To The Bank of Japan)
Hideo Hayakawa, former Bank of Japan chief economist and executive director, set the scene on Wednesday when he discussed the BOJ’s ¥7-trillion-a-month effort to water down the yen by printing money and gobbling up Japanese Government Bonds. It wants to achieve what is increasingly called “2% price stability,” a term that must be a sick insider joke played on the Japanese people. He warned that if these JGB purchases are “perceived as monetization“ of Japan’s out-of-whack deficits, it would drive up long-term JGB yields “to 2% to 3%.” Up from 0.60% for the 10-year JGB. “But once interest rates start rising, they would overshoot,” he said. So maybe 4%?
He’d set the scene for the Bank of Japan’s 81-page semiannual Financial System Report, released the same day. Buried in Chapter V, “Risks borne by financial intermediaries,” is a gorgeous whitewash doozie: if interest rates rise by 1 percentage point, it would cause ¥8 trillion ($82 billion) in losses across the banking system.
This interest rate risk associated with all assets and liabilities, such as bondholdings, loans, and deposits has been dropping since April 1, the beginning of fiscal 2013, the BOJ explained soothingly – the largest decline in 13 years. Banks would be able to digest that 1 percentage point rise.
A big part of that interest rate risk is tied to the banks’ vast holdings of JGBs. The BOJ has begged banks to dump this super-low yielding stuff that could blow up their balance sheets. The three megabanks – Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group – have done that. From the beginning of the fiscal year through August, their JGB holdings plummeted by 24% to ¥96 trillion. And much of what they still hold is paper with short to medium maturities that poses less risk.
The regional banks have not been able to do that, and their JGB holdings remained flat at ¥32 trillion. However, the amount of loans with longer maturities, such as those to local governments, has gone up, which raised the interest rate risk “slightly,” the report said.
Then there are the 270 community-based, cooperative shinkin banks. And they’re stuck in a quagmire. They’re stuffed to the gills with JGBs because, unlike megabanks and, to a lesser extent, regional banks, they have no other options to place their ballooning deposits. On their balance sheets, interest rate risk continued its long and relentless upward trend [my take on the shinkin bank debacle…. “We Don’t Feel Any Impact Of Abenomics Here”]
A 1 percentage point rise would cost megabanks ¥2.9 trillion, regional banks ¥3.2 trillion, andshinkin banks ¥1.9 trillion. A total of ¥8 trillion ($82 billion). If the yield curve steepened, with long-term rates rising 1 percentage point and short-term rates remaining low, the losses would be smaller. In all, it would be survivable. The banking system is safe.
Whitewash doozie because it assumes a 1 percentage-point rise. The yield of the 10-year JGB would rise from todays 0.6% to 1.6%. With annual inflation hitting 2% soon, bondholders would still get sacked. Hence Mr. Hayakawa’s warning: if inflation hits 2%, long-term interest would likely head to 2% or 3%, and once they start rising, they’d “overshoot.” So, with a little overshoot, 10-year JGB yields might rise by 3 percentage points, to 3.6%. Still a very moderate interest rate, by historical standards. What would that do to the banking system?
The report tells us what it would do: megabanks would be severely damaged; the rest of the banking system would be wiped out. If there is a parallel stock market crash, the megabanks would be wiped out as well.
The megabanks combined have ¥28 trillion in Tier 1 capital. Against it are credit risk, market risk from stock holdings, interest rate risk, and operational risk. The risk scenario the BOJ envisioned with a 1 percentage point rise in interest rates would create losses of nearly ¥17 trillion for the megabanks, a big part from its bond and loan portfolio, but an even bigger part from its stockholdings. That would leave about ¥11 trillion in Tier 1 capital.
But if the scenario plays out as Mr. Hayakawa sees it, with a 3 percentage point rise in interest rates, losses at megabanks, according to the report, would jump by ¥4.6 trillion, leaving only ¥6.4 trillion in Tier 1 capital.
Then there is the stock market risk. Traditionally, banks held large chunks of shares of companies they did business with. It cemented the relationship and propped up equities, which in turn made loans appear stronger. It worked wonderfully until the bubble it helped create blew up in 1989. Banks turned into zombie banks. Since then, 20 of these zombie banks have been consolidated into the three megabanks. And they have reduced ever so gradually their stock holdings to get out from under that risk that took them down the last time.
But in the money-printing induced mania, they’ve been adding stocks, and their exposure to the stock market remains enormous. The market downturn envisioned by the BOJ would produce around ¥7 trillion in losses. If that downturn becomes a crash, of which Japan has seen its share, losses could easily wipe out the remaining Tier 1 capital. Bailout time.
Regional banks will get wiped out by a 3 percentage point rise in interest rates. They don’t need a stock market crash. Even the BOJ is worried. According to its risk scenario with a 1 percentage point rise in interest rates, losses will eat up ¥11 trillion of the banks’ ¥15 trillion in Tier 1 capital. Leaves ¥4 trillion. If interest rates rise by 3 percentage points, another ¥4.6 trillion in losses would hit the banks, more than annihilating all of their Tier 1 capital. They’d be goners.
And the beleaguered shinkin banks? They have ¥6.5 trillion in Tier 1 capital. They don’t own a lot of stocks but are loaded with JGBs and local government bonds with long maturities. In the scenario where interest rates rise 1 percentage point, half of their Tier 1 capital would be wiped out. A 3 percentage point rise in rates would produce an additional ¥2.7 trillion in losses, wiping out almost all of the remaining Tier 1 capital.
But the 3 percentage point rise is only theoretical. If that happened, the government wouldn’t be able to make interest payments on its ¥1 quadrillion in debt. The whole house of cards would come tumbling down.
No, interest rates will not be allowed to jump this high. Even if inflation is 6%, the BOJ will see to it that yields remain low. It would impose brutal financial repression. It could use numerous tools, including a yield peg. If it had to, it could print enough money to buy the entire national debt of Japan, even if that might finally be “perceived as monetization” – with all the consequences that this would entail.
Japan is still the second richest nation in the world, according to Credit Suisse. About ¥1 quadrillion of that wealth is tied up in JGBs. But debt that yields almost nothing and can never be paid back, will eventually succumb to fate: either slowly through inflation and devaluation or rapidly through default. Abenomics has chosen the slow route.
But if the house of cards were allowed to come down rapidly, from the ashes would rise a young generation that suddenly could look into the future and actually see something other than the oppressive dark wall of the government debt hurricane coming their way.
Trade is another critical pillar of Abenomics. Devaluing the yen would boost exports and cut imports. The resulting trade surplus would goose the economy. But the opposite is happening. And it isn’t happening in small increments, with ups and downs over decades, but rapidly and relentlessly. It’s not energy imports. They actually dropped! It’s a fundamental shift. Read….Why I’m So Worried About Japan’s Ballooning Trade Deficit
- Kuroda Put Prompts Japan Banks to Shift to Longer Bonds (bloomberg.com)
- Japan banks cut JGB holdings 24 pct in March-August – BOJ (uk.reuters.com)
- PREVIEW-Global woes sap BOJ confidence in economic outlook (xe.com)
- Revenge of the Japanese Zombie Banks (elementulhuliganic.wordpress.com)
A letter sent to a ZH reader yesterday by JPMorgan Chase, specifically its Business Banking division, reveals something disturbing. For whatever reason, JPM has decided that after November 17, 2013, it will halt the use of international wire transfers (saying it would “cancel any international wire transfers, including recurring ones”), but more importantly, limits the cash activity in associated business accounts to only $50,000 per statement cycle. “Cash activity is the combined total of cash deposits made at branches, night drops and ATMs and cash withdrawals made at branches and ATMs.”
Why? “These changes will help us more effectively manage the risks involved with these types of transactions.” So… JPM is now engaged in the risk-management of ATM withdrawals?
Reading between the lines, this sounds perilously close to capital controls to us.
While we have no way of knowing just how pervasive this novel proactive at Chase bank is and what extent of customers is affected, what is also left unsaid is what the Business Customer is supposed to do with the excess cash: we assume investing it all in stocks, and JPM especially, is permitted? But more importantly, how long before the $50,000 limit becomes $20,000, then $10,000, then $5,000 and so on, until Business Customers are advised that the bank will conduct an excess cash flow sweep every month and invest the proceeds in a mutual fund of the customer’s choosing?
Full redacted letter below:
- Toward Free Exchange Rather Than Capital Controls (economicsone.com)
- Easing troubles in the long run (thehindu.com)
- Capital controls to be lifted by January: Anastasiades (cyprus-mail.com)
- Capital controls to be lifted in the first months of 2014, Cyprus FinMin says (famagusta-gazette.com)
- Capital controls to be lifted except cross-border transfers (UPDATED) (cyprus-mail.com)
- Cyprus Capital Controls Could ‘End in Months’ (blogs.wsj.com)
- 5 Years Later: Winners & Losers of the Financial Crisis (fool.com)
- RBI chief says policy not to resort to capital controls – Reuters India (in.reuters.com)
The Bank of Canada signalled Tuesday that it’s lowering its forecasts for economic growth in the second half of 2013 and possibly for next year, citing a more prudent consumer and an export sector that has yet to fully recover.
Senior deputy governor Tiff Macklem said the central bank no longer expects the July-September period to grow at a rate of 3.8 per cent as previously forecast.
Instead, the bank says the third quarter will likely show an economy that advanced at a more moderate pace of 2.0 per cent to 2.5 per cent, the same speed it now expects will continue in the fourth quarter. Previously, it had penciled in a 2.5 per cent expansion for the last three months of the year.
The Canadian dollar dipped on the news and was selling nearly a quarter of a cent lower in early afternoon trading…
- Economy not growing as quickly as thought: BoC (cp24.com)
- Bank of Canada Sr. Dep. Governor Macklem Toronto Speech (Text) – Bloomberg (bloomberg.com)
- Bank of Canada shaves growth forecast for economy (metronews.ca)
- Banks are still ‘too big to fail’, says SNB chairman (news.yahoo.com)
- Top Ten Lessons from the Lehman Collapse (forexlive.com)
- Ex-Citi CEO John Reed: We Need To Break Up The Big Banks (huffingtonpost.com)
- Banks are still “too big to fail”, says SNB chairman (uk.reuters.com)