Greensill: the ECB assesses the risk of European banks, while the panic spreads
In the silence of much of the national press we warned you a week ago about the disaster caused by the bankruptcy of the supply chain finance giant Lex Greensill. Now we are starting to see the consequences for the banks and the institutions that had financed it.
After seemingly ignoring the warning signs, the ECB is rushing to assess the risk to the European financial system by probing the exposures of the continent's largest banks to Greensill and GFG Alliance, the group of funds it used as a safe.
An unnamed ECB insider quoted by the FT insisted that the exercise did not reflect "an increased concern" for the stability of the European financial system, but after being taken aback by the company's explosion last week it is clear that it is a pious, benevolent interpretation.
Germany's BaFin helped unleash the panic over Greensill last week by freezing the assets of Greensill Bank Bremen , Greensill's European banking unit, after a special audit by KPMG found that the company was unable to Provide evidence of “balance sheet credits” purchased from GFG, ie from the financial parent company in Switzerland. The regulator, who has been hit hard by criticism of the Wirecard case, also filed a criminal complaint against Greensill for suspected false accounting. It all came to light when the Greensill Group's main insurer refused to renew a $ 4.6 billion contract, which prompted Credit Suisse to freeze 10 billion in funds set up with Greensill assets.
The corpses that risk making this financial group go bankrupt are many. Softbank is very exposed and has shown collusive behavior with Greensill in the past, but it is not the only one. With the ECB survey, we will soon know which institutions are most exposed. Meanwhile, the American Apollo fund has already stepped forward to absorb what is still good in society.
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The Greensill article : the ECB assesses the risk of European banks, while the spreading panic comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/greensill-la-bce-valuta-il-rischio-delle-banche-europee-mentre-il-panico-di-diffonde/ on Mon, 08 Mar 2021 18:49:24 +0000.