Friday, July 8, 2011

Credit Anstalt All Over Again "UniCredit Stock Halted After Plunge As Fresh Wave Of Italian Fears Emerges"

Following up on June 27ths "Is The Big Money Looking for a Credit Anstalt in Italy? (GS; JPM)":
I've mentioned Credit Anstalt a few times. Both Ambrose Evans-Pritchard and I were thinking about counterparties and bank runs. The collapse of CA brought on the second, nastier phase of the Great Depression.
Before the current bull move, Feb. 16, 2009:

Creditanstalt Redux?: Failure to save East Europe will lead to worldwide meltdown

I've been feeling far too chipper so I decided to check in with Ambrose Evans-Pritchard. Yikes.
From the Telegraph:
The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point.
If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung....
Well, other than that Generalfeldmarschall Paulus, how's the weather?
failed in May 1931. From Kindleberger's "World in Depression: 1929-1939":
In 1929, the Bodenkreditanstalt was fused overnight with the Creditanstalt. The Bodenkreditanstalt brought to the Creditanstalt large loans to industrial concerns which could be maintained only by the device of ignoring market values...
Hmmm, sounds familiar.
Unicredit now owns Creditanstalt.
After the rescue of the bankrupt corpus and a couple mergers CA became part of Italy's Unicredit in 2006....
Here's the latest, from ZeroHedge:
Another day, another implosion in Italy, this time focusing on core bank UniCredit, which earlier dropped by 6.5% resulting in a stock halt, only to reopen just modestly higher.

There was no immediate catalyst, just more of the same: rumors that FinMin Tremonti is resigning, especially following the arrest of Marco Milanese which indicates the fallout is imminent (see below), rumors that Italian banks are failing stress tests, rumors that Italy has the most exposure to Greece, and other generalized fears which today coalesced around the bank that was the most active today on the European version of Sigma X.In other news, 2 Year government spreads are once again surging as GDP-weighted EU sovereign risk is at fresh all time highs (probably to make company to the Dow Jones Transportation index).
UniCredit stock plunging:

Most active Goldman's European dark pool...MORE