Health of Banks Worldwide

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    Posted: 24 September 2008 11:19 AM

    While living in Japan a few years ago, there were many articles which noted that - if Japan’s banks had to meet the USA’s regulatory standards in place at the time - only two would be solvent… the government would actually be required to force mergers, close banks, etc.

    Japan’s banks carried huge “dead money” real estate investments on their books long after there was no hope of recovering any money from the deadbeat borrowers (who were often organized crime-based entities).  Cross-holdings of stock between banks and their large customers also encouraged banks to prop up failing businesses.

    This all took place in spite of a huge personal savings rate with accounts paying out miniscule interest rates… something the USA cannot take advantage of.

    Which makes one wonder - “how solid are any of the world’s banking institutions?”

         
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    Posted: 24 September 2008 11:26 AM #1

    Re: Health of Banks Worldwide

    [quote author=“MacKauai”]While living in Japan a few years ago, there were many articles which noted that - if Japan’s banks had to meet the USA’s regulatory standards in place at the time - only two would be solvent… the government would actually be required to force mergers, close banks, etc.

    Japan’s banks carried huge “dead money” real estate investments on their books long after there was no hope of recovering any money from the deadbeat borrowers (who were often organized crime-based entities).  Cross-holdings of stock between banks and their large customers also encouraged banks to prop up failing businesses.

    This all took place in spite of a huge personal savings rate with accounts paying out miniscule interest rates… something the USA cannot take advantage of.

    Which makes one wonder - “how solid are any of the world’s banking institutions?”

    Well, I guess it is a question of leveraging and reserves. I don’t even want to start looking into this. Might be too scary.  :bugeyed:

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    Posted: 24 September 2008 11:31 AM #2

    Re: Health of Banks Worldwide

    [quote author=“MacKauai”]Which makes one wonder - “how solid are any of the world’s banking institutions?”

    No bank, nowhere in the world nor at any time, can withstand if all depositors close their accounts. A bank is as good as it’s reputation. Bear Steans and Lehman Brothers tainted that reputation and lost all faith.

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    Tightwad.

         
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    Posted: 24 September 2008 01:52 PM #3

    Re: Health of Banks Worldwide

    [quote author=“awcabot”][quote author=“MacKauai”]Which makes one wonder - “how solid are any of the world’s banking institutions?”

    No bank, nowhere in the world nor at any time, can withstand if all depositors close their accounts. A bank is as good as it’s reputation. Bear Steans and Lehman Brothers tainted that reputation and lost all faith.

    Although I agree to this last statement, I must also add that, from my knowledge, European banks are by far the ones that are less leveraged and have the more reserves. Please someone debate it if I am wrong.