Author Topic: European banks  (Read 5945 times)

John Hjorth

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Re: European banks
« Reply #20 on: July 05, 2018, 10:13:50 AM »
Jurgis,

I think your link is very well placed both here and there.

I actually skipped your post in the SBRCY topic, but did not ignore it. It was about if we started with that, in the SBRCY topic it would just be "Hello SBRCY! - ... and goodbye."

I realize now that was quite rude behavior for my part, and I apologize for that.

I never ignore your posts, actually. Please remember I constitute a material part of your audience. I would also say, that I appreciate being valued,  furthermore I'm also a very loyal and devoted crowd. When you update your blog late after each month end, I get symptoms. It starts with cold sweat, then I start to shake, I get depressed, and end up almost suicidal to get rid of the symtoms, untill the monthly blog post finally is up! [ : - ) ]

... BTW, you're the only person reading my blog. Thanks for being valued member of the audience.

- - - o 0 o - - -

Now back to European banks.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai


Jurgis

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Re: European banks
« Reply #21 on: July 05, 2018, 12:45:45 PM »
I never ignore your posts, actually. Please remember I constitute a material part of your audience. I would also say, that I appreciate being valued,  furthermore I'm also a very loyal and devoted crowd. When you update your blog late after each month end, I get symptoms. It starts with cold sweat, then I start to shake, I get depressed, and end up almost suicidal to get rid of the symtoms, untill the monthly blog post finally is up! [ : - ) ]

LOL.

Now I feel responsible for your well-being.

Drink a lot of fluids, don't travel to Russia for investing, and don't buy BRK CFDs.  8)
"Before you can be rich, you must be poor." - Nef Anyo

Sportgamma

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Re: European banks
« Reply #22 on: July 30, 2018, 12:40:27 PM »
A few thoughts on a special situation bank stock in Iceland (it does come with is a Swedish Depository Note): The Arion Bank IPO and what happens after

Spekulatius

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Re: European banks
« Reply #23 on: September 07, 2018, 04:21:21 PM »
ING is down 4% today to $12.8 - any idea what the cause might be. There was news about a fine for money laundering (~780M€), but that was a coupe of days ago.

LYG trades at  58p now with tangible book at 53p. That’s a stock I set my eye on, since it’s a good franchise, IMO. I do think that a hard Brexit is now quite likely and Gb will probably go into a recession after that. Bank stocks are basically macro bets, so I am not sure we are “there” yet.
To be a realist, one has to believe in miracles.

NewbieD

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Re: European banks
« Reply #24 on: September 14, 2018, 06:32:46 AM »
Danske is now at 167 DKK, down from 212 at the start of this thread on uncertainty on money laundering.

Starting to look cheap even on sizable fines? Just under P/B 1 and earnings have been 20 DKK / year recently. I bought a small position today. Might be early, mostly to follow it and go in with size if uncertainty lifts and price remains here and/or there is a share issue much lower after hefty fines. I'm not necessarily long term invested. I read one analyst estimating the fines to be 3-5 BDKK, another up to 40 billion DKK (~5-6 billion USD).
« Last Edit: September 14, 2018, 06:43:23 AM by NewbieD »

John Hjorth

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Re: European banks
« Reply #25 on: September 14, 2018, 07:05:06 AM »
Danske is now at 167 DKK, down from 212 at the start of this thread on uncertainty on money laundering.

Starting to look cheap even on sizable fines? Just under P/B 1 and earnings have been 20 DKK / year recently. I bought a small position today. Might be early, mostly to follow it and go in with size if uncertainty lifts and price remains here and/or there is a share issue much lower after hefty fines. I'm not necessarily long term invested. I read one analyst estimating the fines to be 3-5 BDKK, another up to 40 billion DKK (~5-6 billion USD).

NewbieD,

Yes, I agree with you on that separate matter about DANSKE.CPH. Report from management and board will be released Wednesday the coming week. It's important to understand, that the particular AML issue in Estonia is contained. The branch was simply closed down totally after the "wild party".

However, I'm not going get my tie squeezed in mailbox lid here [or, for that matter, any part of my body!], because of the wholly owned bank subsidiary, Realkredit Danmark A/S - the mortgage institution:
  • I consider RKD materially undercapitalized,
  • The debt mountain in Danish farming and agriculture [RKD a major player here], combined with
  • The drought in this summer in Denmark ruining it for this industry already under severe pressure. The "party" has just started with two large bankruptcies within the last few weeks. The domino bricks have started toppling now.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

NewbieD

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Re: European banks
« Reply #26 on: September 17, 2018, 03:29:38 AM »
Thanks for your sharing John, interesting views. I get I'm at a knowledge disadvantage here. Given time constraints I might have to give up on Danish banks, previous venture into DAB might be a hint 8)

I found this article, mentioning 8 BDKK in potential farmers losses. Not big compared to Danskes market cap? But I guess it depends on if you view more outcomes like this as likely the coming years.

https://www.reuters.com/article/us-agriculture-drought-denmark/danish-farmers-drought-losses-deepen-more-bankruptcies-seen-idUSKCN1L70TR

« Last Edit: September 17, 2018, 03:38:06 AM by NewbieD »

John Hjorth

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Re: European banks
« Reply #27 on: September 17, 2018, 06:19:09 AM »
Thank you, NewbieD, [ : - ) ]

The majority of Danish farmers don't use "traditional" acounting and/or audit firms, but have pooled their interests into professional associations, that provide such services to the members of such a given association.

Here is an example here from Funen : Patriotisk Selskab. [One of the oldest and largest, by the way - I think there are about ten of them in the country.]

One of the services provided to the members - it's really highly valued by the members - is that they do a lot of benchmarking down in so many operational details [based on standardized charts of accounts in the shared accounting systems] for each kind of farm, that states basis for operational consultancy services to each separate member to run the member farm more efficiently. [No "traditional" accounting or audit firm can compete with this.]

The interesting part is, that some of these associations aren't totally tight about the members finances.[To me, that's bordering to doing something illegal, so I suppose each member has specically agreed to this.]

Here [p. 33] is such a tiny window. [I know my fellow Scandinavian CoBF members can read it without problems.]

Now what do you see here?:

Enormous balance sheets, low earnings, low ROA, low ROE, lots of debt compared to earnings.

If you study the P/L in detail, what do you see then?:

Please note the EU-subsidies, and compare them to profit
Please note "Other business income" [Danish: "Andre erhverv"], which can be [examples]: Hunting fees, if you have forest on the farm, winter storage of RVs and boats, if you have storage capacity in the buildings on the farm in winters, other kinds of storage, put & take fees is you have a lake on the farm, B&B earnings if you have some rooms set up for "farm vacation" etc.
Please note "Private income" [Danish: "Private indtægter"]. That is income from work [wage or salary] other places that at the farm - for the farmer and the spouse [<-!]

If you adjust for that - what do you then see of earnings? [The EU-subsidies can naturally be discussed.] And it's a cyclical business.

In short: The stated equity in the tables is simply non-existent, because what you look at is just a treadmill, generating no real cash flow - actually it is draining you for money, energy and time [occupying - perhaps a major part - of your capacity to work and make money somewhere else] to keep it spinning. - So: Pure DFDS [<- not to be confused with DFDS.CPH!] - Danish Farming Derangement Syndrome.

Danish farmers must be an extinct species in the future, unless things change materially - if not for any other reason, then alone for the reason that they are up before sunrise every day, and most likely just pass out late in the night of fatique - every night, seven days a week, meaning no time or energy for reproduction ...

- - - o 0 o - - -

-Perhaps I got carried away a bit here ... [ : - ) ]
« Last Edit: September 17, 2018, 01:06:55 PM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

NewbieD

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Re: European banks
« Reply #28 on: September 17, 2018, 11:53:03 AM »
That is not a wonderful business... This year the extra-curricular activities, so to speak, might not be able to hide sharply higher prices for fodder to the swine and there will be an outright loss. Any talk of the state supporting them?
On the other hand, I guess this is the same story for all of Europa with EU subisidies keeping farming alive. Certainly in France and Spain they get a lot of support.

Apparently Arla announced they will give all their profit (~300 million £) back to the farmers who are having a really tough time b/c of the drought. At least in Sweden many cows were slaughtered in the summer due to pastures not being able to support them. https://www.theguardian.com/business/2018/aug/30/arla-foods-dairy-cooperative-pay-2018-profit-europe-drought-hit-farmers



John Hjorth

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Re: European banks
« Reply #29 on: September 17, 2018, 02:05:36 PM »
I read that you get it, NewbieD, [ : - ) ]

I have nothing to add with regard to the rest of Europe, based on ignorance, unfortunately. [I have enough to think about with my own small Danish bank positions.]

It's not just bad business ... it's plain and simple folly, with participation of banks and mortgage institutions here. It's just soo lame. The total debt of agriculture and farming here in Denmark is north of DKK 350 B.

However, it seems like somebody has - at least - come to some kind of understanding of this, now talking about: "What do we do to avoid the gene pool of our future production basis not to end up in the slaugter house now?"

The Danish industry hasen't - so far - asked for public hand outs, only [interest free] deferred payments. They know, that they are politically really in the dog house already, because of pollution from production.

- - - o 0 o - - -

Think of it, as if I was applying for a DKK 100 M margin line to buy Berkshire at Danske Bank. [I would do better with that than with any farm!]. I would sure hit the headlines in the local papers at any not further specified future point in time at the blowup!
« Last Edit: September 18, 2018, 05:25:04 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai