Here is Italy's UniCredit which has lost about 50% since the start of 2011. Today UniCredit has been halted from trading 8 times due to the declines.
The rest of the Italian financials are down 12-20% for 2012 alone. Here's the Bloomberg chart:
The EU regulators told the EU banks to rase tier 1 capital, since August they have been selling everything not nailed down in an effort to do so, some of you might remember how it bullishly effected the Euro as $USD denominated assets were sold (for example the PrimeX mortgage indices or the F_E_D's custodial account for US treasuries) and Euros were bought to bring them back to the EU banks and the market took this weakening dollar as bullish when in reality what was happening was bearish. The algo's can't think for themselves!
In any case, while these banks are so massively underfunded, I have focussed in on two examples that show what banks are really doing and how it portends toward the future. The first example is the total failure of the ECB's 3 year LTRO which they "thought" would be used by the banks to buy sovereign debt in a carry trade (borrow euro's from the ECB for 3 years at 1% interest and buy Italian 10-year BTPs yielding 7% and keep 6% as profit), instead the banks put the money right back in the ECB's deposit facility, willing to accept a loss just to keep the money out of the market (Euro's borrowed at 1% and sent to the ECB's deposit facility for a .75% interest return= negative .25% just to keep the money safe and shore up their capital requirements). Remember, as of today, the ECB's deposit facility saw a new record of funds on deposit from banks.
The second and less noticed issue was here in the US when we auctioned off 4 week notes with 9 times more bidders then notes available for auction. The interest rate the buyers earned? ZERO PERCENT. The buyers/banks were willing to have their money making 0% just to get it out of the market, but the scary thing is that t was a 4 week note, the money is only safe there for 4 weeks. This happened a few weeks ago, so just what are the banks so afraid of in the near term that they are willing to accept 0% or -.25% rates of return?
At the EU close of trade, Italian 10 year BTPs closed at 7.16% and 533 basis points wider then German Bunds, the second widest spread ever! Just imagine what the BTP's would look like if the ECB hadn't been (and still is) aggressively buying them in the secondary market and perhaps even in the Primary market as there were some anomalies in recent auctions late last year which would suggest the ECB did intervene in the Primary market in which they are banned from buying (via lending to some banks to do the buying for them). The last I heard, the ECB's insane expansion of their balance sheet was 30x leveraged and that was well over a month ago and also at the same amount of leverage that Lehman was at when they failed.
And in some of the oddest news of the day, Greece who may or may not get the latest tranche of troika money to pay maturing debts around March, has spent bail out money on weapons!
From an article at Zeit online:
"If Greece get paid in March the next tranche of funding of € 80 billion is expected, there is a real opportunity to conclude new arms contracts."
Included in the contracts:
60 Fighter Aircraft
$4 bn Euros in French Frigates
$400 million Euros in French Patrol Boats
Ammunition for Leopard tanks
(2) American Apache Attack Helicopters
$2 bn Euros in German U-Boats
According to the story, after a released arms report, Greece is second to PORTUGAL in being the largest buyer of German weapons.
Remember last week Sarkozy made some statement that was very similar to Angela Merkel's in saying, "Don't take 50 years of peace on the continent for granted" (paraphrased).
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