Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 08FRANKFURT1581, German Banks See Light at End of Subprime Tunnel, but Few

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08FRANKFURT1581.
Reference ID Created Released Classification Origin
08FRANKFURT1581 2008-05-21 13:03 2011-08-24 01:00 UNCLASSIFIED Consulate Frankfurt
VZCZCXRO9664
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHFT #1581/01 1421303
ZNR UUUUU ZZH
O 211303Z MAY 08
FM AMCONSUL FRANKFURT
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6533
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCNMEM/EU MEMBER STATES  IMMEDIATE
RUCNFRG/FRG COLLECTIVE IMMEDIATE
UNCLAS SECTION 01 OF 02 FRANKFURT 001581 
 
DEPARTMENT FOR EUR/AGS 
TREASURY FOR LUKAS KOHLER/OFFICE FOR EUROPE AND EURASIA 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EU GM
 
SUBJECT: German Banks See Light at End of Subprime Tunnel, but Few 
Mergers Ahead 
 
Ref: Berlin 0469, Berlin 0112, Frankfurt 1001 
 
ENTIRE TEXT IS SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET 
DISTRIBUTION 
 
1.  Summary:  Following first quarter reports showing further 
write-downs, major German banks are beginning to see signs of 
recovery in the financial sector, as the real economy exceeds 
expectations in both growth and employment.  Industry insiders see 
challenges ahead in finding new, profitable business models, but 
find little cause for worry about the soundness of Germany's banking 
structure even though profits are down sharply.  If the industry 
recovers and profits return, calls for further mergers in the state 
banking sector or for the state to privatize Postbank may diminish. 
 
Banking Industry Resilient through Turmoil 
------------------------------------------ 
 
2.  First quarter 2008 earning reports revealed losses in most major 
German banks, reflecting ongoing turmoil in the financial sector. 
Deutsche Bank reported its first negative quarter in five years, 
with a write-down of 2.7 billion euros ($4.19 billion), while rival 
Commerzbank announced a write-down of 1.4 billion euros ($2.17 
billion).  Dresdner Bank, a subsidiary of Allianz, appears to be in 
worse shape, with losses of 0.9 billion euros ($1.4 billion), as 
rumors circulate that it will be broken up and sold off.  In the 
state banking sector, where quarterly reporting is voluntary, the 
greatest write-downs were announced by BayernLB (2.0 billion euros 
or $3.1 billion) with smaller ones also reported by Landesbank 
Baden-Wuerttemberg (LBBW), Helaba, NordLB and HSH Nordbank. 
Financial authorities also froze assets of Weserbank as it 
approached insolvency, while a group of banks bailed out 
Duesseldorfer Hypothekenbank, which faced a liquidity crunch. 
 
3.  Despite the bad news, financial experts see signs that the worst 
is over.  A senior economist at Deutsche Bank told Econ Off that 
high corporate profitability, good employment data and better than 
expected growth in Germany all point to the relative health of the 
real economy.  Meanwhile, Deutsche Bank's business model remains 
sound, with strong returns in equity issuances and asset management 
in Asia.  A Commerzbank executive also saw reason for optimism, 
saying that his bank saw an opportunity to invest in distressed 
assets where others were afraid to act.  He did, however, admit that 
Germany's small- and middle-sized enterprises had been slow to 
adjust to the higher price of capital and were still reluctant to 
resume normal levels of borrowing.  The write-downs of the last year 
also mean that expected profits were greatly diminished, which has 
altered banks' planning. 
 
4.  Some state banks such as Helaba and LBBW saw the recent turmoil 
as a vindication of Germany's dispersed financial sector and their 
business model.  A senior LBBW executive told Frankfurt Consul 
General that his bank was less affected by the turmoil since it is 
structured like a universal bank and has steady retail income. 
Executives at Helaba told Econ Off that their business model, which 
is focused on conservative retail and wholesale banking, has only 
suffered losses because of changes in spreads in lending markets. 
Several sources argued that heavy losses at WestLB, BayernLB and 
Weserbank were due to flawed strategies, which focused on riskier 
capital markets, and not systemic weaknesses.  Meanwhile, the 
relative success of traditional retail banking among the savings 
banks and banks like Helaba has only served to confirm the viability 
of traditional banking. 
 
5.  Most sources ascribed the slowdown in profits to a short-term 
readjustment in the financial sector and a downward overshooting in 
the accounting valuations of assets.  While asset markets find their 
floor, volumes of leveraged buy-outs, corporate bond issuances, 
home-mortgage lending and other sources of traditional bank income 
are all down in the current cautious market.  Meanwhile, lending 
spreads have increased, raising transaction costs for banks.  The 
implementation of Basel II at the start of the year has also 
required banks to raise capital holdings, creating a need to hold 
capital. 
 
Prospects for Mergers Low 
------------------------- 
 
6.  Few experts saw reason to believe that Germany's dispersed 
financial system would consolidate further, especially if greater 
stability returns to the sector. 
Sources at Deutsche Bank and Commerzbank expressed doubt that the 
government would privatize Germany's largest retail bank, Postbank, 
since that would result in many lost jobs.  Although both banks 
might be interested in purchasing Postbank and benefiting from 
steady retail banking income, the Commerzbank executive said his 
 
FRANKFURT 00001581  002 OF 002 
 
 
bank saw better opportunities elsewhere (his bank was currently 
conducting due diligences on two eastern European banks). 
Representatives of both banks agreed that Allianz would be foolish 
to break up and sell off pieces, if not all, of troubled Dresdner 
Bank at a time when its price would be at an all-time low.  However, 
both Deutsche Bank and Commerzbank are allegedly stock-piling cash 
for mergers, either at home or abroad. 
 
7.  Despite LBBW's successful acquisition of SachsenLB, executives 
in the state bank sector see little reason to believe that there 
will be more consolidation.  Referring to rumors that LBBW would 
acquire WestLB or BayernLB, the senior LBBW executive told Frankfurt 
Consul General that state banks should merge only if they are 
profit-making enterprises.  Executives at Helaba told Econ Off that 
both the savings banks (who partially own the state banks) and the 
federal Ministry of Finance would push for more consolidation among 
state banks, but this would continue to be opposed by state-level 
minister presidents intent on protecting local interests.  They did, 
however, express some confidence that LBBW would take over BayernLB 
in the next twelve to eighteen months. 
 
8.  Comment.  Despite a bad first quarter, German bankers remain 
optimistic that the worst of the subprime turmoil is behind them and 
blame bad business models in certain banks as well as an adjustment 
to new conditions for most of the trouble.  If economic fundamentals 
such as employment and growth remain strong in Germany, there is 
reason to believe that an overall downturn will be avoided and the 
financial sector will rebound.  However, the turmoil has resulted in 
lower than expected real profits for banks and forced many 
institutions to change plans and strategies.  If the sector does 
bounce back, pressure to consolidate may also diminish even though 
many experts feel the industry has too many players.  End Comment. 
 
9.  This cable was coordinated with Embassy Berlin. 
POWELL