Naked Capitalism Link of the Day

Today's link: A peek into one of the deepest little cesspits in Europe, by David Malone:

Beyerishe LB was either the witless dupe who was left holding a huge shit schnitzel or just the last in a long line of greedy and corrupt bottom feeding institutions who wanted the chance to siphon some of that fetid  underground nourishment for themselves.  I personally feel the latter is the more likely explanation for the Europe wide enthusiasm for buying Austrian banks. Austria, with its anonymous accounts had made itself into a major portal for dirty money seeking onward transfer into European banks. And European banks were drawn to Austria like flies to a sewer.

The fact is Beyerische bought a bank for 1.6 billion euros into which it had to immediately pour another 2.1 billion euros just to keep it afloat.  Which although it sounds blunderingly stupid is, by Bavarian banking standards little worse than average. Compare Beyerische to the saga of inept incompetence which surrounded two other Bavarian banks Beyerische Hypotheken-und Wecshel Bank and Beyerische Vereins-bank, whose billions in losses forced the shot-gun wedding whose issue was HVB (see Dominoes Falling from the East) and you wonder how Germany has any banks at all?

Today there is still another 3.1 billion euros of bad debts to be paid at Beyerische. The open question vexing both sides of the German/Austrian border is who will pay? Since Beyerishe sold Alpe Adria back to Austria for a whopping 1 euro it might fall upon the Austrian people. But it might still land back on Beyerishe and therefore on the German taxpayers. Both sides would love to find a way of claiming they were just innocent victims of foreign fraud.

I guess you could call this the European bank mess-Austrian edition.  The article goes into great detail about various bank black holes in Austria which tie into Anglo-Irish Bank, among others.  What a mess, we definitely haven't seen the worst of this yet.