tag:blogger.com,1999:blog-5882645467378797266.post5322032414054286984..comments2023-07-17T11:55:51.363+02:00Comments on ObservingGreece: One Helluva Way To Increase Bank Equity!kleinguthttp://www.blogger.com/profile/12491174042954678023noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5882645467378797266.post-14280770083303934692014-05-30T21:58:43.743+02:002014-05-30T21:58:43.743+02:00As I said in the article, the ENTIRE 3,8 BEUR was ...As I said in the article, the ENTIRE 3,8 BEUR was recognized as income. Of course, assets have to be tested for impairment, be they acquired or not. The future losses will occur if and when the bank decides that the assets need to be written down. Below is a detailed analysis of Piraeus Bank:<br /><br />http://viennacapitalist.com/2014/04/17/greek-banks-what-are-david-einhorn-and-john-paulson-thinking-part-1/<br />http://viennacapitalist.com/2014/04/22/greek-banks-what-are-david-einhorn-and-john-paulson-thinking-part-2/kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-22780580806981874602014-05-30T21:45:29.908+02:002014-05-30T21:45:29.908+02:00I haven't found the exact words of G Provopoul...I haven't found the exact words of G Provopoulos, so it's possible to have said "right away". My sense was that he was referring to the future. <br /><br />3 questions:<br /><br />1) Negative goodwill is recorded in income statement, but NOT ALL negative goodwill AT ONCE? <br />2) After the aquisition of the banks - PB should test fair value of the acquired assets for impairment?<br />3) So if let say PB, acquire and future losses, the negative goodwill is deferred and recognized on the income statement, when those future losses, occur?<br /><br />MSAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-82138578302141033022014-05-28T17:33:18.811+02:002014-05-28T17:33:18.811+02:00If Provopoulos said what you quoted above, he said...If Provopoulos said what you quoted above, he said exactly the right thing except he shouldn't have said 'in the years to come' but, instead, 'right away'. As of now, the negative goodwill is still part of net worth.<br /><br />On page 90 of the Annual Report, you will find all the numbers regarding the negative goodwill from the Cypriot operations: http://www.piraeusbankgroup.com/~/media/Com/Downloads/Investors/Annual-financial-report-2013en.pdf.<br /><br />Reuters seems to be the only media which got this story right.kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-5882645467378797266.post-30563390149128197212014-05-28T15:12:45.572+02:002014-05-28T15:12:45.572+02:00Very interesting comments from you KK and Viennac...Very interesting comments from you KK and Viennacapitalist.<br /><br />Before months in a parliamentary committee some members ask governor of GCB G Provopoulos about the negative goodwill (they perceive them as profits) that Piraeus had. The explanation (as i understood it ) was "that negative goodwill is not a profit and should considered as a part of loan loss reserve that Piraeus Bank probably will deal, the years to come".(It's accounting)<br /> <br />What you asked in Viennacapitalist is important: <br /> <br /> 1) Why didn't make simultuneous provision to the loan loss reserve?<br /> <br /> 2) And how it came about 3.8 b € negative goodwill ?<br /> <br />In the 3M/2013 page 4/25 <br /> <br />Negative goodwill due to the acquisition of assets and liabilities of Cypriot banks network in Greece was 3.413 b €<br /> <br />In the same page, profit before provisions, impairment and income tax 3.542 b €.<br /> <br />In FY 2013 page 54/248<br /> <br />Total Net Income (with negative goodwill): 5.945 b <br />Total Operating Expenses before provisions: 1.637 b<br /> Profit before Provisions, Impairment and Income Tax 4.308 b<br /> <br />They state that, 4.308 b € was a profit before provisions etc<br /><br />According to this <br /><br />http://www.investinganswers.com/financial-dictionary/debt-bankruptcy/loan-loss-reserves-2790<br /><br />" Loan loss reserves are accounting entries banks make to cover estimated losses on loans due todefaults and nonpayment.<br /><br /> If and when Bank XYZ decides to write ALL or a PORTION of a loan off, it will remove the loan from its asset balance and also remove the amount of the write-off from the loan loss reserve.<br /> The amount deducted from the loan loss reserve MAY BE TAX DEDUCTIBLE for Bank XYZ."<br /> <br />http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_14/01/2014_535885<br /> <br />For Greek banks the full amount of available deferred tax assets (from 20% to 100%) will help them with their capital adequasy basis. Greek banks can offset deferred tax (5 b € ) from PSI+ in a period of 30 years.<br /> <br />(Irrelevant, the following, but is there a possibility?)<br /> <br />http://www.taxjustice.net/2014/05/22/seems-credit-suisses-fine-may-tax-deductible/<br /> <br /> <br />In FY 2013, NOTE 48 page 141 / 248--- shareholders equity was 3,937 b €. Negative goodwill was 3,413 b € and 524 mil euros the cost of aquisition. <br /> <br />According to this :<br /> <br />http://in.mobile.reuters.com/article/bankingfinancial-SP/idINL3N0CQ3I320130403<br /> <br />" Piraeus acquired assets with a value of 16.4-19.2 billion euros. It also took on 15 billion euros of deposits. At the mid-point of these two valuations, the Greek operations had a net asset value (NAV) of 2.8 billion euros. Piraeus’ purchase price of 524 million euros amounts to a pretty low 19 percent of that NAV.<br />When Laiki’s directors saw the deal negotiated on their behalf, they concluded the Greek branches had to be recapitalised by about 2.8 billion euros before being sold, according to Reuters."<br /> <br />The issue is how the acquirer of a bank oversight credit deterioration in order to determine the fair value of the loan portfolio, especially when there is uncertainty for future credit losses.<br />When real cash flows differ from expected cash flows, the acquirer may need to adjust the loan discount accretion, the loss-share asset, and perhaps EVEN ESTABLISH A LOAN LOSS RESERVE when anticipated cash flows to be lower than initially expected.<br /> <br />Also in Cyprus Mail news:"Court freezes Vgenopoulos assets" <br /><br />http://cyprus-mail.com/2014/05/23/court-freezes-vgenopoulos-assets/<br /> <br />Very interesting--- in relation to TIME FACTS--- is the following link:<br /> <br />http://www.fergusmurraysculpture.com/2013/05/21/another-day-another-another-3-4-billion-euros/<br /> <br />"Michalis Sarris, ex-Laiki chair January to August 2012 told the parliament's Ethics Committee of “strange” loans worth around €4bn where the collateral, people and interest rates of those loans were 'strange'. He declined to provide further details over concerns that it could hurt potential court procedures."<br /><br />Also the title "Piraeus Bad Loan provisions"<br /> <br /><br />MS<br />Anonymousnoreply@blogger.com