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Chinese whispers are saying that Citi and some Australian banks are about to take huge, like colossal losses this half.

 

Citi is looking at up to $600m write offs with more to come in the second half.

 

Westpac may have to merge or be bought out.

 

This is going to get really ugly and the day the music stops will be in early March I am told. I don't know what the catalyst will be though.

 

Therefore, it is time to start looking at bank debt as a investment instrument. Because short of a bank going under which it probably won't but it might, their debt will always be there and need to be serviced. What better time to buy their debt than when they are distressed?

 

Citi isn't good for much but I guess their ineptitude as bankers allows others to seize the day with their debt because it is clear these people aren't going under. They will merge, downsize, sell off, lay off, write off, but they won't go under and their debt will still be there ticking away being serviced to the bond holder who picked it up on the cheap when nobody gave them a chance.

 

So maybe as useless as they are they are good for something.

 

Does anyone know much about their debt instruments available on the market?

 

The green back has a long way to fall yet so now is not the time to buy but a good time to start the discussion I feel.

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In reply to: plastic on Tuesday 13/01/09 12:26pm

Citi is looking at up to $600m write offs with more to come in the second half. QUOTE

 

Hardly a company-threatening amount!

 

ANZ, a much smaller bank ( still!) made a NPAT last year of AUD3.319b after Provisions of AUD1.9b Oh, and ANZ assets were AUD471b at last balance.

 

I really don't think we should be spreading "Chinese whispers" about Westpac, either, without some hard facts to back them up.

 

 

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What do you think of their debt as an investment instrument?

 

I am sure he said $600m but he could've said $6bn. Will have to wait and see. http://www.sharescene.com/html/emoticons/king.gif

 

But one thing is for sure, this is going to get ugly.

 

 

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Hey Macduffy, headline figures don't show the real story right?

 

It's all about ratios.

 

Those figures can be reduced by God knows how much with some shorting or forced selling by mortgage holders then the ratios and covenants and law etc have to be complied with which forces more selling and then before you know it, its Armageddon.

 

So watch this space. The whispers are right. Early March the music stops.

 

The Big C, ANZ, Westpac and whoever else are down the swanny.

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