Alt Lending Week Ended 4th March 2022

Exposure to Russia. Lenders who have played fast and loose.

At the end of the day Western Europe decided to  ignore the relentless build up of military hardware and personnel on Ukraine’s borders as a bluff by President Putin. I must admit that I did not really understand why he did it but perhaps Sunday’s TV showing him addressing two Senior Russian Generals gave us a clue. When he mentioned the N word both of them looked at him, at the end of a table as long as Southend pier, as if he had lost his marbles. Maybe he has. We’ll soon find out, won’t we? Whatever else has happened Germany has changed it’s tune and looks set to rearm as well as change its energy policy. I suspect that there are also some shockers to come out from the European banking system in terms of their exposure to Russian lenders that have now become pariahs. I wonder how many Cypriot banks are also looking closely at their loan portfolios?

Germany the weak link in the West’s alliance

Whenever Germany is  mentioned in the context of trying to rein in Russia the first thing that comes to mind is the Nord Stream2 pipeline. However it turns out that the relationship with Russia is much stronger and deeper than just this pipeline. Germany has been a net investor in Russia for along time and has over 6000 direct investments into the Federation. I always knew that the Comecon bloc was important to Germany by virtue of the fact that I worked in the credit area of a German Bank up until the mid 1970. The books of the bank in question were full of buyer credits which no other major international bank at the time was prepared to take on. But the German manufacturing sector filled its boots on the back of the German Banking system. Looks like pay back time might be coming. Another nail in the coffin of Mrs. Merkel’s overhyped reputation.

 

Cyprus is a Russian Bank with dirty money posing as an EU state

Great quote isn’t it? But when it comes from the head of Prague based European Values centre for security policy it has a sinister ring to it. As a former director of a Cypriot Bank I can vouch for the fact that the rules there were frequently flexible but the lure of filthy lucre has enmeshed Cyprus in an unenviable situation as banker to the residents of a pariah state and many questions to answer.  It would not be the first time. Iceland was the forerunner of Cyprus in termso fits relationships with Russia and paid a very heavy price. Just like Cyprus everybody on the planet knew about it with the notable exception  of the great and the good of the Central Bankers and regulators who are supposed to understand risks like these.  Coming up not far behind in the lost reputation stakes is the City of London whose lawyers, advisers and deal makers had no qualms whatsoever in who they did business with. In some ways we are just as bad as them.

Howard Tolman is a well-known banker, technologist and entrepreneur in London,We have a self imposed constraint of 3 news stories per week because we serve busy senior  Fintech leaders who just want succinct and important information.For context on Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.

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