Ten years after Lehman there are numerous statements from bureaucrats, academics, media and others that banks are now better regulated, more solid and liquidity problems vanished.

Reader Lars from Norway Emailed this assessment today.

Price/Book Ratio

Deutsche Bank trades at 0.30 on the low side and BNP Paribas at 0.70 on the high side. In between we have Commerzbank at 0.40, Unicredit at 0.50, and Society General at 0.50.

The verdict is negative.

Target2

​Italian and Spanish bank require € 900 billion in liquidity support on a permanent basis. ​

This element is mostly ignored by academics and others because they do not understand the implications of Target 2 as a capital flight phenomenon. This is a hidden crisis.

​The verdict is negative.

Nonperforming Loans

Italian banks would all be insolvent if NPLs were to be written off. In order to keep the facade, NPLs are kept on the books as if it’s not a problem.​

The verdict is negative.

​Proprietary Trading and Derivatives

Some of the banks have huge portfolios, led by Deutsche Bank and BNP Paribas. As much as 45% of total assets. ​

Nobody knows what a strict mark-to-market exercise would lead to. Most of the derivatives are interest rate swaps that might suffer should rates rise.

​The verdict is negative.

Emerging Market and Troubled Bank Exposure

French banks have huge exposures to Italy, and Italian banks have big exposure to Turkey.