Our title is first and foremost a veiled reference to the 1943 Alfred Hitchcock movie "Shadow of a Doubt".
Anat Admati concluded her Bloomberg column of 2011 by adding:
While it was a Spanish trick in 2012, in 2013 it is an interesting Italian trick. Unicredit in its 4Q12 earnings statement reported losses at -€553m vs. -€173m company's gathered consensus it could have been much worse:
So, no earnings mean no Goodwill impairment impact on earnings and a "convenient tax credit" in conjunction with an improved regulatory capital:
In July 2010 we commented on the above: "Statement 159 - Debt Valuation Adjustments - Déjà Vu 2008"
And we wrote more on the subject in October 2011 - For whom the vol tolls and the return of FAS 159.
"To the extent that the earnings power is less, the banks would not generate as much capital, so there’s less capital available to absorb future losses." - Credit Agricole Securities USA analyst Michael Mayo
Any similarities to today's situation are of course purely fortuitous. As a reminder from David Hendler, Senior Analyst from CreditSights did sum it up nicely in the same Bloomberg article around FAS 159:
Talking about regulations and banks, being "serial economic killers" in true Charlie Oakley fashion, although Denmark was the first EU nation to imposed bail-in, the lack of equity buffers in banks are indeed a serious threat even for Denmark given Danish borrowers are starting to struggle on their interest-only mortgages with a deepening property slump as reported by Frances Schwartzkopff on the 19th of March in Bloomberg - Denmark Races to Prevent Foreclosures as Home Prices Sink:
We have argued in a 2011 conversation that the policy of achieving a high home ownership rate is the biggest threat to an economy: