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Saturday, April 30, 2011

Global Sovereign Risk: The Top 10 Most Risky Debtor Nations (Lists) *April 2011 Month End Review*

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Sovereign Risk


Below is a comparison of and the changes to the Top 10 Most Risky Debtor Nations from The 4th Quarter 2010 CMA Global Sovereign Debt Credit Risk Report (December 31, 2010) to the recent CMA Sovereign Risk Monitor (April 30, 2011). This is a snapshot, the market for collateral default swaps (CDS), on which the lists are based, can be volatile and the Top 10 list can change quickly. Civil and military events, government statements and activity, and credit rating agency actions can change the Top 10 list instantly.


Top 10 Most Risky Nations

The Top Ten Most Risky Sovereign Debt (April 30, 2011) The CMA "Sovereign Risk Monitor" listed the following ten nations as having the highest risk of default:
1    Greece
2    Venezuela
3    Pakistan
4    Ireland
5    Portugal
6    Argentina
7    Ukraine
8    Lebanon
9    Dubai / Emirate of
10  Egypt

The Top Ten Most Risky Sovereign Debt (December 31, 2010) The CMA "Global Sovereign Credit Risk Report: 4th Quarter 2010" listed the following ten nations as having the highest risk of default:
1    Greece
2    Venezuela
3    Ireland
4    Portugal
5    Argentina
6    Ukraine
7    Spain
8    Dubai / Emirate of
9    Hungary
10  Iraq

Changes in and Comments about the Top 10 from December 31, 2010 to April 30, 2011
Pakistan enters Top 10 as #3 on deteriorating foreign debt status
Lebanon enters Top 10 as #8 on deteriorating political situation 
Egypt enters Top 10 as #10 on the revolution and overthrow of government
Spain drops out of Top 10
Hungary drops out of Top 10
Iraq drops out of Top 10


About CMA and the CMA Global Sovereign Debt Credit Risk Report 

CMA, the world’s leading source of independent, accurate OTC credit market data, has unrivalled access to information about what is actually happening in the CDS markets. It combines this unmatched breadth and depth of pricing data with market-leading technology to deliver clear and valuable information to financial institutions around the world. The CMA ranks sovereign default risk by CPD (Cumulative Probability of Default). "CPD quantifies the probability of a country being unable to honour its debt obligations over a given period of time period. For Sovereign CDS, this typically includes the probability of a restructuring of debt."


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Links
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* Data Courtesy of CMA *


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Bank Failure Friday: FDIC Seizes 5 Banks! (Charts) *The Park Avenue Bank most costly in 2011*

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2010 bank failures were 157 and 2009 bank failures were 140

The FDIC closed banks on Friday, April 29, 2011, 2 in Florida, 2 in Georgia, and 1 in Michigan, which increases the 2011 total bank failures to 39. Annual charts of USA bank seizures, FDIC Deposit Insurance Fund Cost for Failed Banks, and the FDIC problem bank list are below. States where banks have been closed in 2011 are: Alabama 2, Arizona 1, California 3, Colorado 2, Florida 4, Georgia 10, Illinois 4, Michigan 2, Minnesota 1, Mississippi 1, Nevada 1, New Mexico 1, North Carolina 1, Oklahoma 2, South Carolina 1, Wisconsin 3.

Overall, 4 of these failed banks were small community banks, with total assets less than $500 million each. The Park Avenue Bank was a larger bank with total assets of $953.3 million. The Park Avenue Bank becomes the most costly to the Deposit Insurance Fund (DIF) in 2011 as the FDIC estimates the total cost to DIF at $306.1 million. This is an incredibly high 32% of total assets. The mostly costly banks to the Deposit Insurance Fund in 2011 year-to-date:
1) The Park Avenue Bank, Valdosta, GA $306.1 million
2) First Community Bank, Taos, NM $260.0 million
3) Superior Bank, Birmingham, AL $259.6 million
4) FirsTier Bank, Louisville, Ky 242.6 million
This was also the most costly week for the Deposit Insurance Fund at a cost of $643.2 million. The estimated cost to the FDIC Deposit Insurance Fund for the 2011 bank closures year-to-date is $3.15 billion. (See chart below).

#35 First National Bank of Central Florida, Winter Park, FL
* Premier American Bank, National Association, Miami, Florida, acquired the banking operations, including all the deposits
* As of December 31, 2010, First National Bank of Central Florida had total assets of $352.0 million
* Premier American Bank will purchase essentially all of the assets
* FDIC and Premier American Bank, N.A. entered into loss-share transactions on the failed bank's assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) $42.9 million

#36 Cortez Community Bank, Brooksville, FL
* Premier American Bank, National Association, Miami, Florida, acquired the banking operations, including all the deposits
* As of December 31, 2010, had total assets of $70.9 million
* Premier American Bank will purchase essentially all of the assets
* FDIC and Premier American Bank, N.A. entered into loss-share transactions on the failed bank's assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) $18.6 million

#37 First Choice Community Bank, Dallas, GA
* Bank of the Ozarks, Little Rock, Arkansas, acquired the banking operations, including all the deposits
* As of December 31, 2010, First Choice Community Bank had total assets of $308.5 million
* Bank of the Ozarks will purchase essentially all of the assets
* FDIC and Bank of the Ozarks entered into loss-share transactions on the failed bank's assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $92.4 million

#38 The Park Avenue Bank, Valdosta, GA
* Bank of the Ozarks, Little Rock, Arkansas, acquired the banking operations, including all the deposits
* As of December 31, 2010, The Park Avenue Bank had total assets of $953.3 million
* Bank of the Ozarks will purchase essentially all of the assets
* FDIC and Bank of the Ozarks entered into loss-share transactions on the failed bank's assets
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $306.1 million

#39 Community Central Bank, Mount Clemens, MI
* Talmer Bank & Trust, Troy, Michigan, formerly known as First Michigan Bank, to assume all of the deposits
* As of December 31, 2010, Community Central Bank had approximately $476.3 million in total assets
* Talmer Bank & Trust agreed to purchase essentially all of the assets
* FDIC and Talmer Bank & Trust entered into a loss-share transaction
* FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $183.2 million

The next FDIC bank closings, if any, will most likely be announced on Friday, April 6.

USA Failed Banks by Year

Bank failures and therefore FDIC seizure of banks, dramatically increased in 2009 and 2010 - a 2-year total of 297 compared to 0 in both 2005 and 2006. As noted below regarding total problem banks, bank failures in 2011 are expected to continue at a high rate and be 100+. The chart below is the data from 2004 through 2010. Bank failures for 2011 are estimated by extrapolating 2011 actual closures based on a 52-week year. Actual 2011 bank failures will be included on the chart later this year as the closures accumulate to a higher level.
Year, Total Bank Failures
2004: 4
2005: 0
2006: 0
2007: 3
2008: 25
2009: 140
2010: 157
2011: 39 actual, 119 estimated


FDIC Deposit Insurance Fund Cost of Failed Banks

Failed banks and the seizure by the FDIC cost money. The seized banks' deposits are usually assumed by another bank as are most of the assets. However, not all assets of the failed bank have value (usually the worst performing loans, non-performing loans, repossessions, and foreclosures). The FDIC may enter into a loss-share agreement with another bank to manage the questionable assets or take direct possession of the assets and attempt to dispose of them. Upon seizure of a bank, the FDIC estimates the loss to the Deposit Insurance Fund. The Deposit Insurance Fund is normally funded by the banking community through FDIC assessments to each FDIC insured bank based on insured deposits, plus special assessments. Below is a chart of the estimates by the FDIC of costs (losses) incurred upon seizure of banks in 2011. The chart is by week for 2011 and shows the accumulated losses as the year goes along.


FDIC Problem Banks by Year

The FDIC problem bank list continues to rise, actually skyrocket, although the total assets of these banks has leveled off. Now at 12/31/2010 the total is an astronomical 884. The total assets of the problem banks from the year-ends 2004 through 2009 were $28B, $7B, $8B, $22B, $159B, and $403B, respectively. The total assets of the current (12/31/2010) 884 problem banks is $390B, indicating most of these are small to medium community banks. The FDIC reports the total problem banks on a quarterly basis.
Date, Total Problem Banks
12/31/2004: 80
12/31/2005: 52
12/31/2006: 50
12/31/2007: 76
12/31/2008: 252
12/31/2009: 702
12/31/2010: 884


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USA failed and problem banks
Federal Reserve statistical releases
JPMorgan Chase & Co. (JPM) financial performance charts
Citigroup (C) financial performance charts
Goldman Sachs (GS) financial performance charts
Wells Fargo (WFC) financial performance charts
Bank of America (BAC) financial performance charts
Morgan Stanley (MS) financial performance charts
S&P 500 (SPX) charts and review
China economic, Internet, and technology news
Baidu (BIDU) financial performance and stock charts


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