Unformatted text preview: oan under then existing rules. c N. M. Kiefer Economics 4230: Banks 37/ 40 Greece & Creative Accounting
Greece took things a step further:
With Goldman, Greece entered a currency swap that was highly
proﬁtable in the early years (2001) but carried an obligation to buy
back the swap in the future.
In 2005 that obligation was itself securitized, putting oﬀ the actual
payment. Again, not recorded as a loan.
Now, Greece has issured securities obligating proceeds from
aircraft landing fees and the proceeds from the national lottery.
These are recorded as sales, not loans. c N. M. Kiefer Economics 4230: Banks 38/ 40 Greece & Creative Accounting
FT reported a truly creative deal: Forming an SPV named Atlas, in
2001 and raising e2B backed by grants the ﬁnance ministry
expected to receive from European Union structural funds. The
SPV was arranged by BNP Paribas and Deutsche Bank, along with
two Greek banks, EFG Eurobank and National Bank of Greece.
FT comments ”Such structured ﬁnance deals implemented through
SPVs because they were technically recorded as sales through
SPVs rather than collateralized loans to the government, misled
investors and regulators about the actual depth of a country’s
liabilities, thus allowing it to sell more sovereign bonds.” c N. M. Kiefer Economics 4230: Banks 39/ 40 Current Status
NYT: As recently as 2008, Eurostat, the European Union’s
statistics agency, reported that “in a number of instances, the
observed securitization operations seem to have been purportedly
designed to achieve a given accounting result, irrespective of the
economic merit of the operation.”
Again: Transactions with no business purpose are suspicious.
This stuﬀ is just too tempting, and sovereigns are not watched
carefully ... c N. M. Kiefer Economics 4230: Banks 40/ 40...
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This note was uploaded on 01/27/2014 for the course ECONOMICS 103 taught by Professor Angie during the Spring '12 term at Columbia College.
- Spring '12