Chapter 721: Loss Exploded
In addition to map software, at the end of November, Digital Future cooperated with the University of Cambridge to set up their first artificial intelligence laboratory in the world in London Technology City and began to enter artificial intelligence research and development in the field.
According to Barron's plan, in addition to the artificial intelligence laboratory in London, starting next year, two artificial intelligence-related laboratories will be established in Silicon Valley in the United States and Yanjing in China.
In the future, artificial intelligence will be widely used in many fields, including digital entertainment, manufacturing, logistics, and autonomous driving. Therefore, the field of artificial intelligence is still very important for laying out the future.
To this end, they directly allocated 10 million pounds this time to conduct research related to deep reinforcement learning and neural networks equal to artificial intelligence in colleges related to the University of Cambridge.
Based on the results of these studies, they will continue to provide additional funding.
“Industrial Bank’s huge losses have reappeared! NM Rothschild Bank may have lost more than 3 billion euros due to traders’ illegal operations!”
Just before Christmas, including British banks, Such reports have appeared in many European newspapers in China, and even American media across the ocean have related reports.
For a time, the public’s attention was drawn from the intensifying Greek sovereign debt crisis to France’s NM Rothschild Bank.
After all, the last Société Générale, which also suffered huge losses due to traders’ illegal operations, was also a French bank...
Many reports are discussing why such incidents occur frequently in France and whether it has something to do with their too loose financial supervision.
After this news was widely reported, the share price of LCR Rothschild Group fell by more than 10%!
Immediately afterwards, as the core company of the LCR Rothschild Group, NM Rothschild Bank immediately issued an announcement stating that they had indeed incurred certain losses due to the illegal operation of a certain trader. , but the scale of the loss was not as much as rumored. According to their calculations, the loss caused by this incident was within 1 billion euros.
Now the police have intervened and have controlled the relevant personnel. More detailed explanations will be disclosed after the case is processed.
As expected by Barron, the Rothschild family finally chose to pass on most of the losses in this incident...
"Although a loss of 1 billion euros will make the LCR Rothschild Group's financial statements this year very ugly, it will not have a too fatal impact on them..."
Daisy was right. Wrong. After all, during the last subprime mortgage crisis, William Weber Capital caused NM Rothschild Bank to lose 2.5 billion euros through a gambling agreement. This time, although their actual losses were higher than that time , but through various means, these losses were passed on to their money management department - that is, their funders bear most of the losses, and then the private sector of NM Rothschild Bank only announced a loss of 1 billion euros, which is It will have an impact on the share price of LCR Rothschild Group, but it is not fatal.
"So we have prepared more 'surprises' from the beginning, right?"
Daisy knows that what Barron said, as well as Goldman Sachs, The "insurance agreements" between some Wall Street banks and the previous German financial institution are now borne by the LCR Rothschild Group. As mentioned before, in order to join the Eurozone, Greece hired Goldman Sachs Group to help them with "financial optimization." The specific method was:
Greece issued a US$10 billion ten-year government bond, which was listed in batches. The banks under Goldman Sachs were responsible for converting the dollars supplied by Greece into euros. When the debt matures, Goldman Sachs will still convert it into euros. Exchange back to US dollars.
The secret is that if the exchange is calculated according to the published actual exchange rate, there will be nothing to write about.
In fact, Goldman Sachs’ “idea” was to artificially set an exchange rate that would allow Goldman Sachs to lend a large amount of cash to Greece without it being reflected in Greece’s public debt ratio.
To put it simply, if 1 euro is equal to 1.35 U.S. dollars at the market exchange rate, Greece can get 7.4 billion euros from issuing 10 billion U.S. dollars. However, Goldman Sachs used a more favorable exchange rate, allowing Greece to get 8.4 billion euros. EUR.
In other words, Goldman Sachs actually provided Greece with a loan of 1 billion euros, but this money would not appear in the calculation of Greece’s public debt ratio at the time because it would take ten years. Then it will be returned. In this way, Greece has this cash income, so that the national budget deficit is only 1.5% of GDP on paper. This meets the entry threshold of the euro area and allows Greece to successfully join the euro area. middle.
In addition to using this method, Goldman Sachs has also designed a variety of ways for Greece to raise money without increasing the debt ratio - such as using future revenues from the national lottery industry and aviation taxes as pawns in exchange for cash.
This pawn exchange method is not a liability in the calculation, but becomes a sale, that is, the securitization of bank debt.
In the end, Goldman Sachs received a commission of 300 million euros from the Greek government for this service.
However, when carrying out these operations, Goldman Sachs knew that Greece would have long-term economic problems if it entered the Eurozone through this method. In the end, the 1 billion euros they lent to Greece would inevitably have a relatively high cost. solvency risk.
In order to prevent its investment from being wasted, Goldman Sachs purchased a 10-year CDS "Credit Default Exchange" of 1 billion euros from a German financial institution so that the underwriter could make up for it if there was a payment problem on the debt. deficit.
CDS (Credit Default Swap) can be said to be an important reason for the subprime mortgage crisis, especially American International Group, which eventually went bankrupt because it issued too many CDS related to subprime loan bonds.
If there were only CDS from Goldman Sachs, then the LCR Rothschild Group would not be in trouble immediately. After all, the term of Goldman Sachs’s 1 billion euro loan with Greece is 10 years, which means that it ends In 2011, the CDS they purchased were also 10-year and expired in 2011, which means there is still more than a year from now...
But in addition to Goldman Sachs’ CDS, in After that, they also made connections and introduced some European sovereign debt clients, including Greece, to other Wall Street banks, and these banks also purchased CDS very cautiously. The idea was to purchase it from a financial institution in Germany. Now the underwriter of these CDS has become the LCR Rothschild Group...
And a considerable number of these CDS will be released next year. Due...
(End of Chapter)