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[updated numbers below]Read a post this morning regarding European banks getting too large to rescue. They talked about the leverage in some of the banks in Europe as compared to the US banks and how in some cases the banks liabilities were close to the size of the entire GDP of the country they were HQ’ed in.

Let’s compare, these are the leveraged ratios:

US Investment Banks:

Goldman Sachs: 25x
Morgan Stanley: 32x
Merrill Lynch: 27x

US Commercial Banks:

Bank of America: 10x
Citigroup: 14x
Wells Fargo: 12x
Wachovia: 10x
JP Morgan: 12x

European Banks:
Barclays: 60x
UBS: 46x
Deutsche: 61x
Credit Suisse: 32x

Maybe someone with a better financial background could please explain to me and readers of this blog as to how the European banks will be able to get through this financial situation unscathed. To me its not looking its pretty, especially considering the liabilities of some of those banks comes close to the entire GDP of a country if not outweighing it.

September 22, 2008