Credit Lines , the Bank of Porsche

Back in the good ole days banks used to woo prime clients like Porsche with a credit line. This was a commitment to hand over ( €10bn in this case) on demand …obviously with prearranged interest rates .

Astoundingly for the banks Porsche drew the whole lot down.

  1. In case they needed it
  2. Because they could ‘lend’ it out .

The upshot , according to this Bloomberg article , is that banks are suffering liquidity problems as a result ( on top of their other liquidity problems)

bloomberg.com/apps/news?pid= … refer=home

Very handy income seeing as bankers won’t be buying too many Porcshes for the next while !

ft.com/cms/s/0/13b12528-e03e … fd2ac.html

Kerry Group alone had over Half a Bn of lines in place , in 2005

They , along with the top 10 non financial companies on the ISE , have about €2bn of Committed Credit Lines in place mainly from our banks

These will not expire until say 2010 on average , nor will the self same banks be minded to renew them on easy terms in 2010 .

***For no reason whatsoever other than the exemplary clarity of the explanation given *** I enclose a snippet from the last Kingspan annual report .

Looks like some one in Porsche is earning their money :wink:

mm I’m suspicious as to what these “low risk investments are”. There have been plenty of examples in the past of non financial companies who thought they were investing geniuses and lost badly.

Orange County was the classic example