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Bad bank finds €56 bln after checking sums

The Local · 29 Oct 2011, 10:20

Published: 29 Oct 2011 10:20 GMT+02:00

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A spokesman for the bank’s administrators, FMS Wertmanagement, confirmed a Friday report that cash securities had been subtracted from the relevant accounting entries – when they should have been added.

FMS has already corrected its balance for 2010, which is now healthier to the tune of €24.5 billion, while the first half results for this year will now show debts of €301.8 billion rather than the original €357.8 billion.

Weekly magazine Stern reported that because FMS accounts are included in the calculation of the German state, the government has registered the change in fortunes to European Union authorities. The mistake was so massive that the EU statistics body Eurostat had to publish a new overview of German figures.

However, the reprieve is likely to prove temporary as the planned write-down of Greek government debt is expected to cost Germany billions, although it is not yet known how badly this will affect FMS.

HRE was nationalised in 2009 after making bad investments amid the US subprime lending crisis.

Story continues below…

DPA/The Local/hc

The Local (news@thelocal.de)

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Your comments about this article

10:58 October 29, 2011 by TheCrownPrince
Who is responsible for the accountancy there? The trainees? 56 billion? Are they mad, were they drunk? This is ridiculous! As good as this sounds for the federal budget, the people involved should all be summoned before a commission of enquiry of the parliament.
11:26 October 29, 2011 by murka
What do you expect from a Bad Bank? lol
11:59 October 29, 2011 by DinhoPilot
Top University students of the Douchebag class of 1990.
12:15 October 29, 2011 by derExDeutsche
trying their best to lose the 'bad' moniker.
12:18 October 29, 2011 by zeddriver
What accounting school did they go to. Cash on hand is an asset. Not a liability to be deducted. Must be that one of the Occupy Wall Street protestors infiltrated the accounting department and applied the Karl Marx money bad must remove it accounting method.
14:18 October 29, 2011 by ChrisRea
They most probably "imported" some "specialists" from S&P and Fitch, well-known for their accounting&auditing mistakes. S&P had no problem "losing" $2 trillion (so about 30 times more than HRE's mistake) when assessing the rating of the US. Fitch also regularly makes mistakes in the range of billion (e.g. this August they miscalculated ~$8 billion when rating Hon Hai Precision Industry Co., the world's largest electronic components manufacturer; in May 2010, they also misjudged by $2-3 billion BP's liability in the case of Gulf of Mexico oil spill). So I guess even Occupy Wall Street would be a better source for accounting staff.
14:29 October 29, 2011 by Sastry.M
And therefore only Bad Banking surfaces when chosen angels are replaced by simple humans for auditing transactional accounts.
14:58 October 29, 2011 by michael4096
Wrong target. Accountants make mistakes like you, me and everybody else.

A more interesting question is: What CEO doesn't know his own balance sheet to the nearest €56B and catch the mistake immediately?
16:28 October 29, 2011 by Sastry.M
Using computing machines with artificial embedded intelligence , they obey the dictates of their creators to the extent that no mistakes are crept in the methods of computing. Thus within the rationale of working machines which help carry out large scale manipulations, they cannot condone mistakes which their subjective users connive superficially with the hope of undetectability. If secrecy should justify authority to avoid unnecessary complications and yet susceptible for mistakes, transparency of truth can be made public by reports from people authorized with honest auditing.
16:36 October 29, 2011 by zeddriver

You are partly correct. I would say that yes the CEO should be included. We may make a simple mistake like that. Which is fine if your building a bookcase. But at the lofty level of this bank. It's unacceptable. They have the personnel and the responsibility to shareholders to check and recheck. There is an old saying for builders. Measure once, cut twice. Measure twice, cut once.
17:49 October 29, 2011 by pepsionice
I am reminded of the Bush-Gore vote counting episode....where so many Germans were wanting to "help" us count votes after the Florida mess. I'd like to personally offer my accounting services to Germany....to help count money.....if you guys have issues in counting cash or bonds.
11:05 November 1, 2011 by TomGielink
Do these guys not run the business and compare actual to budget, Daily ,Weekly or Monthly.

A 56 billion surprise either way does not occur in one month in any business

What was the CFO doing, What was the CEO doing and what kind of priority did Shauble and the Auditors have that that an error of this magnitude could occur?


Looking at the Euro mess and knowing that Shauble is a key advisor

......I REST MY CASE!!!!
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