The debt review of France’s large and dium-sized banks continued until late September when it finally concluded.
On the third day after Achille Fuld completed the review, a report appeared on Jero Bonaparte’s desk.
The content of the report was Achille Fuld’s assessnt over more than a month of the debt status of large and dium-sized banks within France exceeding tens of millions.
In the report, Achille Fuld arranged the debt situations of these dozens of banks from high to low, with the most severe belonging to Isaac Pereire’s Paris Industrial Bank.
Such a bank with a market value of over a billion had a debt burden that was 2.5 tis the size of the entire bank.
Although the 2.5-fold debt is far from the nearly 10 tis in history, it is still a considerable hole.
Once exposed by soone with intentions, Industrial Bank might not hold up until the next day.
Looking at the debt figures in the report, Jero Bonaparte couldn’t help but furrow his brows and muttered softly, "Let see where they spent the money."
Jero Bonaparte continued reading, and in the report Achille Fuld handed over, it clearly stated that the vast majority of Industrial Bank’s debts were used for investnt, and their investnt targets were their own subsidiaries and foreign high-yield bonds/stocks.
Among them, the companies established by Industrial Bank included Paris Public Transport Company, Paris Water Company, Lyon Public Transport Company, Paris Real Estate Company..., they spanned across France and beca an important part of France’s real industry.
"No wonder!" Jero Bonaparte muttered again softly.
Judging from Isaac Pereire’s investnt company types, most are ones that focus on long-term strategies.
Take Paris Water Company, for instance, even if Isaac Pereire was authorized by Jero Bonaparte to monopolize the entire Paris water supply, would Isaac Pereire dare to raise prices?
They simply wouldn’t dare! If the tap water prices were excessively absurd, not only Parisians would be unwilling, but even Jero Bonaparte would order Isaac Pereire to promptly adjust the water price to a suitable level.
Therefore, the earning speed of Paris Water Company is far inferior to financial speculation... don’t ntion daily yields of 5%, 6%, even higher than the annual 4% yield of France’s national debt cannot be achieved.
Originally supposed to be a money-making tool, the real estate company also failed to reach expected levels because of Baron Haussmann’s continuous building plans.
Even worse, Paris Industrial Bank wasn’t established relying on traditional comrcial models.
If it had the traditional comrcial models of France, Isaac Pereire would never have been able to build a bank comparable to Rothschild Bank in just a few years.
The establishnt of Rothschild Bank was through three generations of hard work by the Rothschild Clan, and it was at a good ti, which made the bank possible.
While the establishnt of Paris Industrial Bank depended on noble alliances and returns promised higher than France’s 4% national debt yields to absorb retail capital to grow strong.
Thus, the bank inherently had speculative attributes at its inception; therefore, when Industrial Bank couldn’t earn the promised returns dostically, they turned their attention abroad.
Industrial Bank not only holds railway bonds from the Kingdom of Prussia, Sardinian Kingdom, United States of Arica but also the national debts of the Austrian Empire and the Ottoman Empire... all these various debts are why Industrial Bank has such high debts.
This essentially ans France lent money to Industrial Bank, which then lent money abroad.
Those investing in Industrial Bank got its bonds and stocks, while Industrial Bank gained debts and foreign bonds.
Over ti, Industrial Bank’s debts kept increasing.
At the end of Industrial Bank’s section, Achille Fuld specifically wrote down Industrial Bank’s current situation and his evaluation of them.
As of now, Industrial Bank is still widely pursued in the securities exchange market.
Their value has not only not decreased but has kept increasing.
Industrial Bank exchanged the funds obtained from issuing stocks for other companies’ stocks, and Industrial Bank’s stocks were only guaranteed by its holding of other enterprises’ valuable securities, while various companies’ stocks were guaranteed by their intrinsic asset value.
Therefore, the sa actual assets generated double virtual capital: one form as the stocks of that enterprise, another as Industrial Bank’s stocks allocated to the enterprise and buying its stocks.
However, Achille Fuld believes Industrial Bank’s actions are akin to walking a tightrope,
If overseas investnts suffer losses, the whole company will instantly plunge into crisis,
Because the profit Industrial Bank gains from dostic investnt is far from enough to pay their initial promises, sooner or later they will face crises due to financial chain issues.
After reading Achille Fuld’s entire report, Jero Bonaparte realized that Alphonse Rothschild’s initial warning was not unfounded.
Had it not been for Achille Fuld’s report, Jero Bonaparte would have rely regarded Alphonse Rothschild as being too cautious like his old father.
Then, Jero Bonaparte summoned Bashirio again and instructed him to imdiately send soone to invite Isaac Pereire.
"Yes!" Bashirio obeyed Jero Bonaparte’s order and began to act.
About an hour later, Bashirio appeared once again before Jero Bonaparte, with Isaac Pereire following behind him.
"Your Majesty!" Isaac Pereire, dressed in a black coat, respectfully addressed Jero Bonaparte!
"Pereire, have a seat!" Jero Bonaparte pointed to the sofa beside him and said to Isaac Pereire.
Isaac Pereire followed Jero Bonaparte’s order and sat down. Then Jero Bonaparte looked at Bashirio and said, "Bashirio, you may leave now! I’d like to have a private conversation with Mr. Isaac."
Bashirio bowed to Jero Bonaparte and then closed the door.
The room was left with only Jero Bonaparte and Isaac Pereire. After a brief silence, Jero Bonaparte crossed his hands and spoke to Isaac Pereire in as cordial a tone as possible, "Isaac, you must be very clear about the reason I called you over, right?"
As soon as he said this, Jero Bonaparte regretted it because he realized that the statent clearly had an interrogative tone rather than a consultative one.
"Your Majesty, I understand!" Isaac Pereire replied to Jero Bonaparte in a calm tone.
Initially, when Isaac Pereire was under investigation by Achille Fuld regarding debts, he was already very aware that he might be summoned by Emperor Jero Bonaparte after Achille Fuld reported the bank debts to the Emperor.
"I have reviewed the debt situation of the Industrial Bank, and while your situation is not too severe,
it is sowhat risky, with liabilities exceeding market value by 2.5 tis. How do you plan to repay them?" Jero Bonaparte inquired of Isaac Pereire.
"Your Majesty, the Industrial Bank has many investnts overseas, and the current profitability of these investnts is excellent!
We are fully confident in repaying these debts!" Isaac Pereire responded to Jero Bonaparte with a firm tone.
At tis like this, he had to demonstrate unwavering confidence.
"If an economic crisis occurs, what will you do?" Jero Bonaparte continued his questioning.
"Your Majesty, we have so tangible assets on hand, fully capable of dealing with these risks!" Isaac Pereire told Jero Bonaparte.
Jero Bonaparte suddenly recalled that the Industrial Bank indeed accumulated so land.
Although the land’s appreciation wasn’t as high as historically noted, it was still higher than when Isaac Pereire had acquired it.
If Isaac Pereire could resell the land, the profit would only need to cover the dividends.
Then the Industrial Bank could continue to exist.
Ultimately, whether a bank can continue to operate largely depends on the market’s confidence in it.
By selling land to generate funds, Isaac Pereire signaled to the market that they had the situation under control.
As long as the market feedback wasn’t overwhelmingly negative, the Industrial Bank could survive.
An economic crisis is not perpetually present; if the Industrial Bank can withstand it, they can erge victorious.
Like the Bank of France in 1848, they didn’t need more funds than other banks; they only needed to outlast them.
"That indeed is a solution!" Jero Bonaparte nodded in agreent with Isaac Pereire’s thod and then said to Isaac Pereire, "However, you should be aware that this strategy only works when your debt hasn’t far exceeded your assets!
If the Industrial Bank’s debt greatly exceeds your assets, selling your assets will only be seen as a final, desperate act!
At that point, the entire Industrial Bank would likely face a frenzy of withdrawals!
Leading to bankruptcy!"
"Your Majesty, I will certainly heed your advice!" Isaac Pereire replied to Jero Bonaparte.
"By the way, you should also prepare in advance for the coming economic crisis! So businesses need to be scaled down when possible. If you hesitate to do so now, it might be impossible later!" Jero Bonaparte reminded Isaac Pereire once more.
Isaac Pereire inford Jero Bonaparte that the Industrial Bank had already begun liquidating foreign bonds to cash out.
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