Commerzbank, Germany's fourth largest lender, saw its shares decimated by more than 80 percent to a 19-year low, having increased its loan-loss provisions to cover flood-submerged east German debts. Faced with a precipitous drop in net profit, it reacted reflexively by sacking yet more staff. The shares of many other German banks trade below book value.

Dresdner Bank - Germany's third largest private establishment - already trimmed an unprecedented one fifth of its workforce this year alone. Other leading German banks - such as Deutsche Bank and Hypovereinsbank - resorted to panic selling of equity portfolios, real-estate, non-core activities, and securitized assets to patch up their ailing income statements. Deutsche Bank, for instance, unloaded its US leasing and custody businesses.

On September 19, Moody's changed its outlook for Germany's largest banks from "stable" to "negative". In a scathing remark, it said:

"The rating agency stated several times already that current difficult economic conditions that are hurting banking business in Germany come on top of legacy of past strategies that were less focused on strengthening banks' recurring earning power. Indeed, German private-sector banks, as a group, remain among lowest-performing large European banks."

Last week, Fitch Ratings, international agency, followed suit and downgraded long-term , short- term, and individual ratings of Dresdner Bank and of Bayerische Hypo- und Vereinsbank (HVB).

These were only last in a series of negative outlooks pertaining to German insurers and banks. It is ironic that Fitch cited "bear equity markets (that) have taken their toll not only on trading results but also on sales to private customers, fund management business and on corporate finance."

Germans used to be immune to stock exchange and its lures until they were caught in frenzied global equities bubble. Moody's observes wryly that "a material and stable retail franchise in its home market, even if more modestly profitable, can and does represent a reliable line of defence against temporary difficulties in financial and wholesale markets."

The technology-laden and scandal-ridden Neuer Markt - Europe's answer to America's NASDAQ - as well as SMAX exchange for small-caps were shut down last week, former having lost a staggering 96 percent of its value since March 2000. This compared to Britain's AIM, which lost "only" half its worth. Even Britain's infamous FTSE-TechMARK faded by a "mere" 88 percent.

Only 1 company floated on Neuer Markt this year - compared to more than 130 two years ago. In an unprecedented show of "no-confidence", more than 40 companies withdrew their listings last year. The Duetsche Boerse promised to create two new classes of shares on Frankfurt Stock Exchange. It belatedly vowed to introduce more transparency and openness to foreign investors.

Banks have been accused by irate customers of helping to list inappropriate firms and providing fraudulent advisory services. Court cases are pending against likes of Commerzbank. These proceedings may dash bank's hopes to move from retail into private banking.

To further compound matters, Germany is in throes of a tsunami of corporate insolvencies. This long-overdue restructuring, though beneficial in long run, couldn't have transpired at a worse time, as far as banks go. Massive provisions and write-downs have voraciously consumed their capital base even as operating profits have plummeted. This double whammy more than eroded benefits of their painful cost-cutting measures.

German banks - not unlike Japanese ones - maintain incestuous relationships with their clients. When it finally collapsed in April, Philip Holzmann AG owed billions to Deutsche Bank with whom it had a cordial working relationship for more than a century. But bank also owned 19.6 percent of ailing construction behemoth and chaired its supervisory board - relics of previous shambolic rescue packages.

Germany competes with Austria in over-branching, with Japan in souring assets, and with Russia in overhead. According to German daily, Frankfurter Allgemeine Zeitung, cost to income ratio of German banks is 90 percent. Mass bankruptcies and consolidation - voluntary or enforced - are unavoidable, especially in cooperative, mortgage, and savings banks sectors, concludes paper. The process is a decade-old. More than 1500 banks vanished from German landscape in this period. Another 2500 remain making Germany still one of most over-banked countries in world.

It is a scam two decades old - and it still works. Only last month, a bookkeeper for a Berkley, Michigan law firm embezzled $2.1 million and wired it to various bank accounts in South Africa and Taiwan. Other victims were kidnapped for ransom as they traveled abroad to collect their "share". Some never made it back. Every year, there are 5 such murders as well as 8-10 snatchings of American citizens alone. The usual ransom demanded is half a million to a million dollars.

The scam is so widespread that Nigerians saw fit to explicitly ban it in article 419 of their penal code. The Nigerian President, Olusegun Obasanjo castigated fraudsters for inflicting "incalculable damage to Nigerian businesses" and for "placing entire country under suspicion".

"Wired" quotes statistics presented at International Conference on Advance Fee (419) Frauds in New York on Sept. 17:

"Roughly 1 percent of millions of people who receive 419 e-mails and faxes are successfully scammed. Annual losses to scam in United States total more than $100 million, and law enforcement officials believe global losses may total over $1.5 billion."

According to "IFCC 2001 Internet Fraud Report", published by FBI and National White Collar Crime Center, Nigerian letter fraud cases amount to 15.5 percent of all grievances. The Internet Fraud Complaint Center refers such rip-offs to US Secret Service. While median loss in all manner of Internet fraud was $435 - in Nigerian scam it was a staggering $5575. But only one in ten successful crimes is reported, says FBI's report.

The IFCC provides this advisory to potential targets:

Be skeptical of individuals representing themselves as Nigerian or other foreign government officials asking for your help in placing large sums of money in overseas bank accounts.

Do not believe promise of large sums of money for your cooperation.

Do not give out any personal information regarding your savings, checking, credit, or other financial accounts.

If you are solicited, do not respond and quickly notify appropriate authorities.

The "419 Coalition" is more succinct and a lot more pessimistic:

"NEVER pay anything up front for ANY reason.

NEVER extend credit for ANY reason.

NEVER do ANYTHING until their check clears.

NEVER expect ANY help from Nigerian Government.

NEVER rely on YOUR Government to bail you out."

The State Department's Bureau of International Narcotics and Law Enforcement Affairs published a brochure titled "Nigerian Advance Fee Fraud". It describes history of this particular type of swindle:

"AFF criminals include university-educated professionals who are best in world for nonviolent spectacular crimes. AFF letters first surfaced in mid-1980s around time of collapse of world oil prices, which is Nigeria's main foreign exchange earner. Some Nigerians turned to crime in order to survive. Fraudulent schemes such as AFF succeeded in Nigeria, because Nigerian criminals took advantage of fact that Nigerians speak English, international language of business, and country's vast oil wealth and natural gas reserves - ranked 13th in world - offer lucrative business opportunities that attract many foreign companies and individuals."

According to London's Metropolitan Police Company Fraud Department, potential targets in UK and USA alone receive c. 1500 solicitations a week. The US Secret Service Financial Crime Division takes in 100 calls a day from Americans approach by con-men. It now acknowledges that "Nigerian organized crime rings running fraud schemes through mail and phone lines are now so large, they represent a serious financial threat to country".

Sometimes even stamps affixed to such letters are forged. Nigerian postal workers are known to be in cahoots with fraudsters. Names and addresses are obtained from "trade journals, business directories, magazine and newspaper advertisements, chambers of commerce, and Internet".

Victims are either too intimidated to complain or else reluctant to admit their collusion in money laundering and fraud. Others try in vain to recoup their losses by ploughing more money into scheme.

Contrary to popular image, scammers are often violent and involved in other criminal pursuits, such as drug trafficking, According to Nigeria's Drug Law Enforcement Agency. The blight has spread to other countries. Letters from Sierra Leone, Ghana, Congo, Liberia, Togo, Ivory Coast, Benin, Burkina Faso, South Africa, Taiwan, or even Canada, United Kingdom, Oman, and Vietnam are not uncommon.

The dodges fall into a few categories.