Are European banks sitting on 16.3 trillion in toxic assets?

If you had read the Telegraph on February 12, you would be inclined to believe there might be even more toxic assets on European bank balance sheets than on American bank balance sheets. However, anyone who read the Telegraph later would have seen the £16.3 trillion figure magically disappear (hat tip Richard).

The article I am referring to begins:

European bank bail-out could push EU into crisis
A bail-out of the toxic assets held by European banks’ could plunge the European Union into crisis, according to a confidential Brussels document.

“Estimates of total expected asset write-downs suggest that the budgetary costs – actual and contingent – of asset relief could be very large both in absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.

“It is essential that government support through asset relief should not be on a scale that raises concern about over-indebtedness or financing problems.”

The secret 17-page paper was discussed by finance ministers, including the Chancellor Alistair Darling on Tuesday.

Nowhere is any mention of sums. Yet, the URL of the article is “https://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html.” The page’s title in the browser is equally unambiguous: “European banks may need £16.3 trillion bail-out, EC dcoument (sic) warns – Telegraph”

I find this odd, as did an alert reader who informed me of these editorial changes to the article.  Apparently, a few  paragraphs were removed and the title changed.

So, I did a little sleuthing. Here’s a bit of what I found. If you do a Yahoo search for 16.3 trillion, the sanitized new version of the article pops up in 2nd place with the original title. It is followed in third place by a copy of the original content from the site blacklistednews.com. Note the highlighted text below.

Here’s my take on what happened here:

The Telegraph released this information including the 16.3 trillion pound figure only to have second thoughts about it for some undisclosed reason. They then changed the article without changing the URL title and also without this sleight of hand escaping readers. The original article title made its way onto Digg and into the mainstream consciousness.

You should note that these figures are far higher than any of the worst-case estimates released for toxic assets at U.S. banks.  However, we may be comparing apples and oranges as most estimates quote potential writedowns and this figure involves asset values on balance sheets.  Any way you look at it, the figures are quite high.

Does anyone have any idea what is going on here?

Sources
European bank bail-out could push EU into crisis – Telegraph
European banks sitting on $16.3 trillion of toxic assets… – Digg.com
‘Toxic’ EU bank assets total £16.3 trillion – blacklistednews.com
‘Toxic’ EU bank assets total £16.3 trillion – Reddit.com