IT'S OFFICIAL: Banks In Europe May Now Seize Deposits To Cover Their Gambling Losses

[dkf]

Although deposits under 100,000 euros will be spared, deposits over 100,000 euros will be seized and subjected to an as-yet undetermined haircut--with the confiscated money going to bail out the gambling losses of the aforementioned reckless idiots who run some of Cyprus's banks.

This seizure, needless to say, will dampen the enthusiasm of rich depositors for keeping money in banks that get themselves into financial trouble.

And because many, many banks in Europe have gotten themselves into financial trouble, this will create a general state of unease among rich depositors throughout the Eurozone.
And it should wig out some bank lenders, as well.

After all, never before in the history of this global financial crisis has a major banking system allowed depositors to lose money, no matter how reckless and stupid and greedy their bank managers have been. And only rarely have bank lenders--those who hold bank bonds--been asked to pony up.


Read more: http://www.businessinsider.com/implications-of-the-cyprus-bailout-2013-3#ixzz2OYftUkW4

[The Straight Story]

1. Last I saw is 30%:

Cyprus Bailout: Big Accounts 'Hit By 30% Tax'

Bulging accounts get hit by a levy of "around 30%" as Moscow slams the EU bailout deal's effect on Russian-sourced bank funds .

http://news.sky.com/story/1069277/cyprus-bailout-deal-wins-eurozone-approval

[dkf]

2. The latest I saw is no more than 40%.

The revised accord spares bank accounts below the insured limit of 100,000 euros. It imposes losses that two EU officials said would be no more than 40 percent on uninsured depositors at Bank of Cyprus Plc, the largest bank, which will take over the viable assets of Cyprus Popular Bank Pcl (CPB), the second biggest.

http://www.bloomberg.com/news/2013-03-25/cyprus-to-chop-banking-system-to-win-aid-avoid-default.html

[NutmegYankee]

3. Is the 30% only on amounts over 100,000 euros?

If it didn't, an account with 105,000 euros would take quite a beating. It would suck to be a retiree living off your savings and lose 30% of it all at once.

[dkf]

4. The haircut will be on the uninsured amounts above the limit.

Which is a good reminder to be aware of FDIC limits.

[NutmegYankee]

5. That's good nt

[FarCenter]

23. Deposit Insurance Summary

http://www.fdic.gov/deposit/deposits/dis/index.html

$250K per account ownership category for accounts at FDIC insured financial institutions.

Beware that Money Market Funds may or may not be insured, depending on the financial institution.

[Cleita]

6. I guess it hasn't occurred to these austerity folks that

people will stop using banks for their savings and look elsewhere to invest their money.

[dkf]

7. Cash is the risky asset. Whodathunk.

[Cleita]

8. Personally, myself, considering the banks pay practically no interest as it is,

if I had a house, I would get a floor safe embedded in concrete in my garage. I would keep whatever cash I wanted on hand in it. Concrete embedded safes are burglar proof. (They can't steal the safe and to break into one takes too long.) Then I would invest any excess money in safe securities like AAA munis.

[dipsydoodle]

9. That's a load of puff.

Other European countries have not got the situation that Cyrus has got where the banking sector represent such a high proportion of GDP. It was their choice to become a low-tax judisdiction.

Spain simply nationalised 7 of its banks with debt problems.

[dkf]

10. But why keep your funds in a shaky Spanish or Italian bank when you can go elsewhere?

If you have deposits above the insurance you may as well move it.

[dipsydoodle]

11. Nothing shaky about Spanish banks now

Spain used €30 billion to recapitalise them.

Italy's banks didn't have the problem of delinquent debt with their construction industry which Spain had and was the main cause of the problem there.

[dkf]

12. Spain Brings the Pain to Bank Investors Government to Impose Heavy Losses on Shareholders and

Spain Brings the Pain to Bank Investors
Government to Impose Heavy Losses on Shareholders and Bondholders, Hire Advisers to Help Manage Lenders' Assets

MADRID—The Spanish government will impose heavy losses on investors at nationalized banks and hire external advisers to help it manage these banks' assets, its latest efforts to overhaul a financial sector battered by the collapse of a decadelong housing boom.

Forcing shareholders and bondholders to share the cost of restructuring the country's five nationalized banks was a politically costly step for the government of Prime Minister Mariano Rajoy, but one that was required under the terms of a European Union bailout of Spain's ailing lenders. The decision to solicit advice in drafting a long-term strategy for these lenders came after the state-backed Fund for Orderly Bank Restructuring failed to sell one of them, midsize Catalunya Banc SA.

The bailout fund, known as the FROB, has decided to hire consultancy McKinsey Co. and investment bank Nomura International PLC as advisers, say people close to the situation.


The restructuring terms announced by the FROB will impose losses of up to 61% at Spain's largest nationalized banks. At Bankia SA, BKIA.MC -39.84% the largest of the institutions and the only one that is publicly traded, shareholders will be nearly wiped out and junior bondholders will lose around 30% of their original investment.

In keeping with EU requirements that investors bear losses before companies receive state aid, the nominal value of Bankia's shares will be reduced to €0.01 from €2 and the nominal value of its preferred shares and subordinated debt will be reduced to €4.841 billion ($6.29 billion) from €6.911 billion, the bailout fund said.

http://online.wsj.com/article/SB10001424127887324105204578380600325311568.html?mod=WSJ_hpp_LEFTTopStories

[dkf]

13. Spain braces for ‘tsunami’ of bankruptcies as banks pull plug on zombie developers

Spanish banks are pulling the plug on thousands of builders kept alive during the past five years even as they built almost nothing, said Mikel Echavarren, chief executive officer of Irea, a Madrid-based consulting firm that has advised on 22 billion euros (US$28.5 billion) of refinancing. The banks, forced by the government last year to set aside provisions for the developers, have no incentive to keep funding them.

“Banks have taken the hit, so extend and pretend is over,” said Echavarren. “There’s no motivation to refinance companies that aren’t viable, have no liquidity or possibility of future earnings so we’ll see a tsunami of developer bankruptcies in the next two years.”

The final collapse of an industry that accounted for as much as 18% of Spain’s growth amid the country’s decade-long real estate boom will add to unemployment, already at a record 26%, depress consumer spending needed to turn around the economy and push down the value of residential real estate that’s already dropped more than 30% since 2007, said Raj Badiani, an economist at IHS Global Insight in London.

While job losses in the construction industry continued in recent quarters, “they’ve been less severe than expected, given the scale of the real estate slump,” said Badiani. “With banks cutting financial life support to many developers living on borrowed time, we can expect an accelerated downward adjustment in employment levels.” Badiani estimates the jobless rate could climb to more than 27% this year and house prices will fall at least 50% from the peak by 2015.

http://business.financialpost.com/2013/03/20/spain-braces-for-tsunami-of-bankruptcies-as-banks-pull-plug-on-zombie-developers/?__lsa=625c-0112

[dipsydoodle]

14. As I said

"Nothing shaky about Spanish banks now" I didn't refer to any bi-products of that.

The demise of their construction industry was solely due to the antics of American financial institutions 2007 /2008. It was delinquent debt in that sector which caused the mess with the 7 , not 5 , savings and loans banks which were nationalised.

The demise of their construction industry is also the root cause of their high unemployment.

[Nye Bevan]

15. Don't make large, uninsured deposits with dodgy banks that like to gamble,

would seem to be the moral of this story.

[muriel_volestrangler]

16. Business Insider seems not to have heard about Icelandic banks

if it thinks "never before in the history of this global financial crisis has a major banking system allowed depositors to lose money". There was quite a large fight about it - not only did big depositors lose money, the guarantee scheme didn't pay back small depositors, if they were foreign. But the end result, confirmed by a European court, was that the depositors had to queue for the assets to be liquidated, a process not yet complete after 4 years.

[dkf]

18. They probably don't qualify Iceland as a Major Banking System

[muriel_volestrangler]

24. Its banking sector was about the same size as Cyprus

Landsbanki alone had €22 billion of liabilities: http://en.wikipedia.org/wiki/Icesave_dispute

The Icelandic government refused to honour €4 billion of small depositors' money (and that was just up to €20,000 per customer, not €100,000) if if belonged to non-Icelanders.

[Rise Rebel Resist]

17. (warning strong language)

[dkf]

21. Wow now that is a RANT!

Can't say he got it wrong though.

[Rise Rebel Resist]

22. i watch bbc s*cks a c*cks news everyday

its better than the piss the bbc puts out

[geek tragedy]

19. Be careful where you park your money.

Depositors are creditors just like anyone else to whom a bank owes money.

So, if a bank goes belly-up, someone besides the bank is going to take a hit. In this case, it's tax-dodging Russian plutocrats.

[HereSince1628]

20. Clearly a reason everyone needs an assault rifle to help with bank withdrawls or

protection of that over-stuffed mattress.

PEOPLE!!!!

THE IMF is going to come for your GUNS AND your MONEY!


apocalypse, apocalypse.

Buy GOLD. BUY GOLD... with those soon to be worthless dollars??? Whaaaaaa?