Tag Archive for bank run

European Bank Now OWNS Depositors Money

“Banking Crisis Explodes in Europe on a Sunday Afternoon: Austria Orders First-Ever Bank “Bail-in”; Takes Depositors Money for Failed Bank

 

April 10, 2016, 12:00 Noon EDT: “In a move which could trigger a collapse of European banks, Austria  “Bailed-in” a failed bank; seizing depositor money to pay bank debts, leaving citizens broke. This could be the actual start of a complete systemic banking collapse in Europe as panicked citizens, seeing their fellow depositors wiped out in one fell swoop, start pulling their money out of the banking system. This has “DISASTER” written all over it.
Just over a year ago, a black swan landed in the middle of Europe, when in what was then dubbed a “Spectacular Development.” In Austria, the “bad bank” of failed Hypo Alpe Adria – the Heta Asset Resolution AG – itself went from good to bad, with its creditors forced into an involuntary “bail-in” following the “discovery” of a $8.5 billion capital hole in its balance sheet primarily related to ongoing deterioration in central and eastern European economies.
Austria had previously nationalized Heta’s predecessor Hypo Alpe-Adria-Bank International six years ago after it nearly collapsed under the bad loans it ran up when it grew rapidly in the former Yugoslavia. Having burnt through €5.5 euros of taxpayers’ money to prop up Hypo Alpe, Finance Minister Hans Joerg Schelling ended support in March 2015, triggering the FMA’s takeover.
This was the first official proposed “Bail-In” of creditors, one that took place before similar ad hoc balance sheet restructuring would take place in Greece and Portugal in the coming months. Or rather, it wasn’t a fully executed “Bail-In” for the reason that creditors fought it tooth and nail.
And then today, following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.
The highlights from the announcement: “Today, the Austrian Financial Market Authority (FMA) in its function as the resolution authority pursuant to the Bank Recovery and Resolution Act (BaSAG – Bundesgesetz über die Sanierung und Abwicklung von Banken) has issued the key features for the further steps for the resolution of HETA ASSET RESOLUTION AG. The most significant measures are:
• a 100% bail-in for all subordinated liabilities,
• a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,
• the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,
• as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023.
According to the current resolution plan for HETA, the wind-down process should be concluded by 2020, although the repayment of all claims as well as the legally binding conclusion of all currently outstanding legal disputes will realistically only be concluded by the end of 2023. Only at that point will it be possible to finally distribute the assets and to liquidate the company.
As part of the announcement, Austria has cut Heta’s senior liabilities by 54 percent and extended the maturities of all eligible debt to Dec. 31, 2023 to help cover an 8 billion-euro ($9.1 billion) hole in Heta’s balance sheet. It also wiped out any residual equity and the junior liabilities as well as any supplementary capital. The Finanzmarktaufsicht took control of Heta last year in the first application of European Union rules designed to end taxpayer-funded bank rescues.
“While the application of the new European recovery and resolution framework for banks is uncharted territory in both legal and practical terms, we are on target with the resolution of Heta,” the FMA’s co-chiefs, Helmut Ettl and Klaus Kumpfmueller, said in the statement. “Orderly resolution is more advantageous than insolvency proceedings.”
As Bloomberg writes, dealing with failing banks remains a thorny issue in the EU more than seven years after the collapse of Lehman Brothers Holdings Inc. Rescues in Portugal, Greece and Italy carried out before new rules came into force in those countries prompted protests over unequal or arbitrary creditor treatment. The EU’s untested Bank Recovery and Resolution Directive, now in force across the 28-nation bloc, provides rules and tools, including the so-called bail in, to make sure creditors share the burden.
Creditors were not happy, and Heta became a battleground of what the first BRRD implementation would look like. “At the heart of the issue is 11 billion euros of Heta’s debt that’s guaranteed by the province of Carinthia, which owned Heta’s predecessor until 2007. Those guarantees blunt the intent of the new rules because they mean the losses imposed on bondholders become a claim on Carinthia, which says it can’t pay them. Sunday’s haircut means the province faces claims of about 6.4 billion euros, the FMA said.”
Carinthia’s attempt to neutralize the guarantees by buying up the bonds at a discount was rejected by bondholders led by Commerzbank AG and Pacific Investment Management Co. last month. The creditors, who say that Austria should pay up if Carinthia can’t, also sued in a German court, arguing the BRRD’s rules don’t apply to Heta.
The announcement ushers in the next, and even more contentious phase of creditor negotiations: after initially ruling out a second offer, Austrian officials this week smoothed the way for new negotiations to avoid years of litigation. Gaby Schaunig, Carinthia’s finance secretary, said she will review a recent creditor proposal and that “any out-of-court solution is better than the legal route.”
According to Bloomberg, some of the creditors are planning to make an offer to Austria that would result in a payout of 92 cents on the euro, a person familiar with the bid said Saturday. It’s unclear how many creditors support the offer. On Tuesday, representatives for both sides will also meet in London for talks, according to a report in Der Standard. Many creditors have rejected any haircut as an option over concerns how such an example could impact their investments in comparably impaired financial companies. Others are more willing to negotiate.
Some creditors had already challenged the FMA’s decision to apply European bank resolution rules to Heta. Answering the objections, the FMA said the wind-down remains “fully binding,” adding that creditors are now free to appeal to Austria’s federal administrative court: “Challenges may be submitted to the FMA against the emergency administrative decision of 10.4.2016, which sets out the significant resolution actions under BaSAG, within three months. If applicable, the FMA will initiate ordinary administrative proceedings, will recognize and examine the submitted challenges and will then issue an administrative decision in relation to the challenge procedure.”
Changes, if any, to today’s decision will likely take years to pass through the Austrian court system. In the meantime, the precedent has been set and we expect many more banks to follow suit in “bailing in” their senior debt creditors, and ultimately – if there is not enough value to satisfy claims – depositors.
Putting this is layman’s terms, a bank in Austria named Hypo Alpe Adria, failed. It was taken over by an authority to deal with such failures, that authority being named Heta Asset Resolution AG. But the bank’s failure was so massive, it wrecked Heta Asset Resolution AG too!
There are stockholders in Heta Asset Resolution AG including Depositors. The stockholders are “preferred” creditors, and Depositors are “subordinated” creditors.  The stockholders today found out that they will only see 46 cents on the dollar- AND WILL RECEIVE THAT THROUGH STOCK IN THE FAILED COMPANY!  Depositors found out today, they likely will get: NOTHING.  
This is how Europe deals with bank failures under laws passed after the Lehman Brothers collapse in 2007-08.  THE SAME RULES ALSO NOW APPLY INSIDE THE UNITED STATES!
Think about that for a moment.  All the money you have saved in your retirement accounts IRA/401-K and the like… wiped out in one fell swoop. FDIC Insurance… no more.  This is the new game.  And your life’s work and hard-earned savings are the prize.
The fact that such a thing was announced on a SUNDAY AFTERNOON is astonishing; governments NEVER do things like this. Why a Sunday? Because they know this is going to cause massive turmoil as people all over Europe rush to take their money out of banks starting tomorrow, and Bank Stocks utterly PLUMMET as stockholders see they are no longer protected as “creditors” to Banks.
This could be the actual start of a complete systemic banking collapse in Europe as panicked citizens, seeing their fellow depositors wiped out in one fell swoop, start pulling their money out of the banking system. This has “DISASTER” written all over it.

 

No longer “here it comes”, folks… here it IS. You were warned, repeatedly!

Source: http://coyoteprime-runningcauseicantfly.blogspot.com/2016/04/banking-crisis-explodes-in-europe-on.html

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Bank Run: Countries Repatriating Gold

The whole world knows what is happening, except for those who listen to the news, which at this point is all propaganda used to distract people from what is actually happening. In case you have missed it, America is already at war with Russia (meaning so is Canada, UK and Australia by default). China has stepped in to support Russia and why not, China is now the no.1 superpower on the planet and taking many of USA assets since they defaulted.

The war has been going for awhile, mostly economic so far but then so are all wars. Even the bombing in Syria is arguably all about economic issues at heart. (If they sold the war to the public saying it was about money, it would not be supported, so they have to find an ‘enemy’ each time and then sell it to us so we are more than happy to see cities razed to the ground and women and children murdered.) Even the threats to North Korea are for reasons other than you are told.

This war is not working. Sure the Russian Ruble crashed, but Russia is doing just fine and surviving. When the US dollar crashes, the same can’t be said. All of the wars are ways to prop up the US dollar, which is clearly dead in the water since countries are not trading with it anymore. America hates Russia because they are now trading oil directly for gold. Russia is launching the new SWIFT payment system to replace the corrupt global banking system. The 188 or so BRICS countries are ignoring America and moving towards new systems that completely ignore the old powers that be, because they are corrupt.

So what does this have to do with the bank run? Well everyone knows what is occurring, war is already started, economic collapse is very, very close now. They may also know that all of their gold is about to be stolen, just simply taken or withheld, so before it all collapses they are repatriating their gold back to their own countries, hence a big ol’ bank run. It might be wise to follow their example. Here is a good article below from here.

Has a massive bank run already started?

We’re in the middle of a really big bank run. No, really. This is massive. And it is a bad sign for what’s coming at some point in the near future.

What kind of bank run is this? It is completely different from the runs that the U.S. saw during 1929, at the beginning of the Great Depression. Those were periods of panic where individuals pulled their money out of their local banks.

This is, as one zerohedge.com commenter aptly put it, “the quietest bank run in history.”

The run we’re in now is one in which countries are pulling their gold out of international vaults and bringing it home again.

They won’t be burying it in their backyard, though, because the amount of gold they’re pulling is staggering.

Which countries have seen recent movements repatriate their gold? Here are some of the most notable ones — France, Holland, Germany, Romania, Belgium, Poland, Azerbaijan, Iran, Libya, Ecuador, Mexico, and Venezuela.

And we’re not talking about bringing home chump change. We’re talking about huge ‘withdrawals’ of gold. For instance, Holland brought home 122.5 metric tons of gold that was held in the Fed. That is 20% of its total gold, and 10% of its total foreign reserves. And France’s presidential front-runner is calling for “all” French-owned gold to be “urgently” returned to France. (Forbes) We’ll see if they can pull that off before it’s all gone.

And the numbers are also impressive for other countries wanting to bring home their gold.

What does this show?

It shows a lack of faith in the financial system. Why do people pull their money from the bank during a bank run? they’re afraid they’ll lose their money, and they would rather protect it themselves.

For the same reason, countries around the world are losing faith in those holding their gold. They’d rather protect it themselves.

But why do they want to protect it themselves?

There are a variety of possible explanations, but a few stand out to me.

We’re in a period of war. Both economic and traditional warfare has begun, with most of it still remaining economic. During a period of war, there is less certainty than usual. And where there’s a lack of certainty, there’s a desire to hold your own gold.

Second, we’re on the verge of an economic collapse. This is obvious. Sure, the dollar is supposedly ‘strong’ right now, but that is due to currency manipulation. (You really ought to take some time to understand how currency manipulation works — it is important.) At some point, it’ll collapse. Would you trust the Fed with your gold when that happens?

Third, gold is far more valuable than it is priced right now. And the more valuable it becomes, the less appealing it is to leave it in someone else’s care.

So countries are bringing home their gold, and they’re not taking their time.

So, in a sense, we really are in a bank run. And it is probably only a matter of time before a run comes to your bank, too.

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