Scotland is making a move for independence from the UK as a sovereign nation. Such an event is bound to be rife with political motivations and ramifications that I'm no where near qualified to gauge or judge. Yet, there is one thing that I can comment on with conviction, and that is the risks that abound in the banking system. You see, with so many political motivations running in several directions, the truth (or even a facsimile of it) will be hard to come by in such a situation, but I believe I can ferret out a nugget or two. Here are a few snippets from an article ran on CNBCcom today: Scotland Independence Could Lead to Cyprus-Style Banking Crisis

An independent Scotland is at risk of a Cyprus-style banking crisis, as its banking sector would be "exceptionally large" compared to the size of its economy, a U.K. government report has said.

"An independent Scotland would have an exceptionally large banking sector compared to the size of its economy - with banking assets of more than 1250 percent of Scottish [gross domestic product] - making it more vulnerable to financial shocks and the volatility of the sector," the Treasury report said on Monday.

The report pointed out Scotland's banking exposure would dwarf that of Iceland and Cyprus, two countries that faced severe banking collapses in recent years. Iceland's banks, for example, had assets equivalent to 880 per cent of GDP, while Cyprus, which faced a banking crisis in March, had total banking assets of around 700 per cent of GDP.

...for Scotland if its banks needed bailing out, posing significant risks to Scottish taxpayers, the report claimed.

The report as cited by the article then goes on to make more direct comparisons to Cyprus, not unlike I did two months ago, but with Ireland (see As Forewarned, The Irish Savers Have Just Been "Cyprus'd", And There's MUCH MORE "Cyprusing" To Come).

"At the end of September 2012, the two largest banks – the Cyprus Popular Bank and Bank of Cyprus – had assets in the region of 210 per cent and 175 per cent of Cyprus's GDP respectively."

"It is worth noting that, if Scotland became independent, its banking sector would be similarly concentrated (with two large players, Bank of Scotland and Royal Bank of Scotland and a number of smaller firms), and that an independent Scotland's domestic banking sector would be likely to be significantly larger than that of Cyprus (assuming no change to firms' domicile arrangements)."

While there's not a single doubt in my mind that this so-called research paper has distinct political ulterior motives at it heart, a fact is still a fact nonetheless. RBS is still a problem in terms of systemic risk. On Thursday, 11 April 2013 I penned, I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets! wherein I clearly illustrated that RBS is materially understating its liabilities AND even went so far as to include links to the SEC and the UK banking regulator so that US/UK taxpayers and investors can notify our erstwhile regulator(s) to the potential of financial shenanigans. The root of the problem is that RBS has materially under-reported its liabilities (in my oh so humble opinion.) Those that stress tested RBS (the same erstwhile professionals that allowed the Irish banks to pass their stress tests 3 months before they started collapsing) apparently overlooked humongous swaths of liabilities. The charge documents referred to in the aforelinked article are definitively not apparent in the recent bank stress testing’ conducted by the European Banking Authority, at least not in the summary results that the EBA have made available. For those who are still skeptical, I beg thee reference the RBS Stress Test download. I presented ample evidence directly in my previous articles, to wit:

What happened behind closed doors?

Ulster Bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland. U.S. investors would have had to rely on the contents of The Royal Bank of Scotland's 2008 Annual Accounts which apparently (in my opinion) concealed the existence of the CRO registered charges to the Central Bank of Ireland.

Ulster Bank RBS charge doc 2 Page 1

I even included a lawsuit filed in which investors apparently go the message, they just didn't have access to the analyst that I proffered...

rbs litigation

Anyone interested in RBS will be well served to review "I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets!" thoroughly! 

To give the prospective Scottish taxpayer a clue as to what surprises may lurk beneath, I post this tidbit from the afore-linked article...

The app below allows the UK Taxpayer to calculate for themselves exactly what their individual contribution (pro rata) is to the government bailout of RBS.

I've taken the liberty of pre-populating the input fields for you, but if you don't agree with the numbers then by all means insert your own!

Published in BoomBustBlog

Kiss Those Euros GoodbyeAs of today, all of the puzzle pieces for an Irish government cum ECB via Germany confiscation of Irish bank depositor money is in place. The first piece, Irish bank insolvency was clearly identified and articulated in "If I Provide Proof That The Entire Irish Banking System Is A Sham, Does It Set Up A Much Needed System Reboot? Let's Go For It... I drove the point home even further as the Irish PTB start to admit that their banks need to be recapitalized, in "The Beginning Of The Great Irish Unwind?!?!?!". The second piece of the puzzle is the political will to actually sacrifice bank depositors, clearly illustrated in "As Forewarned, The Irish Savers Have Just Been "Cyprus'd", And There's MUCH MORE "Cyprusing" To Come". Now as of today, we have the final piece, the legal mechanism - which allegedly is just being debated but in reality is already in place. The template has already been established with Cyprus, ala "EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation".

The Irish are about to see their deposits above the 100k euro insured limit hit risk heretofore unseen. You see, weeks after my many warnings of Irishmen and women at financial risk, the Irish presidency of the European Council put forth a proposal to do just what I warned of ahead a key meeting of finance ministers next week. Whats of even more importance is the fact that, as in Cyprus, EU states have NOT ruled out the possibility of confiscating bank deposits below the EU insured limit of 100k euro. This means that there is far from a AAA credit covering your deposits. It almost happened a month or so ago, and nobody wants to rule put the potential of it happening again. Now, on to the news piece that has confirmed my many warnings, the last piece of the puzzle - from the Irish Times: Bank deposits of over €100,000 may be at risk...

Deposits of over €100,000 are likely to be hit in the event of future European bank collapses, according to a proposal put forward by the Irish presidency of the European Council ahead of a key meeting of finance ministers next week.

Discussions on the controversial bank resolution regime, which is likely to see savers with deposits over €100,000 “bailed in” as part of future bank wind-downs, are due to intensify this week in Brussels, ahead of Tuesday’s meeting, which will be chaired by Minister for Finance, Michael Noonan.

Under a compromise text proposed by the Irish presidency, uninsured deposits of over €100,000 would be bailed in in the event that a bank is resolved, but depositors would rank higher than other creditors in the event of a wind-down. In this scenario – known as “deposit preference” – depositors would rank at the very end of the process, with other creditors first absorbing losses.

"In this scenario – known as “deposit preference” – depositors would rank at the very end of the process, with other creditors first absorbing losses." Absolute non-sense. Simply smoke and mirrors for those who don't know any better. The only reason for there to be a wind-down in the first place is that there is no equity left in the bank. With gearing in the European banking model what it is, and the dearth of transparent (non-fraudulent) reporting what it is (see If I Provide Proof That The Entire Irish Banking System Is A Sham, Does It Set Up A Much Needed System Reboot? Let's Go For It...), the chances of there being any recovery is somewhere between zilch and nil, give or take a euro or two - reference LGD 100+: What's the Possibility of Certain European Banks Having a Loss Given Default Approaching 100%? and The Anatomy of a Serial European Banking Collapse to realize that once a counter party driven bank run starts, there may be less than nothing to divy up in the end. Lehman Brothers' US creditors received roughly 10 to 40 cents on the dollar, but after 5 years of wrangling, the European International arm was full repaid. Hey, do you feel lucky with your life savings? Even if you do feel lucky, you'll still need 5 years to spare and a ton of cash for legal fees.

However, some member states have not ruled out the possibility that insured deposits, i.e. deposits under €100,000, would be forced to bear losses in the event of a bank collapse even though these deposits would be likely to be protected by the deposit guarantee scheme.

As stated earlier, this ain't AAA coverage!

This year Jeroen Dijsselbloem, head of the group of 17 euro zone finance ministers, said that losses on bondholders and depositors could form part of future bank bailouts as euro zone officials seek to move the burden of bailouts away from taxpayers – as was the case in the Irish bailout – and on to private investors.

The European Commission argues that this switch from so-called “bailouts” to “bail-ins” would result in an allocation of losses that would not be worse than the losses that shareholders and creditors would have suffered in regular insolvency proceedings that apply to other private companies.

Ahem, that non-sense only works on the uneducated and/or the unassuming. The major difference is that creditors that would be subject to regular dissolution proceedings AND that are unsecured, would demand considerably higher rates of return. A borderline solvent bank whose officers AND regulators admit publicly is in need of additional capital infusions after receiving three thus far, and 96% losses in its publicly traded equity, would have to borrow money at 18%, not 2% - and that's being generous. See the bank deposit rate calculator below.

While the inclusion of large savers in future bank bailouts is now widely accepted, significant differences still remain between member states.

While the new rules governing bank resolution were first intended to come into place in 2018, since the Cypriot bailout there have been calls from senior EU figures such as European Central Bank president Mario Draghi and EU economics affairs commissioner Olli Rehn to introduce the new regime as early as 2015.

The Irish presidency of the European Council is hoping to reach a common position by the end of next month.

The little app below calculates what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity???

 Other hard hitting pieces on the resurgent EU banking crisis

 

Published in BoomBustBlog

This is likely to be the biggest financial story of the month, a story that's bigger than Cyprus, and a story that you're not going to see in American mainstream media - not by a long shot. Let's take this from the top, for BoomBustBloggers were warned weeks in advanced. On Wednesday, 27 March 2013 I published EU Bank Depositors: Your Mattress Is Starting To Look Awfully Attractive - Bank Risk, Reward & Compensation wherein I explained that the situation of extreme loss faced by Cyprus bank depositors, savers and bondholders will not be a unique story - as excerpted:

The deposit accounts that you were getting just a few hundred basis points for have developed:

    1. Liquidity risks: The capital controls that weren't supposed to happen (see No Capital Controls In The EMU? Liar Liar Pants On Fire), happened! See Cyprus Banks Set To Reopen, To Serve As Glorified ATMs With A €300 Cash Withdrawal Limit
    2. Credit risks: Your so-called safe investments will suffer up to a 40% haircut! Mainstream Media Says Cyprus Salvaged By EU Deal, I Say Cyprus Is Sacrificed By Said Deal - Thrown Into Depression
    3. and Market risks: Demand depositors have forcibly purchased highly speculative synthetic call options with their haircuts that are unlikely to compensate anyone for anything!

The little app below calculates what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity???

It's not just Cyprus either. The problems that plagued Cyprus banks plague banks in much larger nations within, and around the EU. From Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe you see institutions that are literally too big to be handled safely...

The Banks Are Bigger Than Many of the Sovereigns

image015.png

 Now, the "Overbanked" article was posted back in 2010. That's right, I warned about the two Irish banks listed in the chart above THREE YEARS ago, You've had plenty of time to mover your money out! Speaking of those Irish banks, I warned the Irish again a few weeks ago as well - with specificity - in Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" As This Bank Scrambled For Capital!!! Here, I focused on Anglo Irish, already nationalized and being wound down. I warned that there will be unhappy returns, if there would be any, just like Cyprus - as excerpted:

First Off Let's Make Bank Collapse Real...

To begin with, let's make this Cyprus thing real, by showing a live example of what happens when to a real small business that had the gall to bank with Laikie Bank, from the Bitcoin forum I excerpt a post that puts things into perspective, re: bank account confiscation:

Later that weekend in the Irish media... As If On Cue, BoomBustBlog Shenanigan Research Gets Real In Ireland

Anglo Irish Bank/IBRC bondholders will actually get some of their money back!

April Fools!!!

As if on cue, a day after my expose on Anglo Irish Bank and its shenanigans (see Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" As This Bank Scrambled For Capital!!!), The Irish Business Post announces senior bondholders will get wiped out. That's right, a 100% loss! Zilch! Zero! Nada! Now, that's investing. That's getting "Cyprus'd", plus some!!! From Businesspost.ie: IBRC senior bondholders to be burned

anglobondwipeout copy

Of course, the story doesn't end with the bondholders. Exactly as anticipated in the articles mentioned above, and as published in the Irish mainstream media over the weekend...

irish pension haircuts copy copy

As you can see, this is actually MUCH WORSE than the deal the Cypriots got. These Irish pensioners are facing a total wipeout - 100% LOSS!!!

If you're not disenfranchised, yet, hold on... It get's worse, much worse. The Irish Examiner published this today... 

ECB gags State on IBRC liquidation

The ECB has gagged the Government from releasing any information in relation to the liquidation of the former Anglo Irish bank, IBRC. A senior official in the Department of Finance told the Irish Examiner they were under strict instructions from the ECB not to release any details to the public. “What they [ECB] have said from an early stage is that if there is any release, at all, then all negotiations are off. They do not want to discuss this in any forum, other than that of a member state and the ECB council,” he said.  The department has received about 16 freedom of information requests in relation to the IBRC liquidation and is now considering adopting a policy position that would allow it to refuse all applications for the release of information. 

Sinn Féin finance spokesman Pearse Doherty said the decision to liquidate IBRC was one of the biggest ever made by the State and he was concerned certain firms may have used insider information to secure payments. “The minister has refused several requests from me for information pertaining to the weeks and months before the event, specifically concerning whether certain sources in the know used confidential information to fast-track invoices in anticipation of liquidation.

So there you have it. Unless you've been hearing a lot about Irish bank collapse lately, it seems if you don't hear it from Reggie Middleton and BoomBustBlog, you're probably not going to hear it at all - so says the powers that be.  

It's not just Anglo Irish Bank, either. I've warned about several other Irish banks. Here's another one I feel likely to give Irish savers a nasty surprise...

You see, the banks can get away with this fleecing because the common person doesn't get a hold of my information and analysis very often, at least not until it's too late. But...... Guess what happened in the Irish mainstream media over the weekend, in the Irish Sun, the most popular rag on the most popular day....

SUN-SUN-PAGES-NEWS-MONEY-6066 copy copy

Subscribers, can download ALL documents supporting shenanigans by these banks (click here to subscribe):

For my US readers who feel this has very little to do with them, I query...

What Should The US Do If One Of The Biggest Banks In Ireland Blatantly Defrauded US Investors?

fraud

For my UK readers who may be a little on the apathetic side...

I Illustrate How The Irish Banking Cancer Spreads To The UK Taxpayer And Metastasizes Through US Markets!

The app below allows the UK Taxpayer to calculate for themselves exactly what their individual contribution (pro rata) is to the government bailout of RBS.

I've taken the liberty of pre-populating the input fields for you, but if you don't agree with the numbers then by all means insert your own!

Other hard hitting pieces on the resurgent EU banking crisis

Published in BoomBustBlog

fraudSince I'm not a securities attorney, let's get a basic understanding of where I'm basing my allegation - after all, I could definitely be wrong as a layman. From Wikipedia:

Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.[1] Offers of risky investment opportunities to unsophisticated investors who are unable to evaluate risk adequately and cannot afford loss of capital is a central problem.[2][3]

Securities fraud can also include outright theft from investors (embezzlement by stockbrokers), stock manipulation, misstatements on a public company's financial reports, and lying to corporate auditors.

Characteristics of victims and perpetrators

Any investor can become a victim, but persons aged fifty years or older are most often victimized, whether as direct purchasers in securities or indirect purchasers through pension funds. Not only do investors lose but so can creditors, taxing authorities, and employees.

Potential perpetrators of securities fraud within a publicly traded firm include any dishonest official within the company who has access to the payroll or financial reports that can be manipulated to:

    1. overstate assets
    2. overstate revenues
    3. understate costs
    4. understate liabilities

Enron Corporation[27] exemplifies all four tendencies, and its failure demonstrates the extreme dangers of a culture of corruption within a publicly traded corporation. The rarity of such spectacular failures of a corporation from securities fraud attests to the general reliability of most executives and boards of large corporations.

So, with that layman's understanding of what securities fraud is (along with my emphasis added), let's move on. 

The Bank of Ireland

In the 2008 Annual Accounts (Irish version of Annual Report) of Bank of Ireland (see attached, page 178) it states the bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland over the Banks ‘right, title, interest, benefit, present and future, in and to certain segregated securities listed in an Eligible Securities schedule.’

Fact: The BoI 2008 Irish accounts (~annual report) refer to the charges in their Disclosure Section (see attached page from 2008 accounts) where they describe the charge as being over ‘certain segregated securities.’

Of paramount importance for US investors and regulators, there is an absolute omission of this information in the Bank of Ireland SEC 20F returns for 2008.

image006

Other Discrepancies In Disclosure

The Bank of Ireland 2008 Irish Annual Accounts refer to the charges in their Disclosure Section (see attached page from 2008 accounts) where they describe the charge as being over ‘certain segregated securities,’ but no mention of ‘right, title, interest, benefit, present and future, in and to certain segregated securities listed in an EligibleSecurities schedule.’

There is also no mention of any information related to this floating charge in the Bank of Ireland SEC 20F returns for 2008.

It appears that this floating charge was not disclosed at the time of the stress testing of the bank conducted by the European Banking Authority.

It is possible that I may have overlooked such, and because of that possibility I have made the SEC 20F available for all who want to check over my work. Here is the UBI 2008 accounts and here is the SEC 20f-2008 for the Bank of Ireland.

Now of course, to constitute fraud there has to be a loss on the part of the one being defrauded or a gain on the part of the one being defrauded - at least according to Wikipedia. Otherwise, it would be a hoax. That's the Irish banking system, and not this bank in particular. So...

image003

If you believe that the information above actually identifies a gross misrepresentation of fact, omission or outright fraud, simply contact the SEC and let them know that Reggie Middleton suggested they look into it. You can actually use this form to convey my message

Remember, extreme wealth concentrates, so you don't have to... Coming from a "Cyprus'd" bank near you!

Other hard hitting pieces on the resurgent EU banking crisis

 

Published in BoomBustBlog

Entering my third week of publicizing my research into what I see as the potential collapse of the Irish banking system, it is about time to bring the series to a close. Before I do, though, there are a couple of loose ends that need tightening up. One is the assertion that the points that I have made are sensationalist. Anyone who has objectively read the articles I put forth cannot be objective themselves and come to a "sensationalist" conclusion. Secondly, there appears to be some who believe the many charges that I proffered as evidence are not actually evidence of a potentially nefarious plot to collude or misrepresent. Well, I believe the case of misrepresentation was made beyond a shadow of a reasonable doubt in Are You About To Get Cyprus'd in Ireland… 

For those of you who actually think it's acceptable for large, international banks to have to mortgage their entire balance sheets, or the vast amount of their securities and liquid asset holdings to essentially obtain access to what essentially is a cross-border, real time checking account (Target 2), I have this fabulous bridge to sell you in Brooklyn... Real cheap! 

Let's examine the argument that the multiple charges were entered by various large banks for the legitimate purpose of facilitating access to Target 2, and not an emergency dash for liquidity funding from the ECB.

First, as excerpted from Wikipedia, a description of how Target 2 operates in terms of collateral:

Liquidity management in TARGET2

The availability and cost of liquidity are two crucial issues for the smooth processing of payments in RTGS systems.

The cost or liquidity is the pertinent issue here. The liquidity "allegedly" sought by the Irish banks is EXTREMELY expensive for it calls for them to leverage/encumber/pledge practically their entire tradable balance sheet. Contrast this with the US Fedwire, were reserves are put up. Yes, reserves, not ALL of central bank lending-eligible securities AND the liquid payment accounts. One cannot practically classify the Irish set-up as a reserve since it is practically everything that the bank has sans plant, equipment and nigh worthless goodwill. Fedwire is the largest system of it's type in existence, yet it requires less collateralization than it's smaller brethren in Europe, Target 2? Either everybody in Europe knows you can't trust European banks or Ireland was given a back door bailout through the Target 2 collateralization system. No matter which way you look at it (both are probably true), it's not positive! Now, back to the Wikipedia write up on Target 2...

In TARGET2, liquidity can be managed very flexibly and is available at low cost since fully remunerated minimum reserves – which credit institutions are required to hold with their central bank – can be used in full for settlement purposes during the day. The averaging provisions applied to minimum reserves allow banks to be flexible in their end-of-day liquidity management. The overnight lending and deposit facilities also allow for continuous lliquidity management decisions. The Eurosystem provides intraday credit. This credit must be fully collateralised and no interest is charged. However, all Eurosystem credit must be fully collateralised, i.e. secured by other assets.

So, now that we've established that the Irish banks have applied for, and received credit in exchange for pledging practically their entire securities and liquid assets portfolio, it is in no way debatable that these banks a) were (and are still, currently) leveraged to the max and b) tied up all of their assets with a pledge of collateralization to (allegedly) back up participation in this payment system. Back to Wikipedia... 

The range of eligible collateral is very wide.

This is to be read as the quality, saleability and marketability of much of the collateral varies greatly - with much of it being worth considerably less than the claim against which it was pledged...

Assets eligible for monetary policy purposes are also eligible for intraday credit. Under Eurosystem rules, credit can only be granted by the national central bank of the Member State where the participant is established... 

Now let's drill down into how Irish banks, in particular, access Target 2 liquidity as compared to their international brethren. On April 3rd I posted The Unique, Peculiar & Unusual Method Irish Banks Used To Say "We're Insolvent"!!! whose excerpt I present below:

A reader posted the following in reference to Are You About To Get Cyprus'd in Ireland? When A Single Word's Worth Billions Of Euros... As a refresher, this is the graphical  arrangement of the interconnected dealings between the ECB and the Irish banks... 
image002

I suspect what you are looking at Reggie is not really an issue for the bank's capital. It looks to me like the ECB is securing itself against the risk that a bank won't voluntarily return a mistaken or fraudulent transfer of funds via Target2. I think in order to participate in Target2, the bank has to contractually give the ECB the right to seize and sell its assets, if that's what it takes to retrieve a mistaken or fraudulent transfer of funds.

This is what reserves are for. By definition, reserves are supposed to be a fractional amount of an entity's holdings to secure against a loss. These Irish banks aren't putting up fractional reserves, they're putting up their entire business. Imagine if you went to a bank to apply for a checking account with real time clearing and a condition of you getting said account was for your to mortgage your house, all of your stocks and bonds, and any other bank accounts. Sounds a bit fishy when put that way, doesn't it?

An amount of readily marketable assets are put up as collateral against the risk described above. If a bank has to put its entire business (after all, a bank's business is money and securities, so these banks put up all of their money and securities) up as a reserve just to essentially participate in a payment system, then it most assuredly...

Tells you something about the level of trust among Europeans. You might want to check other Eurozone banks with US listings and see if all of them don't have this exact same charge filed with the SEC. My guess is they all do.  

Um, no they don't. That was the basis of my claim of misrepresentation and potential fraud. See

At first I thought it might be related to the refinancing and emergency liquidity assistance loans AIB has outstanding from the Irish central bank. Collateral is pledged for those which the ICB could sell if it decides not to roll over the funding and AIB doesn't repay. But the reference to Target2 would make no sense if this were about collateral posted to the ICB.

That said AIB is indeed still a mess for a lot of other reasons.

Actually, AIB is a mess for this reason AND many other reasons as well. The inclusion of charges for the purposes of Target 2 is likely a sham. The Irish banks were dead broke, and without a printing press to manufacture funny munny like we do here in the states. They were fresh out of eligible collateral to pledge to the ECB for more emergency loans. Here's evidence that the Irish charge system was not only unique, but not necessary for the purposes of using Target 2 as an excuse to access emergency funding.

image016
As you can see, Ireland is unique among ALL countries in the EMU in that it, and only it, uses charges to secure access funding. But of course it's just a coincidence, right?!
Okay, let's suppose I'm full of sh1t and have made all of this up as some sort of conspiracy theory. After, it's all just circumstantial evidence, right (albeit an awful lot of it). The charges that I presented in my various articles (see the reference list below) did say that they were for the purposes of Target 2 and we all know banks would never, ever, ever lie, right? Ha! That's funny, even when I just type it! 
Below, please find an all-encompassing charge document from the Bank of Scotland (Ireland) in favor to the Irish Central Bank. The annotations are self explanatory, and keep in mind the amount secured (practically everything) and the amount pledged (practically everything). After you finish reading through the document, let me know in the comment section below if you can determine why the charge was issued...

image026image027image028

So, here we have a comprehensive charge, all-inclusive, not referencing Target 2 in any way whatsoever, filed on the exact same date as EVERY major bank in Ireland - during the middle of the biggest banking crisis Ireland has ever had. Oh, and by the way... this charge or any reference hereto, is nowhere to be found in the company's reporting to its regulators and/or investors - at least as far as I could determine. Hmmmm... Of course, these banks are healthy. Nothing to see here, move on and continue with your daily dose of state-sanctioned, mainstream media piped, independent thought numbing disinformation and propaganda.

Remember, extreme wealth concentrates, so you don't have to... Coming from a "Cyprus'd" bank near you!

Other hard hitting pieces on the resurgent EU banking crisis

Published in BoomBustBlog

Late last week I posted Allegations Of Big Irish Banks Operating Without A License wherein a reader detailed his detailing with AIB and alleged illegal (under Irish law) dealings with the bank. In the article, I asked for comments or criticism since that matter is outside of our expertise and wasn't confirmed. I received several emails on the topic rather quickly. Below is one of the more interesting ones. I find it amazing that AIB is aware of information like this floating around and has not responded with a rebuttal. If the information is accurate, it literally shames the Irish banking regulatory body and press. If it is inaccurate, then AIB should simply issue clarification. 

Hi Reggie,

Attached and below a email from Aib Kathleen Clifford she is the assistant to Aib’s risk director.

The licence has correct company number but Aib Limited was restructured into Aib plc 1982 and doesn’t have any Government or Central Bank stamp?

Below are some the Irish criminal laws breached by AIB plc

Also their ability to trade outside Ireland is dependent on them having a Ratified Irish licence therefore their USA and Eu operations may not be legal.

False claims in performances 
False representation 
Misrepresentation to Central Bank
Fraudulent application or use 
Concealing facts disclosed by documents
Suppression of documents 
False statements to shareholders
Falsification of Financial records 
Liability of officers in respect to financial records 
Furnishing false information 
Operating a Financial institution with out a valid Banking Licence

Everyone a criminal offence.


AIB Banking Licence

 

 

 

Published in BoomBustBlog

aib-logo-may182009Since I started my series on the Irish banks, there's been an outpouring of sympathizers, empathizers, consultants and analysts who have joined in to contribute information, data and insight to the efforts. Below is a contribution from a reader on his experience with AIB (see Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" and As If On Cue, BoomBustBlog Shenanigan...). I have not verified the information contained herein, nor do I endorse it or it author. It is presented here for information purposes only.

Enjoy!


Tom Darcy

 The premise for my allegations came after a newspaper article was published on the 22nd of April 2012; Judge Mc Govern gave possession of my family home to AIB. The article in the Sunday Independent outlined the loss of my two brothers and mum and business. I asked publically for help and information, the response was overwhelming, one report was from an insider in the AIB who directed me to the Annual Banking Licence application form issued by the Central bank under the 1941-1989 Acts, which all Irish banks and international Banks trading in Ireland require. It became instantly clear that the bank had committed numerous criminal Acts in obtaining their Banking licence, as my statement to An Garda (Irish Police) shows below.

I immediately investigated the AIB financial records 2006-2009 and identified stark anomalies and omitions, all contrary to company law, but more important contrary to their legislative obligations in the renewal of the Banking Licence. So I added that in my appeal affidavits in the high courts of Ireland that the AIB had no locus standi (can send affidavits dated from 29th of June 212) finally on the 21st of January some eleven weeks ago Judge Dunne directed me to report to police. I also sought Sine Fein to put by way of parliamentary question to Minister Michael Noonan the issue of illegality of banking Licences, Michael Noonan went as far as accepting that the IBRC had no valid Banking licence (which is a criminal Act) that was published in the Nama report.

____________________________________________________________

I Thomas Darcy an Irish citizen aged eighteen years and older of 21 Myra Manor Kinsealy Co Dublin, Make this Statement of facts upon which I believe to be the truth.

I state the AIB plc as registered on the 21st of May 1997 in the companies office and holding themselves as conducting or being willing to conduct the business of banking in the Irish state subject to the statute law and regulations imposed by Central Bank of Ireland Acts of 1941-1989 and Company laws of 1963-2010 and the laws of this Irish state operated a Financial Institution for the periods between 2006- 2007-2008-2009 in contravention of the said laws. 
I state the AIB plc operated without a perfected Banking Licence in contravention of the Central Bank Acts of 1941-1989 and further state the AIB plc on renewal of its legislated Annual Banking Licence with intent materially concealed and dishonestly omitted facts by false and misrepresentation in which to obtain said Banking licence.
I state the AIB plc contravened its legislated obligation to deposit securities to the Central Bank of Ireland in respect to its loan to deposit ratios and liquidity ratios under the Central Bank Acts of 1941-1989 on renewal of its Banking licence in accordance with statute law. I state the AIB plc with intent criminally ignored its mandatory obligation to inform the Central Bank of Ireland of Material facts and changes to its status and exposure as a Financial Institution as set forth in the Central Bank Acts of 1941-1989.
I state the omission of the aforementioned legislated securities and material changes were not reflected in the annual financial records of 2006-2007-2008-2009 by the AIB plc.
I state the AIB plc with intent contravened Company Law of the Irish State by omitting and concealing its mandatory obligations to produce a True annual financial reflection of its status. I state the AIB plc contravened its Memorandum and Articles of Association under Company law and statute law by issuing a false and misleading set of financial records to its shareholders for the periods of 2006-2007-2008-2009. I state the AIB plc was required by statute law to inform its shareholders of all material changes and exposures to the status of the company as required by law and with intent failed to do so. I seek An Garda Siochana to enforce the laws of this country as set forth in our enacted Constitution dated the 1st of July 1937 and bring criminal charges against the AIB plc its Directors and agents for the breaches and violations of the laws of this state.

Relevant articles:

Anglo is in breach of the terms of its banking licence
Published in BoomBustBlog

US retail investors and financial media tend to be a little... well... US-centric. They tend to ignore a lot of international happenings even though these events can, and often do, have a direct impact on the immediate US financial situation. I have ranted, raved, preached and prognosticated on the interconnectedness, and the inherent risks therein, of the global banking system. From my highly analytical ravings on Bear Stearns (pre-bust Is this the Breaking of the Bear?) to my more free form rants on Lehman (pre-bust Is Lehman really a lemming in disguise?), I think I have proven that being the lone voice in the investment wilderness is not necessarily an indicator of that voice being wrong. See Who is Reggie Middleton? for more on that topic. For now, let's continue where we left off in "Ireland, You May Very Well Be Bust & I Make No Apologies For What I'm About To Show You" wherein I'm about to clearly demonstrate how contagion easily traipsed through geographic borders from Ireland to the UK to the US, and how this big bank seemingly omitted the evidence of such.

Note to professional and institutional subscribers:  Please download the supporting documents for this report from BoomBustBlog’s subscription archive and depository -  Ulster Bank/RBS Supporting Charge Documents. This file contains several hundred pages of documentation to support the assertions and allegations contained in this report (click here to subscribe).

Ulster Bank Limited
Founded BelfastUnited Kingdom of Great Britain and Ireland (1836) as the Ulster Banking Company
Headquarters Dublin, Republic of Ireland
Website www.ulsterbank.ie for RoI orwww.ulsterbank.com for NI

Ulster Bank Ireland Ltd, has charges registered (see Supporting Charge Documents) with the Irish Companies Registration Office (CRO). The bank gave a first floating charge in favour of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland encompassing “all its right, title, interest and benefit, present and future, in and to each of the securities of such a class or description as may from time to time be designated by the European Central Bank as eligible for sale and/or purchase, as the case may be, by the Bank under its standard form for the time being of Master Repurchase Agreement, which specification may be made by reference to particular classes of repurchase transactions, and which are included in the schedule of Eligible Securities provided to the Bank from time to time.”.

These charges were registered with the CRO on 15th February 2008, yet there is no mention whatsoever of these charges in the Banks 2008 Annual Accounts (see attached). 

Ulster Bank is a 100% Owned Subsidiary of the UK (now taxpayer owned) Institution - The Royal Bank of Scotland (RBS)

This affects US investors as well and this piece should be well read by anyone in the US, UK or Ireland who has lost money investing in RBS/Ulster Bank Group.

rbs share price history

In 2008, RBS traded ADR’s in the U.S. under the symbol .NYSE:RBS. These ADR’s were traded OTC. This gives the SEC jurisdiction over the companies US securities. 

What happened behind closed doors?

Ulster Bank gave a first floating charge in favor of the Central Bank of Ireland (an arm of the European Central Bank) and the Financial Services Authority of Ireland. U.S. investors would have had to rely on the contents of The Royal Bank of Scotland's 2008 Annual Accounts which apparently (in my opinion) concealed the existence of the CRO registered charges to the Bank of Ireland.

Ulster Bank RBS charge doc 2 Page 1Ulster Bank RBS charge doc 2 Page 1 copyUlster Bank RBS charge doc Page 1Ulster Bank RBS charge Doc to Pfizer International Bank Page 1

I also attach charge documents that Ulster Bank entered into with Pfizer International Bank. I cannot find these charges in any disclosures.

If you look at the attached charge documents from Ulster Bank to the Central Bank you will see that the wording is different when compared to the charge documents of the other Irish Banks. It specifically states that a first floating charge was created by the Deed of Floating Charge over Eligible Securities for Liabilities Arising in Target2-Ireland. Having said that I can see no mention of these charges in the Annual Accounts for 2008. On page 72 (28) of the Annual Accounts it gives the only details that I can find of charges registered. It states that A registered charge exists over the assets of the Group, securing all borrowings and other obligations in whatever form that relate to the Group's use of the Euroclear system, that are outstanding to Morgan Guaranty Brussels and to any other office of Morgan Guaranty Trust Company of New York. This looks as if it could be a double encumbrance of certain assets for the charge to the Central Bank of Ireland features very similar, all-encompassing language for Ulster Bank, which is a fully owned subsidiary of RBS. Although I'm not an international banking attorney, my layman's eye sees double counting of collateral barring a clause that somehow excludes that covered by the charge over Ulster Bank.

There are also two charge documents for Ulster Bank to Pfizer International Bank. One is for 2009 and the other for 2010. I can see no mention of these in the 2009 and 2010 Annual Accounts.

These charge documents are also not apparent in the recent bank ‘stress testing’ conducted by the European Banking Authority, at least not in the summary results that the EBA have made available, reference RBS Stress Test.

I cannot see how the charge documents are disclosed in the RBS annual accounts (annual report). I see it mentions that the Bank provides collateral in the form of securities in repurchase agreements (footnote page 41). On page 60 it states the Group engages in securitization transactions of its residential loans which are generally transferred to a special purpose entity. This likely relates to the cashflows and not the principal. The charge documents relate to the principal (the actual loan). The registered charge (page 72) exists over the assets of the Group, securing all borrowings and other obligations whatsoever that relate to the Group's use of the Euroclear system (privately owned by J.P.Morgan, http://en.wikipedia.org/wiki/Euroclear).

The charge documents are not covered in the Ulster Bank Annual Accounts or the SEC Group RBS Annual Report. I think that this is a serious misrepresentation of the Accounts/Annual Report. The charge is a floating charge over Secured Obligations (Repo Agreements) which means all present and future liabilities of Ulster Bank (100% owned by RBS). As stated Target2 is only a payment system. The true reasons for the charge increasingly appear to be that of emergency funding, for it also appears as if Ulster Bank was bust. This information should have been included in the SEC Group RBS Annual Report, especially when ADR's were being traded.

RBS Stress Tests

The afore-linked copy of the RBS Stress Test results do not make it possible to determine whether the charge documents were included in the Stress Test, however it is worth pointing out that the charges do not appear in the annual accounts, so one could assume that they were not included in the stress test. The information is based on data supplied by each bank, via its respective national supervisor. Accuracy of this data is primarily the responsibility of the participating bank and national supervisor. This information has been provided to the EBA in accordance with Article 35 of EU Regulation 1093/2010. The EBA bears no responsibility for errors/discrepancies that may arise in the tables.

A Short Traipse Through Recent History & The Expense That Ultimately Befalls The UK Taxpayer

In 2007 Ireland had significant cross border exposure to UK and US banks through derivatives and property products. As I warned in 2007, the real estate bubble in the the US/UK popped in 2008, sending pathogenic contagion straight through the Irish banking system. The entire banking system started collapsing. On February 15, 2008, Ireland took extraordinary measures (which we will explore in depth a little later on) to mitigate said collapse, measures that many a layperson would deem misleading, if not fraudulent. RBS (Royal Bank of Scotland, one of the largest financial institutions in the countries of Ireland and the UK) was effectively nationalized by the UK and a bad bank was formed to purchase bad debt/products from the Zombie Irish banks in exchange for government bonds, backed by a country that just simply couldn't afford it.

It was the UK taxpayer that footed the bill for this nationalization - as per Wikipedia:

The bonus payments paid to RBS staff subsequent to the 2008 United Kingdom bank rescue package have led to controversy. Staff bonuses were nearly £1 billion in 2010, even though RBS reported losses of £1.1 billion for 2010. More than 100 senior bank executives were paid in excess of £1 million each in bonuses. Consequently, former CEO Fred Goodwin was stripped of his knighthood in mid-January, and newly appointed CEO Stephen Hester renounced his £1 million bonus after complaints over the bank’s performance.

82 percent of RBS' shares are now owned by the UK government, which bought RBS stock for £42 billion, representing 50 pence per share. In 2011, the shares were worth 19 pence, representing a taxpayer book loss of £26 billion ($40B). Historically, the RBS stock price went from a high of over 700 pence in early 2007 (taking into account a 3 for 1 stock split that took place later that year) to around 20 pence in late 2011.

... the UK Government (HM Treasury), as of 31 March 2012, holds and manages an 82% stake through UK Financial Investments Limited(UKFI), whose voting rights are limited to 75% in order for the bank to retain its listing on the London Stock Exchange. In addition to its primary share listing on the LSE, the company is also listed on the New York Stock Exchange. The group is based in Edinburgh, Scotland. In 2009, after the financial collapse, it was briefly the world's largest company by both assets (£1.9 trillion) and liabilities (£1.8 trillion).  In 2012, the UK government announced plans to bid for the rest of the RBS shares that it did not own, as it felt that "while the taxpayer owns over 82pc of the bank following a bailout in 2008, they bear 100pc of the bank's huge liability risks".

Part and parcel of the RBS problems was its purchase of Ulster Bank and its exposure to the Irish lending issues!

The app below allows the UK Taxpayer to calculate for themselves exactly what their individual contribution (pro rata) is to the government bailout of RBS.

I've taken the liberty of pre-populating the input fields for you, but if you don't agree with the numbers then by all means insert your own!

Following my warning in February of 2008, Lehman filed bankruptcy in September sending an additional set of contagion shock through Ireland and its banking system, causing Ireland to issues bonds and further indebt itself to save its Zombie banks – again! This time through blanket bank guarantees backed by the full faith of the government.

In September of 2010, a large swath of said government guarantees for the banks were about to expire. Reference this excerpt from the book “Zombie Banks: How Broken Banks and Debtor Nations Are Crippling the Global Economy”:

In September 2010, some of Ireland's government guarantees for bank debts were about to expire, which put U.S. Treasury officials on edge. If the guarantee wasn't renewed, the banks would likely default on their bonds, triggering the next event in line: a slew of credit default swap (CDS) contracts on Irish banks' debt. U.S. Treasury officials had reason to worry - the names backing those contracts were the largest U .S. banks, and they could end up paying billions in case of default. Any more weight on U.S. banks could be a tipping point to collapse. Treasury officials made inquiries to their counterparts at the Irish finance ministry asking about the course of action the country was planning to take and indicated their concern about possible default and its CDS repercussions. A year after having issued blanket guarantees on the banks' liabilities the Irish government once again didn't dare let the bank fail. Instead it ended up asking for financial assistance from the European Union (EU) and the International Monetary Fund (IIMF): the country had been pushed to the brink of collapse.

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Litigation

201294 r01o 09CV00300 Page 01rbs litigation

Indications of capital shortfalls in the Ulster Bank arrangement:

RBS had paid a total of €9.13 billion to Ulster Bank in capital contributions, in order to safeguard the bank’s capital reserves after writing off billions in impaired loans to Irish borrowers. http://businessetc.thejournal.ie/british-banks-bailed-ireland-out-e16bn-762258-Jan2013/24th Feb. 2012

ULSTER BANK’S parent company, Royal Bank of Scotland (RBS), injected as much as £4 billion (€4.7 billion) into Ulster Bank last year, bringing its total investment in its Irish subsidiary to £10 billion (€11.8 billion) since 2008.

http://www.irishtimes.com/business/sectors/financial-services/rbs-chief-insists-11-8bn-injected-into-ulster-bank-was-too-much-1.469092

If you have believe that the information above actually identifies a gross misrepresentation of fact, omission or outright fraud, simply contact the SEC and let them know that Reggie Middleton suggested they look into it. You can actually use this form to convey my message

Those of you in Ireland who may not want to get "Cyprus'd", ie. have your bank accounts fund another bailout, should contact the Office of the Director of Corporate Enforcement. Click this link, and tell them Reggie from NYC sent 'ya. Seriously! The reason why Irish banks haven't been reformed was because not enough light has been shown on the activities. See a valid attempt at such here. This is the time, for the tea leaves foretell the next bank collapse & bailout will be funded directly out of your bank accounts, reference Ireland, You May Very Well Be Bust & I Make No Apologies For What I'm About To Show You for those who don't believe me. See Global Banking Crisis - How & Why YOU Will Get "Cyprus'd" for an example of a bank statement of a Cypriot who didn't take the regulation of his bank seriously!!!

 And for those blokes in the UK, I suggest you drop a note to the Financial Conduct Authority. You can This email address is being protected from spambots. You need JavaScript enabled to view it. sent you. This was excerpted from their website (emphasis added):

We intervene when firms:

    • treat consumers unfairly
    • behave in ways that risk the integrity of the market

We supervise firms differently depending on their size and the nature of their business. This includes:

    • continuous conduct assessment for large firms and regular assessment for smaller firms
    • monitoring products and other issues to ensure firms play fair and don’t compromise consumer interests
    • responding quickly and decisively to events or problems that threaten the integrity of the industry
    • ensuring firms compensate consumers when necessary

Well, straight from the horse's mouth. Have at 'em. They should do the right thing, and EU media should pick up on this as well. You don''t want your 2,000+ pound/euro bank bailout investment to be handled solely by a blogger from NYC, do you???!!!

For paid subscribers, I've posted another potentially "Cyprus'd" EU bank with shortable US/LSE traded shares/options for subscribers, reference EU Bank Capital Confusion, Part 2 - Malarkey (you may subscribe here). Over the next 36 hours or so, I will be releasing an even bigger scandal that is even more far reaching. Stay tuned!!!

 Other hard hitting pieces on the resurgent EU banking crisis

Published in BoomBustBlog

In reference to Are You About To Get Cyprus'd in Ireland? When A Single Word's Worth Billions Of Euros... and Oh No! Is It Possible? A 3rd Irish Bank With Hidden Charges Not Revealed In Its Annual Reports? I bring you this letter presented by one of my readers...

Irish bank investogation by Irish police

The Irish authorities have officially indicated that they are looking into the matter. Could this be the reason why Ireland's top bregulator stepped down so quickly that he forgot to take his bonus?

If you have believe that the information below actually identifies a gross misrepresentation of fact, omission or outright fraud, simply contact the SEC and let them know that Reggie Middleton suggested they look into it. You can actually use this form to convey my messageFor paid subcribers, I've posted another potentially "Cyprus'd" EU bank with shortable US/LSE traded shares/options for subscribers, reference EU Bank Capital Confusion, Part 2 - Malarkey (you may subscribe here). Over the next 36 hours or so, I will be releasing an even bigger scandal that is even more far reaching. Stay tuned!!!

Published in BoomBustBlog

On Saturday, 23 July 2011 (nearly two years ago0 I penned the seminal piece "The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!". In it, I ran down the causes of bank runs in both the EU and the US (Bear Stearns/Lehman, both failures I predicted months in advance). I'd like to quote a piece from this article, for yesterday's news brings it to the forefront yet again...

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The subject of our most recent expose on the European banking system has a plethora of problems, including but not limited to excessive PIIGS exposure, NPA growth up the yin-yang, Texas ratios and Eyles test numbers that’ll make you shiver and razor thin provisions. Focusing on the most pertinent and contagious of the issues at hand leads us back to the initial premise of a European bank run. I laid the foundation for said topic discussion last Thursday in "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style" and the fear du jour is a European version of the Lehman Brothers or Bear Stearns style bank run. The aforelinked at explanatory piece is a must read precursor to this illustration of what can only be described as the anatomy of a European bank run - before the fact. Remember how the pieces of the puzzle were perfectly laid together for a Bear Stearns collapse in January of 2008, two months before the bank's actual collapse? Reference "Is this the Breaking of the Bear?" in which Bear Stearns collapse was illustrated in explicit, graphic detail. Lehman Brothers wasn't impossible to see either (Is Lehman really a lemming in disguise? Thursday, February 21st, 2008 | Web chatter on Lehman Brothers Sunday, March 16th, 2008).

.....

The green represents the unseen canary in the coal mine, and the reason why Bear Stearns and Lehman ultimately collapsed. As excerpted from "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style":

The modern central banking system has proven resilient enough to fortify banks against depositor runs, as was recently exemplified in the recent depositor runs on UK, Irish, Portuguese and Greek banks – most of which received relatively little fanfare. Where the risk truly lies in today’s fiat/fractional reserve banking system is the run on counterparties. Today’s global fractional reserve bank get’s more financing from institutional counterparties than any other source save its short term depositors.  In cases of the perception of extreme risk, these counterparties are prone to pull funding are request overcollateralization for said funding. This is what precipitated the collapse of Bear Stearns and Lehman Brothers, the pulling of liquidity by skittish counterparties, and the excessive capital/collateralization calls by other counterparties. Keep in mind that as some counterparties and/or depositors pull liquidity, covenants are tripped that often demand additional capital/collateral/ liquidity be put up by the remaining counterparties, thus daisy-chaining into a modern day run on the bank!

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I'm sure many of you may be asking yourselves, "Well, how likely is this counterparty run to happen today? You know, with the full, unbridled printing press power of the ECB, and all..." Well, don't bet the farm on overconfidence. The risk of a capital haircut for European banks with exposure to sovereign debt of fiscally challenged nations is inevitable. A more important concern appears to be the threat of short-term liquidity and funding difficulties for European banks stemming from said haircuts. This is the one thing that holds the entire European banking sector hostage, yet it is also the one thing that the Europeans refuse to stress test for (twice), thus removing any remaining shred of credibility from European bank stress tests. As I have stated many time before, Multiple Botched and Mismanaged Stress Test Have Created The Makings Of A Pan-European Bank Run!

So, why have I dragged my readers back down this dark corridor of memory lane once again?

Well, Reuters reports: European Union ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalize those with big savings.

Such an idea, should ministers back it, could further rattle the confidence of lenders, already nervous about draft legislation to determine who alongside shareholders should suffer losses when a bank gets into trouble.

EU finance ministers, gathering in Dublin this Friday, will discuss how to shape this law that could take effect from 2015, covering what is known as bank recovery and resolution.

The talks follow the recent decision to impose heavy losses on some depositors in Cyprus, in return for an international bailout. That set a precedent, which is likely to be mirrored in these EU rules, making losses for large uninsured savers a permanent feature of future banking crises.

But the ministers will have to tread carefully in their discussions.

ECB President Mario Draghi recently cautioned that Cyprus's bailout was "no template", in a bid to ease market fears that bank deposits would in future be fair game for international lenders supporting struggling euro zone countries.

In a document prepared by government officials in Ireland, which as holder of the rotating EU presidency will chair the ministers' gathering, they write that interbank deposits of less than one month should also be penalized.

Hmmm!!!! It appears as if Irish officials may be prepping for something. I trully wonder what that may be...

The proposal will be part of wider talks to consider when, for example, depositors should be penalized if a bank runs into difficulty. This is known as bail-in.

Shareholders are the first to lose their money, with various rankings of creditors behind them.

Customer bank deposits of up to 100,000 euros would remain protected under an existing EU law and the latest proposals touch on sums above this threshold.

That is, unless EU officials decide to change their mind or coerce EU countries to change the laws. Reference, from just a few weeks ago, 

as excerpted from "Mainstream Media Says Cyprus Salvaged By…": Last week I posed the question "Is The Cypriot Government Crazy Or Do They Really Fear Bankers That Much?" The country even considering imposing loses on bank depositors over creditors seemed absurd at best. Even the faux consolation of compensating holders of pure liquidity (or at least what was formerly believed to be pure liquidity - banks have been closed for a week now and ATM withdrawals have been limited to 100 euro per day due to the capital controls I clearly warned of last year) was a scheme born out of lunacy, and unlikely to compensate anyone for anything.

"While it is acknowledged that bailing in interbank liabilities may carry certain risks," officials write in the document, seen by Reuters, "on balance, it is preferable ... that these liabilities are not excluded from bail-in".

Such a suggestion will dismay many officials, who witnessed a freeze in interbank lending that the European Central Bank is still struggling to unblock despite having provided more than one trillion euros of cheap funds.

The little app below calculates what return you should expect to receive to take on the risk of a potential 40% haircut. The second tab offers what recent Cyprus bank rates were. Do you see a disparity???

It's not just Cyprus either. The problems that plagued Cyprus banks plague banks in much larger nations within, and around the EU. From Ovebanked, Underfunded, and Overly Optimistic: The New Face of Sovereign Europe you see institutions that are literally too big to be handled safely...

The Banks Are Bigger Than Many of the Sovereigns

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More on this topic:

Published in BoomBustBlog