Everything counts in large amounts: Greek banks prepare plan to raid deposits to avert collapse

Bank Greece
July 2015ATHENS, GreeceGreek banks are preparing contingency plans for a possible “bail-in” of depositors amid fears the country is heading for financial collapse, according to bankers and businesspeople with knowledge of the measures. The plans, which call for a “haircut” of at least 30 per cent on deposits above €8,000 (Dh32,633), sketch out an increasingly likely scenario for at least one bank, the sources said. A Greek bail-in could resemble the rescue plan agreed by Cyprus in 2013, when customers’ funds were seized to shore up the banks, with a haircut imposed on uninsured deposits over €100,000. It would be implemented as part of a recapitalization of Greek banks that would be agreed with the country’s creditors — the European Commission, International Monetary Fund and European Central Bank. “It [the haircut] would take place in the context of an overall restructuring of the bank sector once Greece is back in a bailout program,” said one person following the issue. “This is not something that is going to happen immediately.”
Eurozone officials said no decision had been taken to wind up any Greek banks or initiate a bail-in of depositors, a process that would be started by the ECB declaring the banks insolvent or pulling emergency loans. Andrea Erri, chair of the European Banking Authority, said on Saturday he was not aware of any plans to introduce haircuts to retail depositors of Greek banks. Greece’s banks have been closed since Monday, when capital controls were imposed to prevent a bank run following the left-wing Syriza-led government’s call for a referendum on a bailout plan it had earlier rejected. Greece’s highest court rejected an appeal by two citizens on Friday who had asked for the referendum to be declared unconstitutional. Depositors can withdraw only €60 a day from bank ATM cash machines, while requests to transfer funds abroad have to be approved by a special finance ministry committee in co-operation with the Greek central bank.

Bank 2

Two senior Athens bankers said the country had only enough cash to keep ATMs supplied until the middle of next week. This followed the ECB’s decision this week not to increase Greece’s allocation of emergency liquidity assistance after the bailout program ended on June 30. The outcome of Sunday’s referendum was to have determined how quickly Greece wraps up a new bailout agreement with creditors, a top Greek banker said. “The solvency of Greek banks is not currently an issue, but obviously the banks will be affected by how soon the country enters a new program,” the same banker said. Greek deposits are guaranteed up to €100,000, in line with EU banking directives, but the country’s deposit insurance fund amounts to only €3 billion, which would not be enough to cover demand in case of a bank collapse.
With few deposits over €100,000 left in the banks after six months of capital flight, “it makes sense for the banks to consider imposing a haircut on small depositors as part of a recapitalization… It could even be flagged as a one-off tax,” said one analyst. Yanis Varoufakis, Greece’s finance minister, on Saturday accused the country’s creditors of trying to “terrorize” Greeks into accepting austerity. “What they’re doing with Greece has a name: terrorism,” he told Spanish newspaper El Mundo. “Why have they forced us to close the banks? To frighten people.” –Gulf News
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This entry was posted in Age of Decadence, Apathy, Anger, Mistrust, Disillusionment, Austerity, Bank Run, Banking Crisis, Bankruptcy, Boom and Bust Cycles, Civil Unrest, Currency - Economic warfare, Depression and Anxiety, Economic Collapse, Fiat Money Printing Fiasco, Financial Market plunge, Financial market turmoil, Geopolitical Crisis, Hierarchal Control, Hoarding Resources, Infrastructure collapse, New World Order, Political Corruption, Political turmoil, Protests, Resource War, Social Meltdown, Squandered Resources, Struggle for Survival, The Pyramid Model, Troubled Banks, Unemployment rising, Unsustainable Debt Burden, Widening gap between rich and poor. Bookmark the permalink.

3 Responses to Everything counts in large amounts: Greek banks prepare plan to raid deposits to avert collapse

  1. Dennis E. says:

    Cut down on how much you keep in the bank. Have cash on hand in small bills. That has been the recommendation. If and when society goes cashless we will all be in the same boat, but not now.

  2. Joseph sonny Skies says:

    gee! Will this be considered a loan from the people to the bank and if so at what interest? OR is this just outright THEFT?

  3. niebo says:

    Just so that everybody knows how this scheme (depositor “haircuts”) worked out for Cyprus:

    “Capital controls in Cyprus took >2 years to reverse

    Cypriot authorities implemented capital controls on March 27, 2013 in order to safeguard the stability of its financial system. These measures were gradually eased and finally lifted on April 6, 2015, over two years after initially implemented. . . . As part of the program, Cyprus agreed to introduce a one-off tax on deposits. The initial proposal suggested a levy of 6.7% on deposit amounts of €100k. Given disagreements over losses on small retail deposits, the scheme was revised. The final agreement APPLIED A 47.5% HAIRCUT to all balances >€100k and incorporated a bail-in of equity holders, bond holders, and large deposits at Laiki Bank.”

    http://www.zerohedge.com/news/2015-07-06/reminder-what-capital-controls-cyprus-looked

    Cyprus was surprised by “bank holidays”; Greece was not. Depositors withdrew billions in Euros prior to the “default” and bank closures. So. . . :

    “. . . Central Banks and the regulators have declared a War on Cash in an effort to stop people trying to get their money out of the system.”

    http://www.zerohedge.com/news/2015-06-01/war-cash-your-deposit-bank-can-be-converted-equity-if-crisis-hits

    And “bail-ins” (haircuts) CAN happen in the US:

    “‘Bail in’ has been sold as avoiding future government bailouts and eliminating too big to fail (TBTF). But it actually institutionalizes TBTF, since the big banks are kept in business by expropriating the funds of their creditors.”

    http://www.huffingtonpost.com/ellen-brown/new-g20-bailin-rules-now-_b_6244394.html

    “There will be no more taxpayer bailouts for the Big Wall Street banks. That much has been established by the lobbied to death Dodd-Frank banking reform (yeah, right) bill. However, instead of taking money from the government (taxpayers), the principal has been established that the next source of money for profligate banks will be your deposit accounts. Yeah, that’s right, the money to stabilize the banking sector during the next crisis will come out of your savings and checking accounts.”

    http://sandiegofreepress.org/2015/01/the-bail-in-how-you-and-your-money-will-be-parted-during-the-next-banking-crisis/

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