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Exclusive - Creditors, Governments Must Pay In Any Euro Bank Rescue: Document

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http://uk.reuters.com/article/2013/06/14/uk-eurozone-esm-recapitalisation-idUKBRE95D0V420130614

Bondholders and governments will always have to contribute to shoring up a failing euro zone bank even when the bloc's bailout fund ESM offers direct aid, according to an EU document obtained by Reuters.

Seeking to limit the burden on euro zone taxpayers, "private capital resources will be explored as a first solution, including sufficient contributions from existing shareholders and creditors of the beneficiary institution(s)," the document said.

It was prepared for euro zone finance ministers to discuss next week in Luxembourg.

While already agreed, the ESM rules will be finalised only when EU institutions, including the European Parliament, agree on two pieces of legislation on guaranteeing bank deposits and closing down bankrupt banks.

Luckily it won't be needed now as the Eurozone has found the "bailin" formula to cover banker losses.

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they are seeking a LIMIT to the burden on taxpayers.

they therefore expect them to pick up the final tab.

Course, they could let the thing bust and sell its assets off, to pay of the innocent first, the involved last.

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http://uk.reuters.com/article/2013/06/14/uk-eurozone-esm-recapitalisation-idUKBRE95D0V420130614

Luckily it won't be needed now as the Eurozone has found the "bailin" formula to cover banker losses.

Not sure that the 'bail-in' formula has been proven to work yet.

The Bank of Cyprus has over 3000 lawsuits pending. The supreme court judge has nodded them along to district courts, so they are not going away.

Then, would the EU want to see another Eurozone country with capital controls? It kind of makes nonsense of the Euro, but you can't do a bail-in without one.

Bail-in, Cyprus-style effectively created two bad banks instead of one . . . that's because the Central Bank wouldn't take any loss . . . and all banks in the country are now discredited, frozen and impotent. Which in turn, is stifling all business.

they are seeking a LIMIT to the burden on taxpayers.

they therefore expect them to pick up the final tab.

Yes, the report contradicts itself. If Governments must pay, that means taxpayers. But very few countries have the taxpayers or revenues to bail banking excesses. At some time, the Central Banks are going to have to take the hit. That's really what the report should have said. Certainly in the case of Cyprus, the local Central Bank was as negligent and culpable as any.

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Bondholders and governments will always have to contribute to shoring up a failing euro zone bank even when the bloc's bailout fund ESM offers direct aid, according to an EU document obtained by Reuters.

I thought in Cyprus bondholders were protected (because the ECB held bonds, funny that) but the depositors got rinsed, despite history telling us it should be the other way round.

I guess it depends who the bondholders are. If theyre retirees, screw them. If theyre Goldman sachs transplanted scum at the ECB/EU, save them.

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(Reuters) - Bondholders and governments will always have to contribute to shoring up a failing euro zone bank even when the bloc's bailout fund ESM offers direct aid, according to an EU document obtained by Reuters.

It doesn't say anything about how they intend to prevent banks getting into that position in the first place.

If the banks are so important that they have to be continually shored up then they are important enough for there to be sufficient rules in place for them not to get there in the first place.

If they're so incompetent that they can't follow those rules then they should be closed down. Those running the failed banks should not be allowed to be in a position to run a bank again.

For goodness sake they could even do things like hold meetings to ensure they're all meeting the rules and then do things like make minutes of the meetings so that it's all recorded. They could even do check ups and do reports and stuff - it's not rocket science :rolleyes:

It seems all the report is saying is banks can do as much fraud as they like and when it all goes wrong they'll be shored up and then that's an opportunity for those allowing that state of affairs to take control by the back door or even the front door - and then rip off more stuff. No progress then.

Edited by billybong

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Bondholders and governments will always have to contribute to shoring up a failing euro zone bank even when the bloc's bailout fund ESM offers direct aid, according to an EU document obtained by Reuters.

I thought in Cyprus bondholders were protected (because the ECB held bonds, funny that) but the depositors got rinsed, despite history telling us it should be the other way round.

I guess it depends who the bondholders are. If theyre retirees, screw them. If theyre Goldman sachs transplanted scum at the ECB/EU, save them.

No, the bondholders were also bailed in. The Cypriot government first tried to protect them believing that if they defaulted it would be harder to raise money in future. The EU told them that the bondholders would be the first to take the pain.

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At least bondholders are or should be made aware that they bear some risk- most depositors are not made aware that they are in fact becoming creditors of the bank when they deposit money there.

Anyone who doubts the serious intent to bail in depositors should ask themselves why the FSA has forced the banks to stick up posters spelling out the deposit guarantee scheme limits lately- and why they keep running ad campaigns on the web to point it out.

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At least bondholders are or should be made aware that they bear some risk- most depositors are not made aware that they are in fact becoming creditors of the bank when they deposit money there.

Anyone who doubts the serious intent to bail in depositors should ask themselves why the FSA has forced the banks to stick up posters spelling out the deposit guarantee scheme limits lately- and why they keep running ad campaigns on the web to point it out.

Back in 2007 there was very little knowledge of the amounts protected. Now evidence suggests that those with balances in excess of £85,000 are aware.

The noises coming out of the Bank of England make it quite clear that depositors will be bailed in if necessary.

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What are the implications for SME's of a bail in? Would this not cripple the sector if done on large scale? How much cash does an SME need to keep handy to operate?

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Haha, this whole thing becomes more ridiculous every day,

What they really mean is ' all these hair cuts are all very fine, but our mates are beginning to feel nervous, some of them might get angry and we wouldn't like it when they get angry'

Bail in will never work, for the same reasons all the other measure will never work, the scale of the debts and hence losses are just too much and get worse the more they meddle.

The way they are trying to fix things actually causes it to get worse,

Stupid twats couldn't run a piss up in brewery.

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Haha, this whole thing becomes more ridiculous every day,

What they really mean is ' all these hair cuts are all very fine, but our mates are beginning to feel nervous, some of them might get angry and we wouldn't like it when they get angry'

Bail in will never work, for the same reasons all the other measure will never work, the scale of the debts and hence losses are just too much and get worse the more they meddle.

The way they are trying to fix things actually causes it to get worse,

Stupid twats couldn't run a piss up in brewery.

Certainly, the Cyprus bail-in has caused more problems than it solves.

It's wiped out all the SME's at a stroke. People who had no debts, just struggling to run a business,

But the EU FinMins think it's the way to go.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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