Samstag, 28. September 2013
Griechenland hat hohe Schulden. Der Internationale Währungsfonds drängt darauf, einen Teil zu erlassen. Die Euroländer wollen das nicht. Es droht Krach zwischen den Rettern.
Euro-KriseRettungsfonds-Chef will Athens Schulden tragbar rechnen
27.09.2013 · Griechenland hat hohe Schulden. Der Internationale Währungsfonds drängt darauf, einen Teil zu erlassen. Die Euroländer wollen das nicht. Es droht Krach zwischen den Rettern.
Von WERNER MUSSLER, BRÜSSEL
© AP
Klaus Regling ist Chef des Euro-Rettungsfonds ESM.
Der Chef des Euro-Rettungsfonds ESM, Klaus Regling, hat einen Weg angedeutet, auf dem die Euroländer und andere öffentliche Kreditgeber um einen Schuldenschnitt für Griechenland herumkommen könnten. Er läuft auf eine Neudefinition der griechischen Schuldentragfähigkeit hinaus. Regling sagte dem „Wall Street Journal“, die im aktuellen Hilfsprogramm für das Land fixierten quantitativen Zieldaten für den Abbau der Staatsschuld reichten nicht aus, um deren Tragfähigkeit zu beurteilen. Eine solche Zielgröße sei für sich genommen „bedeutungslos“. Deshalb sei er von der Notwendigkeit eines Schuldenschnitts, der diesmal auch die öffentlichen Gläubiger beträfe, „nicht überzeugt“.
Damit stellt Regling den Inhalt des im November 2012 vereinbarten Hilfsprogramms für Athen in Frage, an dem auch der Internationale Währungsfonds (IWF) beteiligt ist. Darin ist festgehalten, dass die Staatsschuld bis zum Jahr 2020 auf 124 Prozent des Bruttoinlandsprodukts (BIP) und bis 2022 auf „deutlich weniger“ als 110 Prozent sinken muss. Nur unter diesen Bedingungen gilt die Staatsschuld bisher als tragfähig, was eine wichtige Voraussetzung für eine IWF-Beteiligung an der Kredithilfe für das Land ist. Derzeit beträgt Griechenlands Staatsschuld rund 170 Prozent des BIP.
Der IWF trägt den kleineren Teil des Hilfsprogramms
Regling sagte, die in dem Programm festgelegten Zielgrößen müssten in Bezug gesetzt werden zu den Konditionen, zu denen das Land seine Kredite zurückzahlen muss. Die Eurogruppe hat die Bedingungen, zu denen der ESM-Vorgänger EFSF die Darlehen an Athen gewährt, mehrfach abgemildert. Deren Laufzeit beträgt nunmehr durchschnittlich 30 Jahre, der Zins liegt weit unter dem von Regling auf etwa 9 Prozent bezifferten Marktniveau bei etwa 1,5 Prozent. Die durchschnittliche Laufzeit der IWF-Kredite betrage dagegen 10 Jahre, das Zinsniveau liege bei drei Prozent. „Für den IWF ist es deshalb sehr wichtig, was in zehn Jahren ist. Unsere Finanzierung dauert aber sehr viel länger“, sagte Regling. Deshalb sei die Situation in zehn Jahren „nicht so wichtig“.
Da die europäische Seite einen weit größeren Anteil des Programms – die Rede ist von etwa 80 Prozent – trage als der IWF, sei es unangemessen, nur die IWF-Interpretation der Schuldentragfähigkeit zu Rate zu ziehen. Die niedrigen Zinsen und die lange Laufzeit enthielten bereits ein „erhebliches Zuschuss-Element“, sagte Regling weiter. Vor diesem Hintergrund erwarte er nicht, dass die öffentlichen Gläubiger auf Forderungen gegenüber Athen verzichteten. „Das würde eine Finanzierung aus den nationalen Haushalten bedeuten, und das wäre in der Tat sehr umstritten.“
Debatte auf der anstehenden IWF-Herbsttagung
Bundesfinanzminister Wolfgang Schäuble (CDU) hatte einen Schuldenschnitt aus diesem Grund immer ausgeschlossen. Dagegen hatte der IWF mehrfach darauf hingewiesen, dass auf die Euro-Staaten nach 2015 weitere Schuldenerleichterungen für Griechenland über 4 und 3,5 Prozent des BIP zukämen, um den Schuldenstand bis 2020 auf 124 Prozent und bis 2022 auf deutlich weniger als 110 Prozent des BIP zu senken. Reglings Versuch einer Neudefinition dürfte deshalb Streit mit dem IWF provozieren, weil er darauf hinausläuft, die Grundlagen der bisherigen Vereinbarung auszuhebeln.
Nach Reglings Angaben haben die Euro-Finanzminister bisher nicht über seine Überlegungen diskutiert. In Brüssel hieß es aber, einzelne Vertreter der Eurogruppe hätten darüber durchaus schon informelle Gespräche geführt. Es sei unvorstellbar, dass der ESM-Chef seine Ideen ohne Abstimmung mit wichtigen Mitgliedstaaten in die Öffentlichkeit trage, sagte ein EU-Diplomat. Deshalb sei es wahrscheinlich, dass die Eurogruppe einen Schuldenschnitt über den von Regling skizzierten Weg zu vermeiden suche. Alle Mitglieder der Troika aus IWF, Europäischer Zentralbank und EU-Kommission hätten während der IWF-Herbsttagung in zwei Wochen in Washington ausreichend Gelegenheit, über das Thema zu sprechen.
Freitag, 27. September 2013
Don’t Cry for Me Argentine Bondholders: Avoiding Supreme (Court) Confusion.
Don’t Cry for Me Argentine Bondholders: Avoiding Supreme
(Court) Confusion.
Argentina is in hot pursuit of multiple audiences before the
Supreme Court: two petitions for writs of certiorari filed by
Argentina are pending in the NML v. Argentina cases, and
another is almost certainly on the way. In addition, a writ of
certiorari has already been issued in another case against
Argentina. With so much action involving Argentina in the
high court, there is the potential for confusion between these
multiple proceedings, which we clarify in this alert.
The opinions and other papers relating to these cases, as well as our many prior client notes,
are all available on our Argentine Sovereign Debt webpage:
www.shearman.com/argentine-sovereign-debt.
NML Capital, Ltd. v. Argentina (Supreme Court Docket No. 12-1494): Review
of the Second Circuit’s October 26, 2012 Decision (Pari Passu)
On June 24, 2013, Argentina filed a certiorari petition with respect to the Second Circuit’s
October 26, 2012 decision, in which the Second Court affirmed Judge Griesa’s interpretation
of the pari passu clause, his determination that the plaintiffs were entitled to a “Ratable
Payment,” and his conclusion that the Injunction did not violate the Foreign Sovereign
Immunities Act (“FSIA”). However, the Court remanded the case to Judge Griesa to address
certain issues relating to the operation of its Injunction.
As discussed in our June 27, 2013 note, we assess the likelihood that this petition will be
granted as very low. Further, in its August 23 decision (as discussed in our August 27, 2013
note, at page 6), the Second Circuit expressed its view that this petition was premature,
stating, “Apparently, Argentina filed a petition for certiorari in this matter on June 24,
2013, notwithstanding that, as of that date, no final order had yet issued in this case. See
Supreme Court Dkt. 12-1494.” We continue to be of the view that this petition will not
be granted.
The Supreme Court is scheduled to consider this petition at its internal conference among the Justices that begins on
September 30. Should the certiorari petition be denied (or granted), it will appear in an order of the Court shortly
thereafter. (The Court’s orders can be found on the Supreme Court’s website, at www.supremecourt.gov.) It is possible
that the Court will simply defer a decision pending the filing of the next certiorari petition in this case, discussed
immediately below.
NML Capital, Ltd. v. Argentina: Review of the Second Circuit’s August 23, 2013 Decision (Pari Passu)
On August 23, 2013, the Second Circuit released its opinion on Argentina’s appeal from the Southern District’s amended
Injunction, as discussed in detail in our note of August 27. As expected, on September 6 Argentina and two bondholder
groups filed rehearing petitions with the Second Circuit with respect to the August 23 decision. To date, those petitions
remain pending and undecided.
As addressed in our August 27 note, we expect those rehearing petitions to be denied, at which time a 90-day clock will
begin to run on Argentina’s time to file a petition for a writ of certiorari in the Supreme Court with respect to the
August 23 decision. Argentina’s petition may well present the same FSIA and equity questions as in No. 12-1494. In
addition, the Exchange Bondholders Group and Fintech Advisory, which filed rehearing petitions, may continue to assert
their standing to appeal and file certiorari petitions presenting questions of interest to Exchange Bondholders – namely,
violation of third-party rights and Fifth Amendment due process. A potential timeline for this process is set out in our
August 27 note.
NML Ltd. v. Argentina (Supreme Court Docket No. 12-842): Review of the Second Circuit’s
August 20, 2012 Decision (Discovery)
Distinct from the disputes relating to the pari passu clause and the “Ratable Payment” issue, NML and the other plaintiffs
are in litigation with Argentina over a large number of other issues, most of which are unlikely to have any impact on the
Exchange Bondholders. One such issue is a dispute over the extent of post-judgment discovery that the plaintiffs may
obtain from Argentina and the question of whether the FSIA restricts the scope of that discovery. On August 20, 2012, the
Second Circuit issued a decision in which it concluded that the FSIA does not limit such discovery. (That decision is at
695 F.3d 201.) On January 7, 2013, Argentina filed a petition for a writ of certiorari with respect to that Second Circuit
decision.
In that case, the Supreme Court requested the views of the Solicitor General as to the merits of Argentina’s certiorari
petition (known in Supreme Court parlance as a Call for the Views of the Solicitor General, or a “CVSG”). The Solicitor
General has no deadline for responding to the Court’s inquiry, but based on past response times, is likely to respond
before year end, with the Court’s decision on the certiorari petition to issue shortly thereafter.
BG Group plc v. Argentina (Supreme Court Docket No. 12-138): Review of District of Columbia
Circuit’s January 17, 2012 Decision (Arbitration Award)
Rounding out the picture of the Argentine caseload in the Supreme Court is this case, in which certiorari was granted on
June 10, 2013, and argument before the Court has been set for December 2, 2013.
This case relates to an investment treaty arbitration brought by the BG Group against Argentina, arising from losses
allegedly suffered by BG as the result of the Argentine “pesification” program in 2001 and 2002. BG won the arbitration
but the DC Circuit Court refused to enforce BG’s arbitration award. (That decision is at 665 F.3d 1363.) BG thereupon
successfully petitioned for certiorari.
Given the intense interest in all aspects of the litigation against Argentina, the various upcoming procedural and
substantive decisions in all of these cases will likely receive significant publicity. However, care must be taken to treat
them distinctly. In particular, it would appear unlikely that the FSIA discovery issue and the BG case will have an impact
on the “Ratable Payment” issue and other matters of concern to Exchange Bondholders.
http://www.shearman.com/files/Publication/a6c206f1-dc37-4ee4-917c-68d92b88da04/Presentation/PublicationAttachment/62c3d8e2-b84f-4a55-b69a-cdcef4448a4f/Don%E2%80%99t-Cry-for-Me-Argentine-Bondholders-Avoiding-Supreme-(Court)-Confusion-LIT-092713.pdf
(Court) Confusion.
Argentina is in hot pursuit of multiple audiences before the
Supreme Court: two petitions for writs of certiorari filed by
Argentina are pending in the NML v. Argentina cases, and
another is almost certainly on the way. In addition, a writ of
certiorari has already been issued in another case against
Argentina. With so much action involving Argentina in the
high court, there is the potential for confusion between these
multiple proceedings, which we clarify in this alert.
The opinions and other papers relating to these cases, as well as our many prior client notes,
are all available on our Argentine Sovereign Debt webpage:
www.shearman.com/argentine-sovereign-debt.
NML Capital, Ltd. v. Argentina (Supreme Court Docket No. 12-1494): Review
of the Second Circuit’s October 26, 2012 Decision (Pari Passu)
On June 24, 2013, Argentina filed a certiorari petition with respect to the Second Circuit’s
October 26, 2012 decision, in which the Second Court affirmed Judge Griesa’s interpretation
of the pari passu clause, his determination that the plaintiffs were entitled to a “Ratable
Payment,” and his conclusion that the Injunction did not violate the Foreign Sovereign
Immunities Act (“FSIA”). However, the Court remanded the case to Judge Griesa to address
certain issues relating to the operation of its Injunction.
As discussed in our June 27, 2013 note, we assess the likelihood that this petition will be
granted as very low. Further, in its August 23 decision (as discussed in our August 27, 2013
note, at page 6), the Second Circuit expressed its view that this petition was premature,
stating, “Apparently, Argentina filed a petition for certiorari in this matter on June 24,
2013, notwithstanding that, as of that date, no final order had yet issued in this case. See
Supreme Court Dkt. 12-1494.” We continue to be of the view that this petition will not
be granted.
The Supreme Court is scheduled to consider this petition at its internal conference among the Justices that begins on
September 30. Should the certiorari petition be denied (or granted), it will appear in an order of the Court shortly
thereafter. (The Court’s orders can be found on the Supreme Court’s website, at www.supremecourt.gov.) It is possible
that the Court will simply defer a decision pending the filing of the next certiorari petition in this case, discussed
immediately below.
NML Capital, Ltd. v. Argentina: Review of the Second Circuit’s August 23, 2013 Decision (Pari Passu)
On August 23, 2013, the Second Circuit released its opinion on Argentina’s appeal from the Southern District’s amended
Injunction, as discussed in detail in our note of August 27. As expected, on September 6 Argentina and two bondholder
groups filed rehearing petitions with the Second Circuit with respect to the August 23 decision. To date, those petitions
remain pending and undecided.
As addressed in our August 27 note, we expect those rehearing petitions to be denied, at which time a 90-day clock will
begin to run on Argentina’s time to file a petition for a writ of certiorari in the Supreme Court with respect to the
August 23 decision. Argentina’s petition may well present the same FSIA and equity questions as in No. 12-1494. In
addition, the Exchange Bondholders Group and Fintech Advisory, which filed rehearing petitions, may continue to assert
their standing to appeal and file certiorari petitions presenting questions of interest to Exchange Bondholders – namely,
violation of third-party rights and Fifth Amendment due process. A potential timeline for this process is set out in our
August 27 note.
NML Ltd. v. Argentina (Supreme Court Docket No. 12-842): Review of the Second Circuit’s
August 20, 2012 Decision (Discovery)
Distinct from the disputes relating to the pari passu clause and the “Ratable Payment” issue, NML and the other plaintiffs
are in litigation with Argentina over a large number of other issues, most of which are unlikely to have any impact on the
Exchange Bondholders. One such issue is a dispute over the extent of post-judgment discovery that the plaintiffs may
obtain from Argentina and the question of whether the FSIA restricts the scope of that discovery. On August 20, 2012, the
Second Circuit issued a decision in which it concluded that the FSIA does not limit such discovery. (That decision is at
695 F.3d 201.) On January 7, 2013, Argentina filed a petition for a writ of certiorari with respect to that Second Circuit
decision.
In that case, the Supreme Court requested the views of the Solicitor General as to the merits of Argentina’s certiorari
petition (known in Supreme Court parlance as a Call for the Views of the Solicitor General, or a “CVSG”). The Solicitor
General has no deadline for responding to the Court’s inquiry, but based on past response times, is likely to respond
before year end, with the Court’s decision on the certiorari petition to issue shortly thereafter.
BG Group plc v. Argentina (Supreme Court Docket No. 12-138): Review of District of Columbia
Circuit’s January 17, 2012 Decision (Arbitration Award)
Rounding out the picture of the Argentine caseload in the Supreme Court is this case, in which certiorari was granted on
June 10, 2013, and argument before the Court has been set for December 2, 2013.
This case relates to an investment treaty arbitration brought by the BG Group against Argentina, arising from losses
allegedly suffered by BG as the result of the Argentine “pesification” program in 2001 and 2002. BG won the arbitration
but the DC Circuit Court refused to enforce BG’s arbitration award. (That decision is at 665 F.3d 1363.) BG thereupon
successfully petitioned for certiorari.
Given the intense interest in all aspects of the litigation against Argentina, the various upcoming procedural and
substantive decisions in all of these cases will likely receive significant publicity. However, care must be taken to treat
them distinctly. In particular, it would appear unlikely that the FSIA discovery issue and the BG case will have an impact
on the “Ratable Payment” issue and other matters of concern to Exchange Bondholders.
http://www.shearman.com/files/Publication/a6c206f1-dc37-4ee4-917c-68d92b88da04/Presentation/PublicationAttachment/62c3d8e2-b84f-4a55-b69a-cdcef4448a4f/Don%E2%80%99t-Cry-for-Me-Argentine-Bondholders-Avoiding-Supreme-(Court)-Confusion-LIT-092713.pdf
Griechenland braucht zusätzliches Geld, kann aber der Regierung zufolge keine weiteren Kürzungen verkraften. Außenminister Venizelos schlägt deshalb eine Umschuldung vor.
STAATSVERSCHULDUNGGriechenland will Umschuldung statt Hilfspaket
Griechenland braucht zusätzliches Geld, kann aber der Regierung zufolge keine weiteren Kürzungen verkraften. Außenminister Venizelos schlägt deshalb eine Umschuldung vor.
Griechenlands Außenminister Evangelos Venizelos | © Joshua Lott/Reuters
Nach Angaben von Vizeregierungschef Evangelos Venizelos braucht Griechenlandkein drittes Hilfspaket der Euro-Partner. Der Außenminister brachte eine Umschuldung ins Spiel. So könne das Land seinen zusätzlichen Finanzbedarf decken, ohne die internationalen Geldgeber noch einmal um Hilfe bitten und dafür neue Reformauflagen erfüllen zu müssen.
Seine Regierung strebe Neuverhandlungen über Verzinsung und Laufzeit der bestehenden Schulden an. "Es geht um eine zusätzliche Neustrukturierung – ohne Problem, ohne neue Lasten für unsere institutionellen Partner", sagte der frühere Finanzminister. "Wir fordern keinen Schuldenerlass." Vielmehr könne die Regierung in Athen bereits kommendes Jahr an den Kapitalmarkt zurückkehren sowie Erleichterungen im aktuellen Hilfsprogramm erhalten.
Umschuldungen gehen üblicherweise mit zusätzlichen Lasten für die Kreditgeber einher – inform von niedrigeren Zinsen oder längeren Fristen bei der Rückzahlung. Bundesfinanzminister Wolfgang Schäuble hatte vor der Wahl ein weiteres Hilfspaket für Griechenland ins Spiel gebracht, weil die bisherigen Hilfen nicht ausreichen würden. Einen zweiten Schuldenschnitt schloss Schäuble aber aus.
Venizelos machte deutlich, dass die Griechen keine weiteren Sparauflagen verkraften könnten. "Es ist nicht möglich, neue Haushaltsmaßnahmen umzusetzen. Es ist nicht möglich, neue Lohn- und Rentenkürzungen zu beschließen", sagte der Minister. Sein Land steckt das sechste Jahr in Folge in der Rezession. Die Arbeitslosenquote liegt nahe 28 Prozent, bei den jungen Griechen sogar bei mehr als 60 Prozent.
Troika prüft Finanzbedarf
Die Euro-Länder und der Internationale Währungsfonds (IWF) habenGriechenland bereits rund 240 Milliarden Euro zur Verfügung gestellt, um den Staatsbankrott zu verhindern. Zwei Hilfspakete gab es bereits, außerdem einen Schuldenschnitt zulasten privater Investoren. Trotzdem dürfte das Land in den kommenden beiden Jahren etwa weitere zehn bis zwölf Milliarden Euro brauchen.
Derzeit befinden sich Experten der Geldgeber-Troika aus EU-Kommission, Europäischer Zentralbank (EZB) und IWF in Athen, um die Reformfortschritte der Regierung zu prüfen. Danach dürften die Euro-Länder über neue Unterstützung entscheiden, wahrscheinlich im November.
MEHR ZUM THEMA
VIDEOEMPFEHLUNGEN
Zum vierten Mal bremst das Verfassungsgericht des Euro-Landes die Sparpläne der Regierung aus. Experten gehen davon aus, dass es nicht die letzte Aktion des Gerichts war, die die Maßnahmen ins Wanken bringen wird.
Portugals Nationalflagge: Verfassungsgericht stoppt Sparmaßnahmen.Quelle: ap
LissabonDas portugiesische Verfassungsgericht macht der Regierung bei ihren Sparplänen erneut einen Strich durch die Rechnung. Es lehnte am Donnerstag eine Reihe von Gesetzesänderungen aus dem vergangenen Jahr ab, mit denen der Arbeitsmarkt flexibler gemacht werden sollte.
Für die Regierung ist das Veto des Verfassungsgerichts ein erneuter Rückschlag, nachdem die Richter bereits drei Mal Sparmaßnahmen blockiert hatten. Experten erwarten weitere Schritte des Gerichts, die die im Rahmen des 78 Milliarden Euro schweren Rettungspakets mit Europäischer Union (EU) und Internationalem Währungsfonds (IWF) vereinbarten Defizitziele gefährden könnten.
Im August hatte das Verfassungsgericht ein Gesetz abgelehnt, das die Entlassung von Beamten ermöglicht hätte. Portugal hat zugesagt, bis Ende 2014 4,7 Milliarden Euro einzusparen. Die Rettungsmaßnahmen von EU und IWF laufen Mitte 2014 aus.
European finance ministers have agreed to a plan that would make "bail-ins" the standard procedure for rescuing "too big to fail" banks in the future. The following is how CNN described this plan...
Cyprus-Style Wealth Confiscation Is Starting All Over The World
As we warned two years ago, "the muddle through has failed... and there may only be painful ways out of this."
Submitted by Michael Snyder of The Economic Collapse blog,
Now that "bail-ins" have become accepted practice all over the planet, no bank account and no pension fund will ever be 100% safe again. In fact, Cyprus-style wealth confiscation is already starting to happen all around the world. As you will read about below, private pension funds were just raided by the government in Poland, and a "bail-in" is being organized for one of the largest banks in Italy. Unfortunately, this is just the beginning.
The precedent that was set in Cyprus is being used as a template for establishing bail-in procedures in New Zealand, Canada and all over Europe. It is only a matter of time before we see this exact same type of thing happen in the United States as well. From now on, anyone that keeps a large amount of money in any single bank account or retirement fund is being incredibly foolish.
Let's take a look at a few of the examples of how Cyprus-style wealth confiscation is now moving forward all over the globe...
Poland
For years, there have been rumors that someday the U.S. government would raid private pension funds.
Well, in Poland it just happened.
According to Reuters, private pension funds were raided in order to reduce the size of the government debt...
Poland said on Wednesday it will transfer to the state many of the assets held by private pension funds, slashing public debt but putting in doubt the future of the multi-billion-euro funds, many of them foreign-owned.
The Polish government is doing the best that it can to make this sound like some sort of complicated legal maneuver, but the truth is that what they have done is stolen private assets without giving any compensation in return...
The Polish pension funds' organisation said the changes may be unconstitutional because the government is taking private assets away from them without offering any compensation.Announcing the long-awaited overhaul of state-guaranteed pensions, Prime Minister Donald Tusk said private funds within the state-guaranteed system would have their bond holdings transferred to a state pension vehicle, but keep their equity holdings.He said that what remained in citizens' pension pots in the private funds will be gradually transferred into the state vehicle over the last 10 years before savers hit retirement age.
Iceland
For years, Iceland has been applauded for how they handled the last financial crisis. But now it is being proposed that the "blanket guarantee" that currently applies to all bank accounts should be reduced to 100,000 euros. Will this open the door for "haircuts" to be applied to bank account balances above that amount?...
Following the crisis in October 2008, Iceland's government declared all deposits in domestic financial institutions were 'blanket' guaranteed - an Emergency Act that was reafrmed twice since. However, according to RUV, the finance minister is proposing torestrict this guarantee to only deposits less-than-EUR100,000. While some might see the removal of an 'emergency' measure as a positive, it is of course sadly reminiscent of the European Union "template" to haircut large depositors. This is coincidental (threatening) timing given the current stagnation of talks between Iceland bank creditors and the government over haircuts and lifting capital controls - which have restricted the outflows of around $8 billion.
Europe
European finance ministers have agreed to a plan that would make "bail-ins" the standard procedure for rescuing "too big to fail" banks in the future. The following is how CNN described this plan...
European Union finance ministers approved a plan Thursday for dealing with future bank bailouts, forcing bondholders and shareholders to take the hit for bank rescues ahead of taxpayers.The new framework requires bondholders, shareholders and large depositors with over 100,000 euros to be first to suffer losses when banks fail. Depositors with less than 100,000 euros will be protected. Taxpayer funds would be used only as a last resort.
What this means is that if you have over 100,000 euros in a bank account in Europe, you could lose every single bit of the unprotected amount if your bank collapses.
Italy
As Zero Hedge reported on Tuesday, a "bail-in" is now being organized for the oldest bank in Italy...
Recall that three weeks ago we warned that "Monti Paschi Faces Bail-In As Capital Needs Point To Nationalization" although we left open the question of "who will get the haircut including senior bondholders and depositors.... given the small size of sub-debt in the capital structures." Today, as many expected on the day following the German elections, the dominos are finally starting to wobble, and as we predicted, Monte Paschi, Italy's oldest and according to many, most insolvent bank, quietly commenced a bondholder "bail in" after it said that it suspended interest payments on three hybrid notes following demands by European authorities that bondholders contribute to the restructuring of the bailed out Italian lender. Remember what Diesel-BOOM said about Cyprus -that it is a template? He wasn't joking.As Bloomberg reports, Monte Paschi "said in a statement that it won’t pay interest on about 481 million euros ($650 million) of outstanding hybrid notes issued through MPS Capital Trust II and Antonveneta Capital Trusts I and II." Why these notes? Because hybrid bondholders have zero protections and zero recourse. "Under the terms of the undated notes, the Siena, Italy-based lender is allowed to suspend interest without defaulting and doesn’t have to make up the missed coupons when payments resume." Then again hybrids, to quote the Dutchman, are just the template for the balance of the bank's balance sheet.Why is this happening now? Simple: the Merkel reelection is in the bag, and the EURUSD is too high (recall Adidas' laments from last week). Furthermore, if the ECB proceeds with another LTRO as many believe it will, it will force the EURUSD even higher, surging from even more unwanted liquidity. So what to do? Why stage a small, contained crisis of course. Such as a bail in by a major Italian bank. The good news for now is that depositors are untouched. Unfortunately, with depositor cash on the wrong end of the (un)secured liability continuum it is only a matter of time before those with uninsured deposits share some of the Cypriot pain. After all, in the brave New Normal insolvent world, "it is only fair."
Fortunately, it does not appear that this particular bail-in will hit private bank accounts (at least for now), but it does show that European officials are very serious about applying bail-in procedures when a major bank fails.
New Zealand
The New Zealand government has been discussing implementing a "bail-in" system to deal with any future major bank failures. The following comes from a New Zealand news source...
The National Government are pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out."Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand - a solution that will see small depositors lose some of their savings to fund big bank bailouts," said Green Party Co-leader Dr Russel Norman."The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank."Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat."
Canada
Incredibly, even Canada is moving toward adopting these "bank bail-ins". In aprevious article, I explained that "bail-ins" were even part of the new Canadian government budget...
Cyprus-style "bail-ins" are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of "Economic Action Plan 2013" which the Harper government has already submitted to the House of Commons. This new budget actually proposes "to implement a 'bail-in' regime for systemically important banks" in Canada. "Economic Action Plan 2013" was submitted on March 21st, which means that this "bail-in regime" was likely being planned long before the crisis in Cyprus ever erupted.
So what does all of this mean for us?
It means that the governments of the world are eyeing our money as part of the solution to any future failures of major banks.
As a result, there is no longer any truly "safe" place to put your money.
One of the best ways to protect yourself is to spread your money around. In other words, don't put all of your eggs in one basket.
If you have your money a bunch of different places, it is going to be much harder for the government to grab it all.
But if you don't listen to the warnings and you continue to keep all of your wealth in one giant pile somewhere, don't be surprised when you get wiped out in a single moment someday.
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