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Bail ins - banks can steal your savings under EU directives. In Austria savers have just lost 54% of their savings.

(19 Posts)
AnnaForbes Wed 13-Apr-16 13:18:09

Bank bail-ins allow banks to help themselves to your money.

If the banks fail, EU Directives now allows them to help themselves to depositors savings in order to avoid collapse. Bankers and shareholders (who benefit from all the profits) dont pay for their mistakes, depositors do.

In Austria, savers just lost 54% of their money overnight. It happened in Cyprus in 2013 with a sudden, extended closure of the banks and withdrawals limited to €100. Those depositors with over €100,000 lost 40% of their money (Bank of Cyprus) or 60% (Laiki).

More legalised theft from the EU in the name of The European Bank Recovery and Resolution Directive.

I'm out.

Chalalala Wed 13-Apr-16 14:34:26

In Austria savers have just lost 54% of their savings.

Individual savers have not been affected.

You are perfectly free to think it's a bad directive, or to be worried about future developments. But your OP is blatant misrepresentation.

AnnaForbes Wed 13-Apr-16 17:22:06

Why do you think it is a blatant misrepresentation?

Chalalala Wed 13-Apr-16 18:15:00

Because "Austrian savers" makes it sound like it was regular people with normal savings accounts who were affected. In fact (from what I've read) it was only "major creditors" like the banks you mention who lost money, not individuals, and certainly not regular people like you and me.

Chalalala Wed 13-Apr-16 18:17:26

(Now if you want to say it's outrageous that said "major creditors" lost money, that's fine! Just saying your title reads like old grannies lost their life savings, and that's not right)

VertigoNun Wed 13-Apr-16 18:21:00

There is another banking crash on the horizon, so it wouldn't surprise me if this is the solution put into place.

ThroughThickAndThin01 Wed 13-Apr-16 18:21:07

I'm probably an out, but I would expect UK savers to lose their savings, or a percentage of them, in a banking collapse, whether we're in or out.

Chalalala Wed 13-Apr-16 18:39:41

Until now the solution has been to make the tax payer pay the bill, which is not much better... Not sure what the solution is. To make the bank hand over some of their profits and pay back whoever bailed them out once they're back on track, surely?

AnnaForbes Wed 13-Apr-16 19:05:28

When you put money into a bank account, you are effectively lending that bank money. If that bank fails because it runs out of money, you end up in a queue with all the other people who are owed money by that failed bank and get paid out according to a priority system. Banks do not take your money and put it in a safe with your name on it.

The bail-outs we have seen are where external organisations, usually the government, use taxpayers money to prop up the banks when they run short of money. Technically, the shareholders and investors should pay the price for their company's failure as they are the ones that benefit from its success.

So, what is a bail-in? A bail-in means that if a bank needs money to survive it can, under this EU directive, claim a portion of its investors investment. This is fine because investors take a risk and benefit from the profits a bank make. Therefore is it right that they suffer if the bank suffers.

What is very wrong is that this EU Directive also gives the bank the ability to take money from savers, who are customers of the bank, not the owners. Savers do not share in the spoils of the banks profits and therefore should not suffer in the event the bank needs financially bolstering.

Although we have the Financial Services Compensation Scheme which insures deposits up to a certain amount in the event of a bank failing, does it cover us if the bank survives after a bail in i.e. after giving you a financial haircut?

AnnaForbes Wed 13-Apr-16 19:10:23

Chalalala, if we leave the EU, our banks wont enjoy those privileges. Yes, I expect tax-payers will still get hammered, we always do and always will world over. But to lose 60% of your savings overnight is unthinkable, this is what the EU allows.

DoctorTwo Wed 13-Apr-16 19:37:32

Ain't corporate capitalism wonderful? grin I did post about this a couple of years ago (under a different name, I think) but got poo poohed. Then the law allowing this came in earlier this year, and I warned about it again. IMO the only ways round it are to keep under £85k in each institution (not difficult in my case, I have about 1% of that) and/or invest in assets that will increase in value when the banks go tits up. Stuff like gold, silver and digital gold in the form of one of the cryptocurrencies.

lurked101 Wed 13-Apr-16 22:07:19

It isn't savers in the bank who have had their money written off but bond holders. The EU law is basically to make investors in the bank (those who own bonds and shares) more responsible for the debt of the organisation and not the different national governments. Essentially this is to move away from a situation where " too big to fail " occurs. For example if this rule had existed with RBS, RBS share and bond holders would have had up to 8% tbonds written off in order to service the debt before they can recieve state bailouts.

In effect this is a way of stopping the socialisation of the risks taken by the financial industry which I think is a good thing. There are risks in some countries where the banks have sold bonds to retail customers and not financial institutions etc. However over all this is should encourage the financial industry to take less risks as the tax payer will not automatically cover the costs of their mess.

Your initial post is disingenuous too as whatever happens, if you have more than £85,000 in one institution the excess amount is not guarenteed by the government if the bank runs into insolvency.

NotnowNigel Fri 15-Apr-16 09:56:08

I think you'll find that nothing is guaranteed in reality if the banks crash again - as they are very definitely still too big to fail and there will be less tolerance and fluidity in the banks themselves next time round.

BronzeBust Sun 17-Apr-16 00:25:11

I agree. Nothing is guaranteed.

I think they should let one of the banks go bust. Then people will think twice about keeping their money in a bank and realise the bank does not look after your money. That's what the Government Compensation scheme is for. To give people false confidence in keeping their money in a bank.

PigletJohn Tue 19-Apr-16 18:55:33

Why do all the anti-Europeans pretend they don't know about the Deposit Protection Scheme which operates in the UK and other countries?

If Anna is a multimillionaire, she may wish to spread her cash holdings between a number of banks. For most of us, the limit of €100,000 per person per institution is usually enough.

ThroughThickAndThin01 Tue 19-Apr-16 19:00:23

I don't pretend i don't know about it. I just don't trust the system. It's never been proven before has it? It's untried and untested.

DoctorTwo Tue 19-Apr-16 20:24:46

IMO the only ways round it are to keep under £85k in each institution

For most of us, the limit of €100,000 per person per institution is usually enough

For once we appear to agree on a financial matter.

PigletJohn Tue 19-Apr-16 21:07:41

£75k now.

butteredmuffin Thu 21-Apr-16 14:46:25


Oh I forgot. Only the remain side indulge in that kind of nonsense. hmm

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