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Author Topic: Cyprus is the new template  (Read 583 times)
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May 07, 2013, 03:17:28 PM

Bank deposits of over €100,000 may be at risk

Proposals under Irish presidency to deal with European bank collapses likely to ‘bail-in’ large depositors

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.

“We will try to get some guidance from Ministers about the possible design of the bailout tool,” one EU official said yesterday.

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.

Once this gets rubber stamped on the EU level we should expect to see the bankers and bureaucrats get to work quickly on the European periphery.

The Irish politicians will be pushing hard for these proposals to be passed. The so called pillar banks of the Irish economy (Allied Irish Bank, Bank of Ireland) need another €60 billion to cover non performing loans and that figure keeps on increasing. A deposit grab under the auspices of EU rules would be the perfect smoke screen for them.
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