http://en.wikipedia.org/wiki/Plum_Island_%28New_York%29
On Tuesday, March 26, 2013 11:18:57 AM UTC-4, nominal9 wrote: > > Bail-Ins instead of Bail-Outs....there you go.... > > somebody's finally thinking.... contrary logic.... > > HAR HAR HAR HAR. > > I like it.... > > the U.S. should go back and "bail in" the Wall Street banks and trading > firms..... > > > http://www.reuters.com/article/2013/03/26/eurozone-banks-bailouts-idUSL5N0CI1U320130326 > > Cyprus rescue marks "game-changer" for Europe's banks > > - > - inShare > - Share this > - > - Email > - Print > > Related News > > - Global shares, euro checked by Cyprus bailout > nerves<http://www.reuters.com/article/2013/03/26/us-markets-global-idUSBRE88901C20130326> > 9:17am EDT > - WRAPUP 10-Cyprus leader hails bailout, but banks stay > closed<http://www.reuters.com/article/2013/03/25/eurozone-cyprus-idUSL5N0CH01B20130325> > Mon, Mar 25 2013 > - Shares, euro retreat as Cyprus deal stirs > unease<http://www.reuters.com/article/2013/03/25/us-markets-global-idUSBRE88901C20130325> > Mon, Mar 25 2013 > - Analysis: Cyprus rescue raises new questions about euro's long-term > > survival<http://www.reuters.com/article/2013/03/25/us-eurozone-cyprus-contagion-idUSBRE92O0J420130325> > Mon, Mar 25 2013 > - Cyprus and EU agree draft proposal to rescue > banks<http://www.reuters.com/article/2013/03/24/us-cyprus-parliament-idUSBRE92G03I20130324> > Sun, Mar 24 2013 > > Analysis & Opinion > > - One-off or > precedent?<http://blogs.reuters.com/macroscope/2013/03/26/one-off-or-precedent/> > > - The Dijsselbloem > Principle<http://blogs.reuters.com/felix-salmon/2013/03/25/the-dijsselbloem-principle/> > > > Related Topics > > - Investing and Taxes Simplified > »<http://www.reuters.com/subjects/investing-simplified> > - Financials » <http://www.reuters.com/sectors/financials> > > By Steve Slater > > LONDON, March 26 | Tue Mar 26, 2013 10:13am EDT > > (Reuters) - If the bailout of Cyprus is a template for European rescue > deals it marks a "game-changer" for banks that could raise funding costs, > see deposits shift more quickly and delay the prospect of higher > dividends<http://www.reuters.com/finance/markets/dividends?lc=int_mb_1001> > . > > Europe signalled this week that large depositors would shoulder part of > the cost of future bank bailouts after savings over 100,000 euros were > targeted in the Cyprus rescue package. That sent bank share prices falling > and pushed up the cost of insuring bank debt against default. > > > "Bail-in is thus replacing bail-out. As a consequence, the cost of bank > funding will increase, bank deposits will become less sticky, and banks > must hold more equity capital to reassure their creditors," said Nick > Anderson, analyst at Berenberg. > > "The elephant in the room has been spotted at last." > > Jeroen Dijsselbloem, head of the Eurogroup of euro > zone<http://www.reuters.com/subjects/euro-zone?lc=int_mb_1001> > finance <http://www.reuters.com/finance> ministers, said on Monday that > in future, the currency bloc should first ask banks to recapitalise > themselves, then look to shareholders and bondholders and then "if > necessary" to uninsured deposit holders. > > "Now that the crisis is fading out, I think we need to dare a little more > in dealing with this," he said. > > In addition to big depositors, senior bondholders in Cyprus's > second-largest bank, Laiki, will be wiped out and holders of senior paper > in the largest lender, Bank of Cyprus, will also be hit. > > In previous packages for Greece <http://www.reuters.com/places/greece>, > Ireland <http://www.reuters.com/places/ireland?lc=int_mb_1001>, > Portugal<http://www.reuters.com/places/portugal?lc=int_mb_1001>and Spain, > leaders were unwilling to force losses on either senior > bondholders or savers for fear of prompting flight from banks across the > region. > > Under new EU regulations, senior bondholders would bear part of the cost > of future bank bailouts but that provision is not due to be enforced before > 2015. Non-eurozone member Denmark is the only EU state to impose losses on > senior bondholders in recent years, but after its banks were shut out of > debt markets <http://www.reuters.com/finance/markets?lc=int_mb_1001> in > 2011 it has moved to limit the likelihood of such losses. > > Europe's banking index was down nearly 0.6 percent by 1310 GMT, adding to > a 1.9 percent fall on Monday and putting it on course for a fourth > successive daily fall. > > Banks in Italy <http://www.reuters.com/places/italy> and Spain, two > countries at the heart of the euro > zone<http://www.reuters.com/subjects/euro-zone?lc=int_mb_1001>crisis, were > among the biggest fallers with UniCredit and Spain's BBVA down > over two percent. Italian regional lender Banca Carige had slid over three > percent. > > The cost of insuring European banks' senior bonds against default rose, > with the Markit iTraxx senior financials index widening 14 basis points to > 181. The index for subordinated bonds - riskier as they rank behind senior > debt if a bank is wound up - widened 20 basis points to 302 basis points. > > Critics of the action on Cyprus said it had re-established the link > between weak banks and weak sovereigns and could scare depositors, but > others said it was long overdue. > > "Finally the EU is doing the right thing. If you take risk, if you're an > equity holder, a bondholder, or an uninsured depositor, you should be at > risk," said Simon Maughan, analyst at Olivetree Securities. "It is the > bailing out of the bondholders that has been the biggest problem throughout > these bailouts." > > Maughan said there were still risks in Spain, > Italy<http://www.reuters.com/places/italy?lc=int_mb_1001>and possibly > France <http://www.reuters.com/places/france>. "The only way to deal with > them would be to make the investors that put money in in the first place to > front up," he said. > > "WAKE-UP CALL" > > Deposits above 100,000 euros have been at risk since the level of > guarantee was raised and reinforced during the 2008/09 financial crisis. > Cyprus is a reminder that above that level depositors are effectively > unsecured creditors. > > Savers are more likely than ever to spread their cash around, analysts > said. > > "It's a wake-up call... and deposits are likely to be more fluid if you > see a risk emerging," Maughan said. > > "It is now rational for ... depositors to move their money to stronger > non-Eurozone banking jurisdictions such as the UK or Switzerland," said > Andrew Lim, analyst at Espirito Santo. > > Mike Harrison, analyst at Barclays, said the Cyprus events could also > speed up plans for countries to establish pre-funded schemes for deposit > insurance. > > "This could be a catalyst to more harmonisation of the pre-funding of the > scheme," he said. > > Bondholders are likely to be more alert to risks too. > > "The concept of bail-in appears to be happening quicker than perhaps > people had anticipated. It feels that with Cyprus it is potentially now > grinding closer in theory and in practice," Harrison said. > > That is likely to increase volatility, especially for banks seen as more > at risk, and result in greater differentiation in borrowing costs for > strong names like HSBC versus more risky banks such as Italy's Monte Dei > Paschi, which has received a 4 billion euro Italian state bailout. > > The yield on Monte dei Paschi's senior debt rose 41 basis points to 5.16 > percent early last week after an initial plan to tax Cyprus bank deposits > was announced. It has since bounced around from 4.80 percent on Monday to 5 > percent on Tuesday. In contrast, senior debt for HSBC remained steady at > around 1.5 percent. > > Banks may have to hold back on lifting dividends if investors demand they > hold another buffer on top of minimum capital requirements, analysts said. > That could dent hopes of a possible rise in payouts this year. > > But most banks are already under pressure to hold back on payouts until > they have a comfortable capital cushion, and rules continue to differ > across countries. > Norway<http://www.reuters.com/places/norway?lc=int_mb_1001>, > for example, took action last week to raise its already high capital > requirements and implement them before most other European countries. > > -- You received this message because you are subscribed to the Google Groups "Epistemology" group. To unsubscribe from this group and stop receiving emails from it, send an email to epistemology+unsubscr...@googlegroups.com. To post to this group, send email to epistemology@googlegroups.com. 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