It happens overnight…
One day, the banks are open. The next the cashpoints go dark, the banks lock their doors and all online payment systems go down.
Even online banking doesn’t work. You can see your savings… but you can’t access or move them. They’ve been frozen.
When they’re unfrozen… you find your savings have been reduced. A portion of your money has been forcibly taken to pay for the bail out of the bank.
This isn’t fiction. It happened to a British saver in 2013 called Sharon Connor, when the Cypriot banking system went bust. It’s what known as a “bail-in”.
Mrs Connor had just sold a house. She had 183,000 euros in her account – the proceeds of the sale. The next day the banks simply shut. She couldn’t access her money. It was a nightmare scenario. As she told the press:
“It’s making me ill. I felt things were moving forward: on 13 March I was offered a job, which I start on Monday; on 14 March the offer was accepted on the house; and on 15 March the sale went through.
I thought: 2013 is going to be my year. And then on 16 March I hit the floor with this news.”
Now for the bad news.
This is precisely what the authorities plan to do the next time there’s a major bank crisis. Not to bail the bank out. To bail it IN. To freeze your savings and take what’s needed to save the bank.
The Bank of England and Federal Reserve have actually admitted this (in 2012)… though it’s not public knowledge. Here’s an extract from a joint paper they published.
The U.K. has also given consideration to the recapitalization process in a scenario in which Systemically Important Financial Institution (SIFI) liabilities do not include much debt issuance at the holding company or parent bank level but instead comprise insured retail deposits held in the operating subsidiaries.
Under such a scenario, deposit guarantee schemes may be required to contribute to the recapitalization of the firm.
I’ll translate that last line for you. Deposit guarantee schemes contributing to recapitalisation means taking savers money to bail the bank out.
The authorities know they don’t have the money to bail the banks out next time around.
So… they’ll take yours.
Why am I telling you any of this now?
For one very good reason. I think we’re in the early stages of a new banking crisis that will lead to at least one bank failing this year. Perhaps more. Which is why I’m urgently warning all UK savers and investors to take immediate action to protect themselves.
In fact, I’ve just created a special briefing aimed specifically at savers in this country, explaining exactly what’s going on… and why it’s critical you take action today.
Don’t make the mistake of assuming this will never happen… or won’t happen to you.
It HAS happened. And to regular British savers.
Southbank Investment Research
Category: The End of Europe