Depositors Beware – Bank Deposits Of Over €100,000 Are At Risk
Tuesday, 7 May 2013
Gold rose $0.70 or 0.05% yesterday to $1,469.90/oz and silver finished down 0.37%.
A bank holiday was observed in the U.K. and Ireland yesterday.
Ireland’s Finance Minister, and current European Council President, Michael Noonan, is introducing a proposal to European finance ministers that will hit depositors that hold over €100,000 in the event of future bank collapses.
The Irish know a bit about bank wind-downs, and maybe have realized sticking it all on the tax payer, severe austerity, doesn’t leave citizens with many euro’s left to consume and jump start the economy.
Noonan is proposing at Tuesday’s meeting in Brussels that large depositors (over €100,000) are “bailed in” as part of future bank wind-downs.
According the The Irish Times, “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.”
In this set up there would be “deposit preference” where creditors would first assume losses and bank depositors would accountable at the end of the process.
Not all European countries agree, some of them believing that uninsured depositors under €100,000 would incur losses even though they should be protected by the deposit guarantee scheme.