{"id":16226,"date":"2016-01-10T16:12:07","date_gmt":"2016-01-10T21:12:07","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16226"},"modified":"2016-01-10T16:12:41","modified_gmt":"2016-01-10T21:12:41","slug":"the-eu-bail-in-directive-dark-clouds-are-gathering","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16226","title":{"rendered":"The EU Bail-In Directive: Dark Clouds are Gathering"},"content":{"rendered":"
\n

The EU Bail-In Directive: Dark Clouds are Gathering\u00a0<\/a><\/h3>\n<\/div>\n
Portugal\u2019s Rickety Banking System<\/strong><\/div>\n
\n

After the unseemly bankruptcy of the Espirito Santo Group and the associated bank, then Portugal\u2019s second biggest (likely a result of not praying enough, see: \u201cBig Portuguese Bank Gets Into Trouble<\/a>\u201d and \u201cFears Over Banco Espirito Santo Escalate<\/a>\u201d for the gory details), Portugal\u2019s state-run deposit insurance fund basically ran out of money.<\/p>\n

It turns out that Europe\u2019s new\u00a0Bank Recovery and Resolution Directive\u00a0<\/em>(BRRD for short) came just in time for Portugal. At the end of 2015, another Portuguese bank bit the dust, the country\u2019s seventh largest lender by assets, Banif. Portugal\u2019s government once again decided to bail the bank out, but with strings attached. Subordinated bondholders and shareholders were essentially wiped out, which is as it should be.<\/p>\n

\"Banif,<\/a>Banif SA, weekly. Although this is hard to see on this linear chart, the stock rose by 40% today, to \u20ac0.002. Shareholders are allegedly planning to throw a wild party in Lisbon over the weekend (we were unable to confirm this rumor) \u2013 click to enlarge.<\/p>\n

Senior bondholders and depositors were spared however, with Portugal\u2019s overburdened taxpayers once again footing the bill.\u00a0According to the FT<\/a>:<\/p>\n

Portugal has agreed a \u20ac2.2bn state rescue for Banco International do Funchal (Banif), splitting the Madeira-based lender into \u201cgood\u201d and \u201cbad\u201d banks and selling its healthy assets to Spain\u2019s Santander for \u20ac150m in the country\u2019s second bank bailout in less than 18 months.<\/p>\n

Ant\u00f3nio Costa,\u00a0Portugal\u2019s new socialist prime minister, said the bailout would involve \u201ca high cost for taxpayers\u201d but had the advantage of being \u201ca definitive solution\u201d.<\/em><\/strong>\u00a0Branches would open normally on Monday, he said.\u00a0The rescue, which \u201cbails in\u201d shareholders and subordinated creditors, follows\u00a0the \u20ac4.9bn bailout in August last year\u00a0of Banco Esp\u00edrito Santo, once Portugal\u2019s largest listed bank, whose healthy assets,\u00a0split off into Novo Banco, remain unsold<\/em><\/strong>.<\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The EU Bail-In Directive: Dark Clouds are Gathering\u00a0 Portugal\u2019s Rickety Banking System After the unseemly bankruptcy of the Espirito Santo Group and the associated bank, then Portugal\u2019s second biggest (likely a result of not praying enough, see: \u201cBig Portuguese Bank Gets Into Trouble\u201d and \u201cFears Over Banco Espirito Santo Escalate\u201d for the gory details), Portugal\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,46,6423,6424,279,284,6170,4696],"class_list":["post-16226","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-bail-in","tag-bank-recovery-and-resolution-directive","tag-brrd","tag-eu","tag-european-union","tag-pater-tenebrarum","tag-portugal"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16226"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16226\/revisions"}],"predecessor-version":[{"id":16228,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16226\/revisions\/16228"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}