How to Lose Your Entire Savings In an Instant

Phoenix Capital Research's picture


By the look of things, Europe’s banking system is breaking down again.


Bankia’s shareholders have received a nasty new year’s surprise. They may lose most of their investments or even all of them says the Spanish bank rescue fund in its latest report.


According to FROB, the Fund for Orderly Bank Restructuring, Bankia has a negative value of 4.2 billion euros, and its parent group BFA is 10.4 bn in the red.


Valuation is key in the recapitalisation of Spain’s banking system, weighed down by massive bad loans accumulated in a property bubble that burst in 2008. Bankia/BFA is set to receive 18 bn euros of European aid, and become the country’s biggest bailout recipient.


Greece’s four largest banks need to boost their capital by 27.5 billion euros ($36.3 billion) after taking losses from the country’s debt swap earlier this year, the largest sovereign restructuring in history.     


National Bank of Greece SA, the country’s biggest lender, needs to raise 9.8 billion euros, according to an e-mailed report by the Athens-based Bank of Greece (TELL) today. Eurobank Ergasias SA (EUROB) needs 5.8 billion euros, Alpha Bank (ALPHA) needs 4.6 billion euros and Piraeus Bank SA (TPEIR) needs 7.3 billion euros, according to the report. Total recapitalization needs for the country’s banking sector amount to 40.5 billion euros, the report said.


The above articles tell us point blank that Europe’s banking crisis is neither fixed nor even close to over.


Consider the article on Spain.


A little known fact about the Spanish crisis is that when the Spanish Government merges troubled banks, it typically swaps out depositors’ savings for shares in the new bank.


So… when the newly formed bank goes bust, “poof” your savings are GONE. Not gone as in some Spanish version of the FDIC will eventually get you your money, but gone as in gone forever.


This is why Bankia’s collapse is so significant: in one move, former depositors at seven banks just lost virtually everything.

In the case of Greece, the above article needs some perspective. Sure, €27.5 billion sounds like a lot of money, but just how big is it relative to Greece’s banks.


The entire capital base of the Greek banking system is only €22 billion.


By saying that Greek banks need €27.5 billion Greece is essentially admitting that is needs to recapitalize its entire banking system. Also, you should know that Greek banks are still sitting on €46.8 billion in bad loans.


There is a word for a banking system with a capital base of €22 billion and bad loans of €46.8. It’s INSOLVENT.


Take note, the EU Crisis is anything but over. The ECB may have pushed it back by a year by promising unlimited bond buying… but that relief rally is coming to an end.


With that in mind, smart investors are taking advantage of the lull in the markets to position themselves for what’s coming.


We offer several FREE Special Reports designed to help them do this. They include:


Preparing Your Portfolio For Obama’s Economic Nightmare

What Europe’s Crisis Means For You and Your Savings


How to Protect Yourself From Inflation


And last but not least…


Bullion 101: Everything You Need to Know About Investing in Gold and Silver Bullion…


You can pick up free copies of all of the above at:




Phoenix Capital Research




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waterdude's picture

Still pushing the bear angle on Spanish financials in Virginia!  PIty about the 65% move since July '12. Must have missed the recap/provisioning/rescue funds equal to 25% of Spanish GDP. Some would say an important oversite.

fajensen's picture

There is a word for a banking system with a capital base of €22 billion and bad loans of €46.8. It’s INSOLVENT.

Another word is: Bollocks!

According to Basel II banks only need 2% capital - and "capital" is pretty much defined the same way as that "meat" that goes into sausages. A capital base of 22 billion creates assets, a.k.a. debts, of 110 billion. Less than half of that is "bad", meaning that taxpayers bought it already at par.

Sure, a bank may occasionally be allowed to collapse but only to keep the "financial crisis"-pot boiling nicely while society is ripped off. Orderly defaults, I think was the requirement.

Surprese's picture

Dear Zerohedge,

This was not your finest hour. Propaganda bullshit like this should not be allowed if you want us to take you seriously.

After reading "... it typically swaps out depositors’ savings for shares in the new bank..." I can only conclude that this guy from Phoenix Capital either is completely ignorant or a plain lier.

Either way it is sad, as I used to believe that people writing in this forum had above average competence and know-how...


Daedalus's picture

This article is so disingenuous and badly expressed as to be just factually wrong.

FACT: Despositors and other SENIOR creditors of all Spanish banks have not (?yet?) had to take any losses.

FACT: In Spain all deposits up to €150,000 are guaranteed by the equivalent of FDIC

FACT: The Spanish equivalent of FDIC is might well be unable to payout of such guarantees in such an event without support from the Spanish government

FACT: Many Spanish savers were incouraged to invest is SUBORDINATE instruments of banks as a yield-enhanced savings product

FACT: The holders of such SUBORDINATE instruments have been converted to greater diluted common equity on recapitalisations

FACT: The purpose of SUBORDINATE instruments is that they are risk absorbing. The reason fo the enhanced return is that they take risk.

FACT: Many Spanish savers assumed that they were risk-free or guaranteed because they were from a bank

It is one thing to write light-weight articles to pump-up interest in your subscription newsletter. But is is quite something else to publish stuff that is plain wrong because it is too much of a quiet-news day to find anything actually true which is alarming.

Phoenix Capital, you've jumped the shark on this one.

ebworthen's picture

Nearly every bank is insolvent.

Get your money out NOW before it is too late.

Convert it to physical property you live on or Gold and Silver.

joego1's picture

Does Homeractually still walk into Bankia and deposit his pay only to find out that the ATM is permanately broken?

Stuntgirl's picture

Bankia is the only bank that will open a checking account for you at little cost if you don't have a regular paycheck/income.

If you are jobless and living off some savings, for example, you may be forced to move to/stay in Bankia because other banks will charge you an eye just for the account.

Independent professionals with irregular income as well.

I see a trend in who keeps getting shafted.

Although the entire article above is just simply not true.

Argentina does that, spain never has, though it might learn.

steve from virginia's picture


Question: what did Greek and Spanish (and others) borrow and spend their billions on?


 - Speculative housing.


 - Cars ...


 - Concrete block 'resorts' lining every linear foot of the Mediterranean coastline. Every one of them looks like something Erwin Rommel would come up with ...


 - Freeways, roads, parking and more freeways ... to nowhere.


 - Airports, big-box stores and 'retail',


 - Imported fuel ...


Lets leave out the military hardware, the imported Chinese consumer goods, the French ag products stuffed down their unwilling throats, the payoffs under the table. It goes without saying that very little of the above crap could pay for itself or DID pay for itself ... even partially! It was just euros shoveled down the rathole. A few billionaires and some corrupt heeler politicians made some more money ... ugh!


Now the eur-holes have buyers' remourse ... they have nothing to offer as collateral for new loans, the old loans are non-performing, there is no cash flow ... there are some used cars rusting away and some concrete boxes that might come in handy duing the filming of an apocalypse movie. At some point good money will have to be spent to tear half of the shite down and throw it away ...


Bring on the guillotines!



100pcDredge's picture

Thanx for the tip - but I still prefer to burn my savings in my fireplace.

SamAdams's picture

Somehow, this still doesn't sound as bad as being Corzined...

AGuy's picture

"Somehow, this still doesn't sound as bad as being Corzined..."

Oddly enough, Corzine has been working as a consultant in the Spanish banking industry </Joking>


Stuck on Zero's picture

Uh let me see.  The three rules of successful investing are:

1) Capital preservation

2) Capital preservation

3) Capital preservation


Papasmurf's picture

Uh let me see.  The three rules of successful investing are:

1) Capital preservation

2) Capital preservation

3) Capital preservation


Which shares in common with real estate: location, location, location.

OpenThePodBayDoorHAL's picture

Wrong. Bankia clients were advised to buy these bank shares, not forced or automatically converted. Get your facts straight.

Stuntgirl's picture

It seems that he is saying that depositors will get converted. That is  NOT TRUE. Shares might. But not deposits.

Deposits are in theory covered by the state's deposit guarantee up to i think 150,000€ per account.

It doesn't matter, because the guarantee fund has been wiped out for a while, but still noone has ever said deposits were uncovered or to be converted.


jeff montanye's picture

stuntgirl: if you, no debt and open...hal are right, the only interesting part of phoenix capital's post is wrong.  if so the tylers ought to revoke their/his posting license for a bit (perhaps not the four years that austria's ex top law enforcer just got in the greybar but ... awhile.)

thanks jesse

Stuntgirl's picture

Phoenix really should have checked first.

Spain-bashing is my favorite sport, but what he says would be massive seizure of assets. I'm not saying it can't happen, but he says Spain typically does something that did not happen even during the civil war.

Everyone should be aware that Bankia is a really big deal in termms of deposits. It is pretty much the amalgamation of almost EVERY caja (savings bank, credit union) in Spain. Dealing with it is a matter of course for spaniards since a lot of Government payments have to go through it. University payments and some taxes, for example. I'd say half of retirees have accounts there. And every single unemployed.

Anyway, I live in front of one which gets regularly molotoved. I'll let you guys know when actual blood happens.

NoDebt's picture

That's what I was thinking when I read the article.  Are we both wrong?  I thought I understood this point fairly well, but maybe not.

Attention Euro Banking Janitors..... clean up on aisle seven!

Mudja's picture

I've got a great position with Euros. They make great cat litter.

Half_A_Billion_Hollow_Points's picture

Bitcoin is the world's honest banking system.  Fuck inflation and fuck banks and god damn fuck the bernank.

foxmuldar's picture

Save those euros. Use your dollars for cat litter. Have you looked lately how strong the Euro is now against that greenback in your pocket. Is getting Ugly. the dollar is taking a nose dive. 

foxmuldar's picture

I have two young female kittens. If I put euros or dollars in their litter box, they would just pluck them out and hide them. They know better the value of saving then all the politicians in Europe and the US combined. I'd like to nominate my kittens stinky and dinky for treasury secretary. LOL  

SafelyGraze's picture

with a capital base of €22 billion and bad loans of €46.8, the greek banks just need for others (greeks, eu members, imf, ecb, pension funds, japan) to go ahead and lend them the difference.

this is so simple. problem solved.

keep it off balance sheet and you are recapitalized