'Bail-in' Risks See Europe Banks Get Downgrade Warning

GoldCore's picture

Today’s AM fix was USD 1,334.25, EUR 971.57 and GBP 798.00 per ounce.
Yesterday’s AM fix was USD 1,333.50, EUR 971.94 and GBP 799.84 per ounce.    

Gold rose $2.30 or 0.17% yesterday to $1,337.40/oz. Silver fell $0.02 or 0.09% at $21.17/oz.

Gold in U.S. Dollars, 1 Year - (Bloomberg)

Gold traded below the highest level in more than four months as investors weighed the crisis in Ukraine against the weakening U.S. economy.

Prices rose 0.3% after a report showed that U.S. companies added much fewer workers than projected in February. The metal climbed to $1,354.87 on March 3, the highest since October 30, as tension between Ukraine and Russia escalated. Bloomberg reports that gold in Singapore  for immediate delivery was at $1,334.86/oz at 2:30 p.m. in from $1,336.90/oz yesterday.

Must read guide to and research on Bail-ins can be read here:
Guide: Protecting your Savings In The Coming Bail-In Era

The move towards "bail-ins" and away from government "bailouts" continues to evolve
and yesterday credit rating agency, Standard and Poor's  (S&P) warned that this could lead to credit ratings for European banks being slashed by one or two notches.

Following similar moves in the U.S., European banks could see ratings downgrades if regulators continue to move towards depositor and bondholder “bail-ins.” S&P signaled that it would review its ratings on banks by the end of April this year.

In the future, rather than banks becoming insolvent and being liquidated and wound up as has happened throughout history, “bail-ins" will force losses on bank's creditors including depositors as was seen in the testing ground for bail-ins that was Cyprus. Central banks and regulators now think that rather than governments and taxpayers bearing the cost of rescuing failing banks, now creditors including depositors will suffer losses.

"Bail-ins" target both depositors and bondholders. In some cases, bondholders are asked to defer repayment deadlines and can even agree to reduce their claims. If this becomes practice, it could drive up the interest charged by bondholders and have a negative feedback loop.

Some have warned that bail-ins could also damage the wider economy as it could mean that banks have to charge higher interest on their lending as a result. In our research, we have highlighted that bail-ins may have a very negative impact on consumer and business confidence as people’s life savings and cash balances of companies are confiscated as seen in Cyprus. 

S&P said developments in the U.S. towards "bail-ins" meant that its rating outlook on eight U.S. banks had already been impacted and now they are turning their focus on European banks.

The coming bail-in regimes will pose real challenges and risks to investors and of course depositors - both household and corporate. Return of capital, rather than return on capital will assume far greater importance.

Evaluating counterparty risk and only using the safest banks, investment providers and financial institutions will become essential in order to protect and grow capital and wealth.

It is important that one owns physical coins and bars, legally in your name, outside the banking system. Paper or electronic forms of gold investment should be avoided as they could be subject to bail-ins.

Must read guide to and research on Bail-ins can be read here:
Guide: Protecting your Savings In The Coming Bail-In Era

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Coldfire's picture

I wonder if defaulting on your debts might not have some kind of negative consequences.

pashley1411's picture

All you need to know is about the government, and finance, is GM.   When the going gets tough, the political "outs" get kicked in the face. 


MarcusAurelius's picture

The S&P will "review"?

Well that's it then. Everyone should be totally relieved that such measures are being taken by such an honorable rating firm (aren't they all). 

Bet heavily on the Eurozone being finacially sound forever and the EURO to 1.8000. Long live the TBTF entities. 

moneybots's picture

Bail in the bankers first.  Hank Paulson got some 500 million from Goldman Sachs.  The people doing "God's work" should be first in line to be bailed in.

no more banksters's picture

"It is almost certain that, the banksters will laugh this time, with the European Economic and Financial Affairs Council's (ECOFIN) decision, taken about a month ago, concerning the participation of shareholders and depositors in future possible damages of the banks, what they called "bail in". And this because, in such deregulation conditions, banksters will have the opportunity, not only to get away without paying a cent, in a potential banking crisis, but on the contrary, to gain from such a situation according various possible scenarios."


Ban KKiller's picture

I love it "return of capital". Can I have my gold back? No,...you don't hold it. 

highly debtful's picture

I get the the reasoning of physical PM's outside of the system to counter sovereign theft through bail ins. But I'm not too optimistic about my financial well being when my government really gets stuck in a financial quagmire, because they'll creatively try to rob me in so many other ways. One thing that comes to mind: tax on real estate. Once they start tinkering with that, you're trapped, because there's hardly anything less liquid than that. Just ask the Greeks.

Soul Glow's picture



highly debtful's picture

Oh, that's right. Silly me.

SpanishGoop's picture

If "bail-ins" fear becomes wide spread it is bye,bye and over for banks.

so, go on.


Soul Glow's picture

People won't think it will happen until it does.  People don't know banking accounts are un-allocated.  They don't understand that the FDIC stands for "Federal Deposit Insurence CORPORATION" and that what backs them backs the Fed and its US Dollar - NOTHING.

layman_please's picture

in this bizarre world banks need depositors 'as much' governments need taxpayers