Who's Next? Italy's Monte Paschi Admits To Billions In Deposit Outflows

Tyler Durden's picture

It appears, given news from Italy today, that European depositors are increasingly coming to the realization that deposits in their local bank are not 'safe' places to put their spare cash, but are in fact loans to extremely leveraged businesses. In a somewhat wishy-washy, 'hide-the-truth'-like statement on Monte dei Paschi's website, the CEO admits to, "the withdrawal of several billion in deposits." Of course, the reasons why these depositors withdrew their capital from the oldest bank in the world will never be known though of course he blames it on "reputational damage" from their derivative cheating scandal. Apparently the fact that this happened to come about six week after said scandal and the bank's third bailout, and that the prior two bailouts did not result in such an outflow of unsecured liabilities (at least not to the public's knowledge), was lost on the senior management, as was lost that a far greater catalyst may have been the slightly more troubling events in Cyprus in the second half of March. Unsurprisingly, as Reuters notes, the CEO declined to give a forecast on the level of deposits at the end of the first quarter of 2013; no wonder given the bank just doubled its expectations for bad loans and the 'Cypriot Solution' dangling over uninsured depositor hordes.

Via Reuters,

Customers' deposits at Italian bank Monte dei Paschi fell by "a few billion euros" ... the bank said in a document posted on its web site on Saturday.




But it has yet to make clear what impact the scandal itself had on its first quarter results.


"The illicit nature of the derivatives trades and their consequence on the bank's assets exposed the bank to reputational damage that was immediately translated into...the withdrawal of a few billion euros in deposits," the bank said in a document for shareholders attending its April 29 meeting.




But he declined to give a forecast on the level of deposits at the end of the first quarter of 2013 or to indicate the outlook for net interest income and loan loss provisions.

A quick glance at BMPS' capital structure shows that there isn't a whole lot (read: almost any) of impairable securities below the unsecured liability (i.e., deposit) level. It is also obvious that when the bad debt impairment begins and depositors start getting whacked at least senior bonds, which should be pari passu, will feel the pain too as per the Diesel-BOOM doctrine, although we doubt this particular case of pain sharing will bring much comfort to any and all uninsured depositors in the oldest bank in the world.

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francis_sawyer's picture

Italians understand the meaning of a padded mattress...

Banksters's picture

Fractional reserve implosion in 3, 2, 1.   No worries, because GS Draghi will save the day, though I did read somewhere that  banks who required Emergency Liquidity Assistance would need to be solvent but illiquid.  Lol.  You can't make this shit up.



Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

What could go wrong?
Richard Chesler's picture

Financial speculation is intrinsically a transitory mechanism, since it is dependent on confidence, and confidence in the medium run is undermined by the very speculation itself.

SafelyGraze's picture

"where there is no (libor) justice, there can be no deposits" 


BaBaBouy's picture

Will Cyprus Fractional Reserve Banking (-7%) Contagion Spread Across EU ???

Will Ben Shalom Save Europe And The 1% Like In 2008 ???

Will FED Sprinke $ TRILLIONS Around The World Like Green Icing Sugar ???


HAVE Your Postion In GOLD In HAND !

Kirk2NCC1701's picture

If "Nigel-you-heard-it-here-fist-Farage" is to be believed in his proclamation in Santiago today, 3/30, he stated to day that "Slovenia is next".  In spite of what their politicians claim.

I have not received a satisfactory answer how that can be, given one of Europe's most educated people and an economy that until recently had a puny 38% Debt/GDP ratio.  Unless someone knowingly and deliberately toxified their banking system -- to set them them up for a fire-sale plunder of real assets!? -- it makes NO sense how an economy can go from 'glow' to 'no go' in such a brief time frame. 

A banking version of Ocean 11 con-game going on with the banks of small and easy-to manipulate peripheral economies?  Got Goldman Sachsed?  If so, it goes to show just how desperate the 'core' banks have become on the EU... playing for time, to allow their creme-de-la-creme clients to run for shelter, before it all blows up.

Ahmeexnal's picture

Slovenia will be the wall against which the teutonic usurer plunderers will crash and burn. Those people don't play shit and know very well whom to go after.

indygo55's picture

Yes but do they have guns?

new game's picture

duplicate but worth 2nd post - IMFO


None of this will happen.

anybody in there right mind seeing any of the right things happening, fuck no.

it is getting worse; EVERYWHERE EXCEPT ICELAND!!!!!!

tptb are firmly in control and WILL use the force of police and military to back their policies.

we are firmly locked into facism. the grip is FIRM.

wake the fuck up and quite wasting your mental energies thinking there will be a better set of policies

governing america or anywhere on this globe.

dont get me wrong, i too wish that we could put stockman or paul craig roberts in control. but i have

moved on to a better place(mentaly) - planning for the inevitable- anarchy til new forms of government evolve. This is the HISTORY lesson that will take place in your lifetime (if you are under 80 years old).

all i am saying these people sounding the alarm are correct but POWERLESS to make any change and most importantly IT IS TOO LAtE -ALREADY.

can't raise rates or allow them move to market adj. - bonds implode. without printing rates would rise and kill the budget, not to meNtion dumpage, and most iMportantly the dollar is heading to the cliff. all these policies converge to a meltdown and chaos.

any change in current policy causes major disruptions such as no check in the mail to MILLIONS of humans or bond dumpage, all while the brics are setting up trading paths around the almighty dollar. shalom has so fucked us all and he is getting backed tighter and tigher into a corner of which there is no way out without major, major market disruption or collape of life as we know it.

wish think realize and

plan accordingly...

I almost forgot-happy look in the tomb day to youall...

UK debt marsh's picture

Ireland's Debt:GDP was sub-40%, and Spain's was about 40% when TSHTF.

Slovenia's is now 60%, not 38%, and rises to 80% if you take guarantees to deadbeat State-owned enterprises and banks into account.

That 80% rose last week as they "solved" their banks with more cash-less guarantees

They may dodge the bullet, and I wish them well.  My own bet would be on Italy being next, as either a waxwork clown or a comedian win the next election, and in the interim every economic statistic looks sick.

Hondo's picture

Remember who plundered the Cypriot banks....the elite. What are the bad assets on the books of the banks who put them there and who defaulted on them.....

Antifaschistische's picture

We need to track the number of personal safes sold in the Euro area. I bet those sales are doing just as good as gun/ammo sales in the US. Why keep your money in a bank if you can't believe it's "safe".   That's the only reason left on the planet to put your money in a bank...safety.  It's certainly not for ROI.

Buck Johnson's picture

Fractionl reserve looked good when it was being made but when it is in reverse, the banks have to come up with the money and they don't have it.  For the bank to lose a couple of billion that money was leveraged many of times. 

RaceToTheBottom's picture

Derivatives in the TBTF cesspool banks will do what Glass-Steagall had done in the past.  Any bank large enough to have large Derivatives should not be the place for your deposits (or any business) and should not be covered in any deposit guarantee blathering.  The guarantee cannot be honored

NoDebt's picture

I think you hit on an important point.  Lay the Cyprus "template" over Citi or BofA...... I wonder what it would look like?

The ONLY thing left to hang your hat on with US banks is the ablity for the Fed to print currency (which Euro nations individually lack) to make depositors whole in nominal terms.  Still, an XX% currency devaluation looks not-so-bad compared to a Cyprus bank depositor who lost, effectively, everything.

There are no good choices left.  There are only choices.


augmister's picture

+1!   Bingo!  Cyprus IS the template and the TBTF banks in the US are headed down the same path, no doubt.   Before this is over in the US, there will be "new fiat" to replace and wash out the old.   Transfering FNRs to the Bank of Sealy and Bank of Certa will just be undercut by the ruling powers.   Only one path for those FNRs, and that has been post here ad nauseum.  Think of the reissue of the "new fiat" as a reverse stock split, on the order of 1 to 10, for starters.  All the legal marihuana will not let Joe and Mary Beercan American forget that they have been fleeced.   Any wonder why DHS has been buying up all the hallow point ammo?   Restrictions on legally obtained firearms in the US?   Does it all fit yet, comrades?

Handful of Dust's picture

My Uncle Guido lives South of Naples and he says they are VERY aware "what's a hap'n in Cyprus"...in his own words.

I suspect there will lots of Italians taking vacation up in Norway...and while they are there, paying the Norwegian bank a visit.

BTFDemocracy's picture

They say its not so easy for foreign prospecting clients to deposit money into norwegian accounts...

Maybe a Norwegian can fill us in on the details.

e-recep's picture

i think all banks on earth are fucked. norwegian banks are no exception. you gotta get out of the global banking system.

Againstthelie's picture

And the reason why Gold also next week probably will be sold during european trading like it happened the last two weeks...

The more severe the problems, the more Gold is in danger...

spankthebernank's picture

Gold is not in danger.  Any weakness in price will accelerate the heavy accumulation going on right now.

Lets_Eat_Ben's picture

Im feeling good about my gold calls =)

They can't stop that train. If Italy or any large country moves into gold the economics of a shift like that cannot be controlled. At that point it becomes a political situation of the highest priority.

Ahmeexnal's picture

when that happens, you can count on north korea conveniently launching a couple of nukes

augmister's picture

Your gold calls will only be good if you buy physical.   And in my geo, it is drying up!   Be a buyer of physical at ANY price.

Go Tribe's picture

China on holiday next week isn't it?

qmhedging's picture

Meanwhile in China " The Centre for Health Protection (CHP) of the Department of Health received notification from the National Health and Family Planning Commission (the Commission) today (March 31) concerning three confirmed human cases of influenza A (H7N9).

     A CHP spokesman said the two cases in Shanghai were two men aged 87 and 27, who passed away on March 4 and 10 respectively. As regards the case in Anhui, the 35-year-old female patient is now in critical condition.

More fowls will float with pigs.


qmhedging's picture

Meanwhile in China " The Centre for Health Protection (CHP) of the Department of Health received notification from the National Health and Family Planning Commission (the Commission) today (March 31) concerning three confirmed human cases of influenza A (H7N9).

     A CHP spokesman said the two cases in Shanghai were two men aged 87 and 27, who passed away on March 4 and 10 respectively. As regards the case in Anhui, the 35-year-old female patient is now in critical condition.

More fowls will float with pigs.


Pinto Currency's picture


Beauty, Banzai.

Keep on, keeping on.

SafelyGraze's picture

and when your exam is finished .. 

a happy ending!

FreeNewEnergy's picture



BurningFuld's picture

Monte Paschi says" tis' but a flesh wound."

willwork4food's picture

But JFK said " Why is it bleeding so much?"

Long_Xau's picture

...flesh weighing only one pound, taken from the heart.

JR's picture

Banzai7’s brand of political satire cuts to the chase with a humorous exaggeration so unexpected it jolts the senses with delightful merriment and a burst of laughter. He's an original. He’s a genius of political statement.

He’s the plus one on the Zero.

palmereldritch's picture

Seriously, ....and I mean it, I am not asking for this....[God forbid, God forbid]... but shouldn't he be wearing a thong?

bustdrs's picture

Banzai, one of the best ever graphos

Swarmee's picture

This sort of exposure is probably why Bernanke has TWO pairs of suspenders in his "tool kit".

kliguy38's picture

They would never publicly admit it unless they WANTED you to know it....they're running money OUT of deposits in an effort to pump up the velocity......THAT is how bad things are now.........

Dealer's picture

Man this whole thing is so crazy.

Irelevant's picture

If all the cash goes into that infinite suply of oil we have waiting just around the corner then all will be well.

A Man without Qualities's picture

Ain't much money velocity when it's stuffed under the mattress.



mayhem_korner's picture



Sure about that...?  What money moves faster - that which is "held" in a bank account, or that which is physically lying around?  Not sure why it would move less fast just because it's not in a "vault."

seek's picture

Spending rates decline sharply during times of crisis, having cash on hand isn't going to change that. People will husband their last dollars/euros very carefully until they think it's safe to spend.

This really does reek of desperation. I keep wondering what's broken that we don't know about.

Long_Xau's picture

There's one more factor though. In many EU countries, including Cyprus, the interest rates on savings and the perceived price inflation rates (not the statistics (this is a new word I just came up with, not to be confused with the science of statistics1. Statistics2 is a portmanteau of the words statist and statistics1, and as anything that has to do with the state, it means nothing like what it looks like at first glance)) are not pegged at zero yet. When people feel their savings are evaporating it does make them feel a strong pressure to convert them to something else.

By the way, even when people "spend" cash to buy precious metals, it has a very short term effect (increase of velocity of money) which could fool bankers, e-con PhDs etc. that things are getting better for their scheme.