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Crimea Bank Runs Begin As "Bail-In" Risks Arise

Tyler Durden's picture




 

While the sight of Russian flags, pro-Russian troops, and Russian navy ships in Crimea is now a day-to-day thing; this morning brings a new normal for the eastern Ukraine region - long lines at bank ATMs as the bank runs have begun. We noted last night the dreaded inversion of Ukraine's yield curve, the greater-than-50% yields on 3-month Ukraine government debt, and the pressures on local bank debt maturities as the ability to garner dollars cost-effectively was becoming a problem but on the heels of concerns by the head of the central bank that moving cash in Crimea was difficult, ATM withdrawal limits have been cut. People in long ATM lines are reported to be concerned because "banks are closing" but it is Deutsche Bank's comments this morning that raised many an eyebrow as they suggest that Ukraine's debt is pricing in a "burden-sharing" haircut for bondholders (which as we have seen in the past - in Cyprus - can quickly ripple up the capital structure and become a depositor haircut).

Quiet calm bank runs are beginning in Ukraine...

h/t @MarquardtA

 

As Deutsche Bank raises the prospect of bail-ins and Private-Sector-Involvement (PSI) in bailing-in the banks and government...

...given the recent experience of IMF programs it is natural to ask whether some form of 'private sector involvement' (PSI) will be proposed as part of any package of support.

 

 

The IMF itself recently published a consultation paper arguing that private sector debt restructurings had “often been too little, too late” and that the fund should look at ways to avoid its “resources eing used simply to bail out private creditors”. The ongoing consultation process which this paper nitiated is one reason why concerns over IMF-sponsored restructuring are more prevalent for Ukraine now than they have been in similar situations in the past. However, we think it unlikely that there will be  ignificant change in the Fund’s approach towards Ukraine, given that the consultation is still ngoing, views are divided and its outcome remains uncertain. Nevertheless, that does not mean that some form of PSI will not be considered, condoned, encouraged or even mandated and so it is useful to onsider the pros and cons from the perspective of the Ukraine (and its potential official sector inanciers) and the implications for private sector creditors.

[Of course PSI can take on many forms from debt-extensions to bondholder haircuts to further up the capital structure depositor haircuts]

...current market prices are relatively consistent with such a scenario of PSI-lite. Indeed, the current relative pricing of Ukrainian bonds are very unusual: the pricing of short-dated bonds are distressed, implying a relatively high probability that they won’t redeem at par, but on the other hand the narrow range of prices across the curve suggests that the market assumes a high recovery in the event of a default/restructuring.

Such pricing would be fair, considering a baseline scenario involving an IMF program and an orderly adjustment. However, it leaves little compensation for a more disorderly scenario. Tensions with Russia show no sign of abating and could escalate further. Also there is no guarantee that the new government has a strong enough popular mandate to carry through the necessary reforms. PM Yatseniuk has emphasized that the road ahead for Ukraine will not be easy, but only time will tell how united the country will be in following the path he intends to take.

We suspect a brand new populist PM is unlikely to remain in power long if depositor haircts were engaged - and would certainly not imbibe the eastern Ukraine region with the country's new leader.

 

It is also notable that these bank runs are focused on local Ukraine/Russian banks...

 

 

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Thu, 03/13/2014 - 09:19 | 4542470 IridiumRebel
IridiumRebel's picture

Come on you fuckin nazis! You gave the gold away now go get their money. my money would have been gone before Putin landed at Sevastopol.

Thu, 03/13/2014 - 09:25 | 4542488 nope-1004
nope-1004's picture

Insolvent banks.... huh, who knew?  Where is Geithner when you need him for another round of stress tests?

 

Thu, 03/13/2014 - 09:35 | 4542516 CH1
CH1's picture

Betcha they wish they had some Bitcoin now!

Thu, 03/13/2014 - 09:40 | 4542535 fonestar
fonestar's picture

Anyone who keeps their "money" in a bank in 2014 is just plain stupid.  Sorry, but no sympathy.

Thu, 03/13/2014 - 09:55 | 4542594 IridiumRebel
IridiumRebel's picture

I agree with this...our medium of exchange may be different, but I agree. Get your buddies out here to downvote my posts too. Keep...whatever the hell you call stacking...bitcoins.

Thu, 03/13/2014 - 10:14 | 4542670 fonestar
fonestar's picture

fonestar owns gold, silver, Bitcoins, weapons of all major calibers, ammunition, dried food, water purification, generator, tools and more...

Thu, 03/13/2014 - 10:46 | 4542828 IridiumRebel
IridiumRebel's picture

I knew I liked you.....

 

 

...when you post like a normal person without bitcoin rhetoric.

Thu, 03/13/2014 - 10:54 | 4542874 DoChenRollingBearing
DoChenRollingBearing's picture

Got me beat.  I still need the generator, water purification gear and more tools.

I should get more ammo too.  They say that only a few thousand rounds is not nearly enough.

Thu, 03/13/2014 - 11:00 | 4542912 bluskyes
bluskyes's picture

got fuel for that generator?

Thu, 03/13/2014 - 11:03 | 4542928 fonestar
fonestar's picture

Some, plus additives to prolong usefulness.

Thu, 03/13/2014 - 16:37 | 4544809 JuliaS
JuliaS's picture

And of course, foney's stash is 100% digital. Real stuff's for suckers, you see.

If you think that "real" is what you can touch, then, according to professor Fonestar himself, you are a "simple-minded idiot" (as oppose to a highly sophisticated one).

Thu, 03/13/2014 - 09:59 | 4542604 Bill of Rights
Bill of Rights's picture

For once I agree

Thu, 03/13/2014 - 11:20 | 4543013 TheHound73
Thu, 03/13/2014 - 11:44 | 4543144 Kirk2NCC1701
Kirk2NCC1701's picture

People are Sheeple in almost every country.  Only the experienced (old) ones, smart ones and distrusting ones will keep most of their money at home.

Kirk takes the Squirrel approach to risk mitigation:  Bank of this, Bank of that, Bank here, Bank there, Bank in Far Far Away, Bank of Certa & Sealy.  Thus covering every scenario/situation for acces to Cashish.   But then again, Kirk is not afraid to leave the village or country, the way most sheeple are afraid to.  ;-)

To use another analogy of "predictive bahavior", it is known that although a rabbit might zig & zag, he always runs a pattern around his hole: a rabbit runs in circles.  So do most people.  And we all know what happens to rabbits and sheep.  :-(

Thu, 03/13/2014 - 10:07 | 4542636 asteroids
asteroids's picture

If I were evil, once Crimea joins Russia, I would simply default on Crimean debt/bonds. This would probably fuck up a lot of people Russia isn't too happy with.

Thu, 03/13/2014 - 09:27 | 4542496 Sudden Debt
Sudden Debt's picture

My money would be gone, and I'd be on a plane outa there like the very same day!

But as Ukraine still has it's own currency, it's actually VERY SMART TO TAKE OUT A BIG ASS LOAN, BUY GOLD WITH IT AND WAIT 2 MONTHS WHEN THEIR CURRENCY IS DEVALUATED BY 99% AND REPAY THE DEBT WITH A PACK OF SIGARETTES!!!

Thu, 03/13/2014 - 10:05 | 4542628 Luckhasit
Luckhasit's picture

Since the Ukraine is going the Venezuela route, I would substitue cigs with toilet paper.

Thu, 03/13/2014 - 10:56 | 4542880 DoChenRollingBearing
DoChenRollingBearing's picture

Depending on yoru culture, cigarrettes are very value dense.  Still having a few dozen rolls of TP tucked away does give one a little cusioning in case of supply interruptions...

Thu, 03/13/2014 - 10:17 | 4542668 Billy Sol Estes
Billy Sol Estes's picture

The American version is to:

 

  1. Change 401k contribution to 0%
  2. Take out a loan from your big corporate 401k
  3. Buy the dip in Gold
  4. Pay yourself back over the year
  5. Repeat every year till crash

In the event you decide not to pay yourself back, no one will arrest you or seize your assets.

Thu, 03/13/2014 - 10:21 | 4542702 symtex411
symtex411's picture

I highly doubt that they would price any loans in the local currency. 

Thu, 03/13/2014 - 09:53 | 4542553 Independent
Independent's picture

Seen longer lines in other places in Europe like those Brits waiting to get stuff out of their insolvent banks a while back.  At least the Crimeans are joining back with a country with tons of oil and gas and they wont have to stand in line for those, while them Euros are screwed royally.  I dont care what the ruble does compared to foreign currency.  All I know is Mother Russia had BLACK GOLD and if you dont have the shinny yellow beauty the Black one will do just fine. And dont forget there is ton of oil and gas offshore in Crimea, ask Exxon about it, but they will have to get back in line now to see who will develop those goodies.  The west can say all the crap they want, Russia now has a piece of the pie, gorgeous subtropical weather with no visa required.  Life is GOOD Suckaz!!!!!!!!!!!

https://www.youtube.com/watch?v=emcZfU0IECc

https://www.youtube.com/watch?v=D--cwQ6gWbY

Crimea is like the Mediterranean all rolled up into one Gorgeous Peninsula.  Russians dont need Greece or Turkey Vacations anymore.  Now World Visit Russia.

Thu, 03/13/2014 - 09:54 | 4542591 RaceToTheBottom
RaceToTheBottom's picture

Sochi annex

Thu, 03/13/2014 - 14:22 | 4544092 European American
European American's picture

"my money would have been gone before Putin landed at Sevastopol."

 

My devaluating fiat dollars have been (long) gone before The Mulatto landed in DC. Got Gold?

Thu, 03/13/2014 - 09:19 | 4542472 WarPony
Thu, 03/13/2014 - 09:41 | 4542545 fonestar
fonestar's picture

Hey moron, this effects Bitcoin how exactly?

Thu, 03/13/2014 - 09:50 | 4542577 Sudden Debt
Sudden Debt's picture

don't let them play with your balls man... that's gay...

Thu, 03/13/2014 - 11:26 | 4543045 WarPony
WarPony's picture

Back at you Skippy - moron.  It's called non-disclosure of risk, moron.  As in it's risky, moron.  Now how that effects a MORON like you is your own damn business, moron.

Thu, 03/13/2014 - 12:26 | 4543400 fonestar
fonestar's picture

At best this effects some(?) Bitcoin users in Texas who would volunteer to respect these "laws".

Thu, 03/13/2014 - 09:24 | 4542484 youngman
youngman's picture

I doubt the Ukrainian speaking Ukrainians are going to send more cash to the Russian speaking Ukranians....

Thu, 03/13/2014 - 10:22 | 4542704 Pure Evil
Pure Evil's picture

I think what you really meant to say was that the Ukrainian Ukraines are not going to bail out the Russian Ukrainians with their new fangled IMF bailout package.

Ah, decisions, decisions. Which is the least evil, loans from the IMF or loans from Putin.

Oh well, since they've already raped the Ukrainian Ukraines dry by stealing their gold, they might as well endure the pain of getting a new asshole reamed with an IMF loan.

Thu, 03/13/2014 - 09:25 | 4542486 Tabarnaque
Tabarnaque's picture

Welcome to Eurozone Bitchez! Ukraine to be Cyprused.

Thu, 03/13/2014 - 09:27 | 4542491 sudzee
sudzee's picture

Hyvna collapsing so grab some ruble while one can.

Thu, 03/13/2014 - 09:28 | 4542499 TheGermanGuy
TheGermanGuy's picture

Local sources report that the number of boating accidents has increased sharply during the last days

Thu, 03/13/2014 - 10:31 | 4542748 Billy Sol Estes
Billy Sol Estes's picture

Want to get in on the action?

Yacht rentals out of Odessa starting at €488.

No need to worry about a deposit or returning the yacht to the port-of-call.

http://www.kazantipvoyage.com/rent-yacht-odessa.htm

Thu, 03/13/2014 - 10:37 | 4542785 Billy Sol Estes
Billy Sol Estes's picture

Call: +33(0)4 93 91 97 34 to make your reservation today! 

http://www.easyboatbooking.com/en/boat-rental.cfm?idvl3=0&idvl8=0&idvl2=...

Thu, 03/13/2014 - 09:37 | 4542504 Dr. Engali
Dr. Engali's picture

Keep your "money" in the system you stupid sheep. You deserve what you get. Look at those lemming standing in line to take back what they think belongs to them. 

Thu, 03/13/2014 - 09:38 | 4542528 MeMongo
MeMongo's picture

Ah look at all the nice, reserved, and overall calm demeanors of the sheeple in line, like there all waiting to sample some ale at the three Floyd's fesival:-) I get the feeling it won't be much like that if this shit starts in our inner cities!

Thu, 03/13/2014 - 09:42 | 4542549 fonestar
fonestar's picture

Tardo.

Thu, 03/13/2014 - 09:59 | 4542603 fijisailor
fijisailor's picture

No kidding.  It took them this long to wake up?

Thu, 03/13/2014 - 09:30 | 4542508 fijisailor
fijisailor's picture

Since when did DB start calling the shots with Ukrainian banks?

Thu, 03/13/2014 - 09:36 | 4542521 Byte Me
Byte Me's picture

58% of Crimeans know that Vlad has their back. Eat yer cookin' bitches!!

Thu, 03/13/2014 - 09:39 | 4542525 Smiley
Smiley's picture

Just cut the crap already and give us a number.  Everybody knows what this is:  How many hundreds of Billions are we being blackmailed for THIS TIME?

Thu, 03/13/2014 - 09:38 | 4542526 1stepcloser
1stepcloser's picture

Cash going out the front door....gold going out the back?

Thu, 03/13/2014 - 10:23 | 4542713 Billy Sol Estes
Billy Sol Estes's picture

No, crates of wine and ammo boxes are going out the back door.*

 

**Au is concealed carry, duh.

Thu, 03/13/2014 - 10:53 | 4542869 1stepcloser
1stepcloser's picture

Right who knew Banking is run like the mafia

https://www.youtube.com/watch?v=ZPtjyqgZAUk

Thu, 03/13/2014 - 09:40 | 4542527 astoriajoe
astoriajoe's picture

Good thing there are instagram filters to make it all seem artistically retro.

Thu, 03/13/2014 - 09:39 | 4542534 geno-econ
geno-econ's picture

Largest holders of Ukraine bonds are Austrian Banks. Watch for Austrian bankers to spike their sacher torte with cyanide---an eligant way to go.
Rather than accept a haircut or confiscation, as in Cyprus, most Ukrainians would be wise to buy rubles in the East and US dollars or shekels in the West.

Thu, 03/13/2014 - 09:45 | 4542558 WhoIsJohnGaltCoin
WhoIsJohnGaltCoin's picture

LOL MeMongo. what percentage of inner city dweller have over $1,000 in a checking account?

Thu, 03/13/2014 - 10:12 | 4542655 MeMongo
MeMongo's picture

Haha that's too true Galt! And foney don't call Me Tardo!

Thu, 03/13/2014 - 10:18 | 4542688 Billy Sol Estes
Billy Sol Estes's picture

I have a corporate job and my current statement is $120.

Thu, 03/13/2014 - 09:48 | 4542568 Belrev
Belrev's picture

Is this really true? And who is Alexander Marqedat on twitter?

I only saw a rumor about this coming from Ukraine's opposition blogs.

Prime minister of Crimea is refuting this rumor.

Why would he shoot himself in the foot 3 days before referendum?

Thu, 03/13/2014 - 09:50 | 4542575 Took Red Pill
Took Red Pill's picture

Coming soon to a bank near you! Why would anyone keep large amounts of money in a bank anymore? Virtually no interest paid and a chance you could lose it. Most people (not Z.H.ers) don't realize that when you put money into a bank, it's not yours anymore. You are lending it to the bank. FDIC is drastically underfunded. Any major financial crisis and it's gone!

Thu, 03/13/2014 - 09:52 | 4542584 nelsonmandella
nelsonmandella's picture

Fonestar rocks 

Thu, 03/13/2014 - 09:53 | 4542585 nelsonmandella
nelsonmandella's picture

Fonestar rocks 

Thu, 03/13/2014 - 09:57 | 4542599 fijisailor
fijisailor's picture

You mean as in rocks in his head?

Thu, 03/13/2014 - 09:56 | 4542597 Belrev
Belrev's picture

I think this is a rumor spread before the independence referendum.

 

I checked forums of Crimea major cities and they are very active, but nothing about any banking restrictions.

Seems like another false rumor spread by western media.

Oficially the Prime Minister of Crimea denied this rumor and sayd the photo of document "signed" by him to restrict withdrawals is a fake.

Thu, 03/13/2014 - 10:28 | 4542721 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

If it is just a propaganda rumor in Crimea (rest of Ukraine different story) it shouldn't have any effect locally or on the referendum. Simply I am local hear rumor go to bank don't see a line or see a line walk in and am told there is no restrictions. 3 days is too long a time to poison a local populace's opinion for it to be effective to sway a vote for something like this.

And besides it wouldn't be the regional Crimean government who is restricting the banks anyways since they are Ukrainian not Crimean banks, just geographical branch locations in Crimea.... Like foreign banks.

Thu, 03/13/2014 - 10:01 | 4542610 TrustWho
TrustWho's picture

Ukraine needs money. Crimea wants to leave Ukraine. I would expect all Crimean bank accounts will be zero the hour after the vote on statehood.

Thu, 03/13/2014 - 10:02 | 4542615 Last of the Mid...
Last of the Middle Class's picture

Evidentally while all the KGB operatives were waving russian flags in the square the population headed to the bank to get their money the fuck out.  Too funny

Thu, 03/13/2014 - 10:14 | 4542675 1stepcloser
1stepcloser's picture

I can't wait until this happens all around the world, all at once...  "Your deposits are now insured up to 1 Billion dollars", they will shout...but 1 billion dollars won't buy a loaf of bread... Blow it up...  

Thu, 03/13/2014 - 10:18 | 4542689 Ban KKiller
Ban KKiller's picture

"Won't pay back at par". No....shit? Best laugh today. Well except for the fonestar hits. 

Your FRNs are safe!

Thu, 03/13/2014 - 10:20 | 4542695 Billy Sol Estes
Billy Sol Estes's picture

Look at those idiots lining up at the APM: Automated Paper Dispenser.

If you want out of the country, you need to pay the border guards with the yellow stuff.

Thu, 03/13/2014 - 10:26 | 4542726 Rodders75
Rodders75's picture

 

Life's too short. Here are some photos of Erin Ade to cheer us all up. 

 

https://www.google.co.uk/search?q=erin+ade&source=lnms&tbm=isch&sa=X&ei=...

 

 

Thu, 03/13/2014 - 11:20 | 4543014 YHC-FTSE
YHC-FTSE's picture

They're a bit slow these neonazis, aren't they? They've got an alliance of zionists and nazis in government, they've lost all their gold to the Fed, they've got the Russians prepping for war, they've got their own nutjobs prepping for war, they're in debt up to their eyeballs, they're about to have their energy supplies cut, every soldier in the Eastern Ukraine with more than half a neuron rolling around their heads have defected to Russia, and they start queueing NOW for their cash? Unbelievable.

Thu, 03/13/2014 - 11:26 | 4543044 Angry White Dude
Angry White Dude's picture

This is a brilliant move / development. I read somewhere else (sorry no source) that after the referendum, the Russian ruble will replace the Ukranian currency. As Ukraninan banks start to fall, Russia can offer to make depositors whole in rubles. No idea how affordable that is for Russia, but certainly from a parlor game standpoint it is another opportunity for Russia to come riding in on a white horse to save the people...

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