Two weeks ago we presented pictures of a bank run in Latvia after one local bank had been found to do just what MF Global is alleged of doing - gross commingling. To wit: "If anyone is wondering why the collapse of MF Global after the discovery of its commingling and theft of client funds was the single worst thing that could happen to market confidence, then look no further than the small Baltic country of Latvia where precisely what Jon Corzine's firm did to its clients, has happened at the bank level. Businessweek reports: "Lithuanian prosecutors issued an arrest warrant for Vladimir Antonov and Raimondas Baranauskas who are former shareholders of Bankas Snoras AB. Both men are suspected of embezzlement and document forgery, the Prosecutor General said in a statement on its website today. Baranauskas is also suspected of accounting fraud and abuse of authority, it said." Kinda like Jon Corzine, if not by the actual authorities, then by everybody else....Depositors can withdraw 50 lati a day beginning today for the rest of the week, said Krumane at a pressconference." At today's rate this is about $95. Which is why what happened next, as shown in the pictures below, was to be completely expected, and is a perfect indicator of the collapse in liquidity and credibility of our own system where commingling, unlike in Latvia, goes unpunished." Sure enough, as nothing has changed, either in Latvia or the US, things just got worse. Following a rumor in Latvia that the large Swedish bank Swedbank is about to collapse, Latvia has just experienced its second bank run in under a month.
Video of people lining up at ATM and branches:
Google translated from E24.no
Latvian customers of the Swedish large bank Swedbank has through the weekend emptied ATMs in several areas. This after rumors that the bank is about to collapse.
This confirms several sources in Latvia to E24, as well as communications director Thomas Backteman in Swedbank.
- Yes, it is true that there is greater activity against ATMs in some regions of Latvia, said Backtemann to E24 Sunday evening.
The Swedish bank Swedbank is one of Europe's largest banks, and in Norway owns the brokerage, First Securities.
When customers begin to withdraw savings from a bank, this is called a bank run . Since a bank can not muster all the money that is on savings accounts at short notice, is a silk incident very dramatic for a bank.
There are conflicts view about the severity of the actual run:
Backtemann think what happens is very undramatic:
- I would not call it a bank run. We are talking about small amounts in a few regions in Latvia, but not in Riga.
This disproves the Norwegian Tor Bernhard Slaathaug, who works and lives in Riga:
- ATMs of Swedbank around the corner from me is empty, and there is no congestion at other ATMs in the area, he says to E24.
- People are worried, after Krajbanka emptied bank guarantee fund, and thus is of course the people concerned. If a new bank tipped over, it will have serious consequences, says Slaathaug to E24.
Regardless of just how severe the event ends up being, isolated incidents like these occuring increasingly more frequently will do nothing to reinforce the public's confidence that the financial system is actually stable. And all it will take is one such rumor and/or one bank run in a major "developed nation" for things to begin unwinding.Unfortunately, with the global financial regime only focused on the symptoms and never the underlying causes of the problem, more such pictures of empty ATMs in the near future are virtually assured.