Italy Hit By Biggest Depositor Run Since 2012

In the aftermath of the recent political and market turmoil in Italy, last weekend we were surprised to report that none other than JPMorgan came to the unexpected conclusion that what Italy's Euroskeptics are hinting at, if not explicitly pushing for, namely Exitaly, may be the best option for the country, however one which would not take place without major market turbulence.

At the heart of JPM's argument is that with Italy effectively owing the Eurosystem €426BN via Target2 imbalances, it has the leverage to if not start with a clean slate, then certainly threaten to do so...

... leverage which is further compounded by Italy's surprisingly favorable current account balance and Net International Investment Position (more details here).

So fast forward just a few days, when later last week the Bank of Italy released data on its aggregated balance sheet for May 2018 including its net Target 2 balance, showing a dramatic increase in its negative net balance. Indeed, the net balance deteriorated by nearly €40bn, its largest monthly deterioration since March 2012, to a new record of -€465bn.

As JPM further details, on the Bank of Italy’s balance sheet, the increase in the Target 2 liability was largely matched by a decrease in deposits from MFIs even as the aggregate size of the balance sheet was little changed, which as JPM's Nick Panigirtzoglou writes, suggests the worst possible scenario: that some deposits were moved abroad.

This is in sharp contrast with the period of rapid deterioration of the Target 2 balance during the escalation of the Euro area crisis from mid-2011 to mid-2012. At the time, the counterpart to increasing Target 2 liabilities came from an expansion in the Bank of Italy’s assets, primarily from an increase in liquidity provision to the banking system.  Indeed, the levels of excess liquidity in the Eurosystem given QE and the large balance of outstanding TLTROs reduce the need for such liquidity provision.

But, as JPM adds, this tentative sign of deposit outflows highlights another risk posed by a hardening of rhetoric regarding the euro, given that aggregate deposits at Italian banks (excluding deposits by other MFIs and
general government) amounted to nearly €1.7tr as of March 2018.

In short: with the risk of both Italeave and redenomination rising, the Italian savers are starting to pull a "Greece", something we observed on Friday in the dramatic spike in Italian bill yields above those of Greece.

Which brings us to the next "big question": how long will the Italian authorities allow these outflows to accelerate before they too respond with whispers (at first) of capital controls.

 

Comments

ravolla Pandelis Sat, 06/09/2018 - 12:41 Permalink

HEY Spam-Lovers!  It's time for the Biblicism Thread-Jack!!!

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In reply to by Pandelis

MoreFreedom Truther Sat, 06/09/2018 - 13:47 Permalink

People blaming lenders, for when borrowers borrow without the intention of paying back their loan, is getting old. 

Voters are the ones asking politicians to give them benefits from the treasury (i.e., steal from that other guy behind the tree, not me) that they aren't willing to pay for.  Those who voted for those politicians deserve what they voted for, good and hard.  The others are getting screwed.  

In reply to by Truther

philosobilly MoreFreedom Sat, 06/09/2018 - 15:43 Permalink

granted most people are functionally retarded, much less literate in basic math. the 2008 meltdown is a perfect example. people who had no right getting a loan, signed up for loans, which were ridiculous on purpose because of govt forcing lenders hands. govt and the serfs definetly at fault, not the lenders- they were coerced. but we create currency in the form of debt, due to the partial fractional banking model. you deposit 100 dollars, the bank then lends 90 dollars up to ten times createing 800 dollars out of thin air, this coupled witht eh actions of the fed buying bad debt to prop up the whole house of cards, all at the behest of govt and by its laws is the source of all the financial problems we now face. so yes the lenders choose to be lenders, no one is forcing them to be bankers instead of bakers or farmers, so they do share in the guilt. debt has always been slavery by another name, and serfs will be serfs.

In reply to by MoreFreedom

Endgame Napoleon BigCumulusClouds Sat, 06/09/2018 - 13:20 Permalink

There was a lot of celebrity glitter glued to the Clinton facade. 

Perot tried to cut through that glittery gauze with some straight talk. 

Didn’t work. 

When globalism ramped up in the Clinton-dominated Nineties, continuing through the subsequent decades, the wealth kept accumulating at the top due to 1) labor cost savings from offshoring over two million jobs to cheap-labor China & Mexico, 2) labor cost savings from using a welfare-supported workforce of single moms who are advantaged by working part time to stay below the income limits for pay-per-birth monthly welfare and refundable child tax credits up to $6,431, 3) labor cost savings from using welfare-buttressed & womb-productive illegal / illegal immigrant labor, 4) tax cost savings from the avoidance of corporate contributions to the SS trust fund by using foreign labor and 5) doubling up per household on non-job-creating & high-salaried jobs via assortative mating.

Since so much of America’s national wealth is in so few hands, and since wealthy people often respond to crisis by moving their intergenerational wealth offshore to foreign safehavens, the USA would, likewise, be very vulnerable in such a bank-run situation. Extreme wealth concentration is one way to build your Republic like a collapsible house of cards.

In reply to by BigCumulusClouds

TrustbutVerify Endgame Napoleon Sat, 06/09/2018 - 15:58 Permalink

Endgame...When globalism ramped up jobs left the US wholesale (understatement).  The US bought the hoax that all those jobs would be made up by "call centers" in the new computer and internet era.  Remember that?  I do.  

Forget the high-tech jobs and money concentrated into small areas.  They can take care of themselves.  There should be strong tax incentive, perhaps no taxes for 10 or 20 years for new plants within manufacturing sectors that were devastated by off-shoring.  Like garment manufacturing.  Its a sector that works well in rural areas.  Widespread moderate wages that require lots of people.  

Remember blue jeans manufactured in the US?  Levis an American Brand?  LOL.  Wrangler?  LOL. How about T-shirts?  Simple T-shirts.  Any made in the USA?  Only a very, very small percentage - way less than 1%.  The southeastern US used to be "eat up" with garment manufacturing plants.  It was amazing.  Now almost 100% gone.  

Bring it all back.  

In reply to by Endgame Napoleon

William Dorritt BigCumulusClouds Sat, 06/09/2018 - 13:50 Permalink

Arkanacide ?

My fav was the guy who strangled himself with the barbells just before he was supposed to testify against the Clintons in NY.

What did Bourdain have on them or Harvey ?

If Harvey talks they all go down; he was a regular on the Lolita Express along with Bill and Hilary.

Since the FBI and DOJ aren't the ones going after Harvey, lets hope he is looking a life with a bar of soap and a lonely body builder who will like him better with all of his teeth broken out. They love sex offenders in prison, kiddie rapers even more.

 

I thought I read that Dershowitz,

also a passenger on the Lolita who got Epstein a free-pass on Kiddie-sex-trafficking and immunity for the "unnamed" co-kiddie sex traffickers,

went to talk to Harvey.

 

I wonder how they will enforce Omerta with Harvey while he is in NYPD custody, does he have kids they can go after ?

In addition to the six properties where the Israeli Mosad kiddie sex compromise operation was run (according to former CIA Steele) , there is the question of what happened on the 300 foot yacht, I bet Harvey knows.

Under Global Magnetsky,

Epstein's so called Billionaire Investors; who paid him $1 Billion, acted as a money-laundering-conduit from Israeli Intelligence so that nobody-Jeffery would have the money, bling and status to operate the Compromise Operation.

All of the assets of the co-conspirators in the kiddie-sex-trafficking-operation should be seized by Treasury under Trump's executive order.

The Treasury can operate the properties while the assets are liquidated and the victims of kiddie rape paid restitution.

According to CIA Steele, all of the Control Files from the Lolita kiddie sex trafficking operation are in Israel for safe keeping.

 

The MeToo movement lost a fierce supporter in Anthony Bourdain, whose girlfriend Asia Argento accused Harvey Weinstein of sexual assault

http://www.businessinsider.com/anthony-bourdain-supported-metoo-movement-girlfriend-asia-argento-was-weinstein-accuser-2018-6

" His girlfriend Asia Argento was raped by weinstein. She is one of the leaders of the metoo movement, who is most likely being protected by the Government for her story about weinstein. Harvey has a history of threats and intimidation, this smells like retribution"

In reply to by BigCumulusClouds

Richard640 ravolla Sat, 06/09/2018 - 13:16 Permalink

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In reply to by ravolla

Endgame Napoleon Richard640 Sat, 06/09/2018 - 14:05 Permalink

I don’t know about that. Some Christian groups in America are very pro-Israel. Many individuals outside of those groups are, too. Blaming the tiny, worldwide, Jewish minority for every problem in the world is nuts.

But I do notice that liberals, including some Jewish liberals, overemphasize the historical sins of Christians, specifically the white Christians, while under emphasizing the evil deeds of those they place under the umbrella of “oppressed,” brown-skinned peoples.

Because the Holocaust was so vast and still in historical memory, I find this less grating than when groups with far less mistreatment from whites, or with major mistreatment that is multiple generations in the past, start that up.

It has been a long time since most minority groups were majorly oppressed in the USA. And in truth, many minorities have been able to parlay their group’s historical oppression into lucrative, PC-thumping careers. 

America now has a lot of brown privilege, including everything from brown-privilege scholarships, to affirmative-action hiring, to rampant and above-firing workplace discrimination in many workplaces with 80 to 90% minority employees, to the constant verbal laurel wreaths placed on minorities’ heads when they do anything good.

Real excellence speaks for itself. When a person does something above the pack, it is stand-alone, and at this point in history, the true excellence of above-the-pack minorities is not dependent on skin-pigmentation cheerleading to get its just reward. No need for extra accolades. 

But when minorities do any, little, good thing—when they just show what we would call good manners in the South—it will be pitched by liberals who are trying to prove their magnanimity as a demonstration of the greater, selfless commitment to the common good that minorities show to family and their fellow man.

It does not work two ways.

Minorites are above criticism in the most extreme ways. Whites are called racist for daring to criticize ithe most egregious actions committed by minorities.

When minorites do things like committing mass murder in the name of 1) religion, 2) ancestral blood lines or 3) skin-pigmentation loyalty groups, white people are just racist pigs for critiquing it harshly.

Nothing could be farther from selflessly pursuing the common good than mass murder.

We are told, over and over, by multiculturalist liberals, that  non-Western minorities learn at the knee of their close-knit families and their self-sacrificing cultures to subordinate their own needs to the group.

But in cases where they commit terrorist acts, they are putting the common good of their fellow Americans far below the obsessions of their ethnic / religious /racial loyalty groups.  

Even when people are in an above-critique minority group, it is not okay to be a mass murderer. It is not okay to be a white, Christian mass murderer, either, but even highly intelligent minorities often jump to the defense of fellow minorities, while castigating the white Christians. 

In reply to by Richard640

OverTheHedge ravolla Sat, 06/09/2018 - 13:31 Permalink

Lots of people have tried lots of different strategies to get rid of the biblical spammer - even I have succumbed to abuse once or twice. Phillipat completely lost the plot, bless him, to no avail. Your contemptuous ridicule is the best solution yet I take my hat off to you, sir.

Fingers crossed your fake spam doesn't become more annoying than the real thing.

In reply to by ravolla

Dilluminati Sat, 06/09/2018 - 12:33 Permalink

The EU Gangsters are after it, best to withdraw and buy Dollars, Gold, Silver, or lead.. opps

They have been disarmed in Europe, better buy gold and hide that in the yard buried, so the options are Gold and Silver.

Buying Olive Oil and food would be smarter than allowing the EU banksters stealing it all

JoJo Kracko Dilluminati Sat, 06/09/2018 - 12:42 Permalink

If the banksters want to inflate their way out of this central banks of the world caused imminent debt disaster (credit disaster?), then I can agree with your desire to buy Gold and Silver.   Dollars?  Not so much.   True it probably, in the short term, will still be the flight to safety currency, but only until it also has to be massively deflated to deal with their own debt problems.   Lead?  Yeah, right.   Long before TPTB are threatened by the massive number of guns owned by the poor in America, they will have (probably) manufactured enough reasons and MSM media support to have had the guns taken away from everyone.   Of course, this is assuming the shit doesn't hit the fan and have the whole system collapse at once.  If it does, then yeah, lead is probably the most valuable commodity of them all.

In reply to by Dilluminati

Let it Go Sat, 06/09/2018 - 12:39 Permalink

It was expected!

Unfortunately, much of the problem is rooted in the fact the euro itself was constructed on a weak and flawed foundation. Any currency joining and binding states or countries together must allow for an adjustment to send back funds to its weakest part or eventually it will become unbalanced and fail.

This means that until the EU is prepared to do “whatever is necessary,” to paraphrase ECB chief Mario Draghi, in order to protect retail bank depositors, the EU will remain far from being a united political economy. More on the problems that haunt Europe in the article below.

http://Euro-zone Growth Tepid-Euro Will Suffer.html

Imagery Sat, 06/09/2018 - 12:40 Permalink

"worst possible outcome: Depositors removing savings from banks"?  Really?

So they should just leave it in and let the OWO Govt & EU Goons steal it?

Damn, has ZH bought into the Globalist Fiat, Fractional-Reserve TBTF WS Bankster THEFT & FRAUD as a BIZ MODEL theme now?

just the tip Imagery Sat, 06/09/2018 - 13:35 Permalink

it's easier to do than you think.

when the c-note was redesigned, not once but twice, that rendered the original benjamins null/void.  there was a cut off date, sure, but if you didn't turn in your money by that date you lost it.

same here.  if they have it, you lose it, if you don't give it to them, you lose it.  so what was your strategy again?

In reply to by Imagery

shizzledizzle Sat, 06/09/2018 - 12:41 Permalink

What took so long? Perhaps all these "technical issues" were actually trial runs... Opps we're sorry you can't get to your money. We'll have it fixed by the time we are insolvent.

Jazzyg Sat, 06/09/2018 - 12:42 Permalink

"'That sure has all the signs of a Bank Run"~Bert(or Ernie..i get confused) the Cab Driver to George Bailey while he's busy groping on the new Mrs.Bailey in the back seat of the cab..."It's A Wonderful Life" 

Dre4dwolf Sat, 06/09/2018 - 12:47 Permalink

If italy offers its own currency again instead of the euros.... thats the bet of a century..... Italian bonds will skyrocket post Euro exit.

Great opportunity to make $$$

OverTheHedge Dre4dwolf Sat, 06/09/2018 - 14:04 Permalink

The oddity will be that the euro will continue to exist - normally with a currency collapse and change to new money, the old money evaporates, disappears, is wiped from reality. If your government was about to pull the rug and obviously start an inflation frenzy, but the current currency was going to still be available in the country next door, what would you do?

In reply to by Dre4dwolf

William Dorritt Sat, 06/09/2018 - 13:22 Permalink

So what if the Italians want to put some money under the mattress as a hedge.

If the Euro Banksters are able to collapse the govt they will steal the money out of the banks with bail ins like they did in Cyprus or was it Crete a couple of years ago.

Bring back the Lira overnight and require that all transactions inside of Italy are in Lira at fixed, but regularly reviewed exchange rates. The internal economy has to be recreated after the 30 year assault on free enterprise and entrepreneurs, and Italians.

Companies that need Euros or dollars can have monitored accounts for buying and selling just like the good old days when Italy was a country that was almost self sufficient save oil.

If Italian women don't want to be gang raped and wear burkas, they need to start having Italian babies. 3 is the replacement rate, not 2.