Bank Runs Spread To Thailand

Bank Runs Spread To Thailand (ZeroHedge, Feb 18, 2014):

Thailand’s Government Savings Bank (GSB) president admitted that clients withdrew 30bn Baht (around $1bn) in a single-day last week and Bank for Agriculture and Agricultural Cooperatives (BAAC) and Krungthai Bank (KTB), although of a much smaller magnitude, have also seen withdrawal spikes of similar magnitude according to The Bangkok Post. The ‘bank run’ comes after speculation that cash at the state-run banks are being used by the government (which is in turmoil) to fund farmers (who have not received their ‘promised’ rice subsidies of over 130 bn Baht). Withdrawal requests are met with banks warning that there were insufficient funds at the time due to many depositors withdrawing cash. One depositor, rather ironically summed it up, “I started to feel concerned that my money may become only paper.”

Via The Bangkok Post,

The deposit flight from the Government Savings Bank (GSB) is not out of fear for its financial stability but rather is a response to speculation the state-run bank is involved in lending to the troubled rice subsidy of the Yingluck Shinawatra government.

Spikes in money withdrawal have also been seen at the Bank for Agriculture and Agricultural Cooperatives (BAAC) and Krungthai Bank (KTB), although of a much smaller magnitude.

Read moreBank Runs Spread To Thailand

Ron Paul: ‘The Great Cyprus Bank Robbery’

The Great Cyprus Bank Robbery (Ron Paul, April 1, 2013):

The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.

Read moreRon Paul: ‘The Great Cyprus Bank Robbery’

How Cyprus Exposed The Fundamental Flaw Of Fractional Reserve Banking

How Cyprus Exposed The Fundamental Flaw Of Fractional Reserve Banking (ZeroHedge, March 31, 2013):

In the past week much has been written about the emerging distinction between the Cypriot Euro and the currency of the Eurozone proper, even though the two are (or were) identical. The argument goes that all €’s are equal, but those that are found elsewhere than on the doomed island in the eastern Mediterranean are more equal than the Cypriot euros, or something along those lines. This of course, while superficially right, is woefully inaccurate as it misses the core of the problem, which is a distinction between electronic currency and hard, tangible banknotes. Which is why the capital controls imposed in Cyprus do little to limit the distribution and dissemination of electronic payments within the confines of the island (when it comes to payments leaving the island to other jurisdictions it is a different matter entirely), and are focused exclusively at limiting the procurement and allowance of paper banknotes in the hands of Cypriots (hence the limits on ATM and bank branch withdrawals, as well as the hard limit on currency exiting the island).

Read moreHow Cyprus Exposed The Fundamental Flaw Of Fractional Reserve Banking

JPMorgan On The Inevitability Of Europe-Wide Capital Controls

JPMorgan On The Inevitability Of Europe-Wide Capital Controls (ZeroHedge, March 22, 2013):

With the Cypriot government still ‘undecided’ about what to ‘take’ and the European leaders very much ‘decided’ about what to ‘give’, the fact of the matter is, as JPMorgan explains in this excellent summary of the state of affairs in Europe, that because ELA funding facility is limited by the availability of collateral (and the haircuts applied to those by the central bank), and cutting the Cypriot banking system completely from ELA access is equivalent to cutting it from the Eurosystem making an exit from the euro a matter of time. This makes it inevitable that capital controls and a capital freeze will be imposed, in their view, but it is not only bank deposits that are at risk. A broader retrenchment in funding markets is possible given the confusion and inconsistency last weekend’s decision created for investors relative to previous policy decisions. Add to this the move by Spain, which announced this week a tax or bank levy (probably 0.2%) to be imposed on bank deposits, without details on which deposits will be affected or timing, and the chance of sparking much broader deposit outflows across the union are rising quickly.

Via JPMorgan,

Capital Control Risks

What was widely viewed as an ill-conceived Cyprus deal last weekend renewed fears of a re-escalation of the euro debt crisis. The original proposal to hit insured depositors below €100k caused a bank run and set a new precedent in the course of the Euro area debt crisis, with potential negative consequences for bank deposits not only in Cyprus but also in other peripheral countries. Once again, as it happened with the Greek crisis last May, the Cyprus crisis exposes the fragmentation of the deposit guarantee schemes in the Euro area and its inconsistency with a monetary union.

Read moreJPMorgan On The Inevitability Of Europe-Wide Capital Controls

Mass Panic In Cyprus: The Banks Are Collapsing And ATMs Are Running Out Of Money

Mass Panic In Cyprus: The Banks Are Collapsing And ATMs Are Running Out Of Money (Economic Collapse, March 21, 2013):

European officials are openly admitting that the two largest banks in Cyprus are “insolvent“, and it is now being reported that Cyprus Popular Bank only has “enough liquidity to cover the next few hours“.  Of course all banks in Cyprus are officially closed until Tuesday at the earliest, but there have been long lines at ATMs all over Cyprus as people scramble to get whatever money they can out of the banks.  Unfortunately, some ATMs appear to be “malfunctioning” and others appear to have already run out of cash.  You can see some photos of huge lines at one ATM in Cyprus right here.  Some businesses are now even refusing to take credit card payments.  This is creating an atmosphere of panic on the streets of Cyprus.  Meanwhile, the EU is holding a gun to the head of the Cyprus financial system.  Either Cyprus meets EU demands by Monday, or liquidity for the banks will be totally cut off and Cyprus will be forced out of the euro.  It is being reported that European officials believe that the “economy is going to tank in Cyprus no matter what“, and that it would be okay to let the financial system of Cyprus crash and burn if politicians in Cyprus are not willing to do what they have been ordered to do.  Apparently European officials are very confident that the situation in Cyprus can be contained and that it will not spread to other European nations.

Unfortunately, European officials are losing sight of the bigger picture.  If the largest banks in Cyprus are allowed to fail, it will be another “Lehman Brothers moment“.  The faith that people have in banks all over Europe will be called into question, and everyone will be wondering what major European banks will be allowed to fail next.

Read moreMass Panic In Cyprus: The Banks Are Collapsing And ATMs Are Running Out Of Money

Cyprus Banks To Reopen Next Tuesday At Earliest As CAPITAL CONTROLS Become Reality

Cyprus Banks To Reopen Next Tuesday At Earliest As Capital Controls Become Reality (ZeroHedge, March 20, 2013):

We can only hope that nobody will be shocked that the greatly overhyped Friday Cyprus bank reopen has been postponed.

  • CYPRUS BANKS EXPECTED TO REMAIN CLOSED THROUGH END OF WEEK:CYBC

And since March 25, Monday, is another Cyprus bank holiday, “Greek Independence Day” (from whom? Certainly not the Troika), it means Cypriot banks will now remain closed at least until next Tuesday and likely far longer. In the meantime, since TV cameras can’t show lines of people at their freindly neighborhood bank, which will have been closed for over a week, the propaganda machine will blast full bore how because the market is pushed higher by the Fed, any fears of bank runs can be forgotten. Actually instead of “can”, replace with “must.”

But since banks have to reopen at some time, at which point the inevitable bank runs will become reality, the already discussed Plan B is now taking shape:

  • CYPRUS CABINET TO DISCUSS DECREE ON CAPITAL CONTROLS: CYBC

It remains to be seen if a country can’t have a bank run in the New Centrally-Planned and Despotic Normal, if there is simply a law saying it is now illegal to pull or transfer more than €100 of cash per day.

18 Indications That Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy

18 Indications That Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy (Economic Collapse, Sep 3, 2012):

Summer vacation is over and things are about to get very interesting in Europe.  Most Americans don’t realize this, but much of Europe shuts down for the entire month of August.  I wish we had something similar in the United States.  But now millions of Europeans are returning from their extended family vacations and the fun is about to begin.  During August economic conditions continued to degenerate in Europe, but I figured that it wouldn’t be until after August that the European debt crisis would take center stage once again.  And as I wrote about last week, if there is going to be a financial panic, it typically happens in the fall.  The stock market has seen quite a nice rally over the summer, and many investors are nervous that we could see a significant “correction” very soon.  The month of September has been the absolute worst month for stock performance over the past 50 years, and it has also been the absolute worst month for stock performance over the past 100 years as well.  Of course that does not guarantee that anything is going to happen this year.  But things in Europe continue to get worse.  Unemployment rates are spiking, manufacturing activity is slowing down, housing prices are crashing and major financial institutions are failing.  What is happening in Europe right now appears to be an even worse version of what happened to the United States back in 2008.

Read more18 Indications That Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy

Report: Bank Runs Have Spread To China’s Industrial And Construction-Heavy City Of Wuyishan

A Chinese Bank Run? (ZeroHedge, June 1, 2012):

The balance sheet recession that seems to have correctly diagnosed the problem facing Japan (and now Europe and the US)  – explicitly causing debt minimzation as opposed to profit maximization – seems to be taking hold. However, it appears this death-knell for credit-created growth is now being seen in China – as AlsoSprachAnalyst interprets “people are not borrowing, but selling assets to pay down debts, and/or holding cash“. What is most worrisome is that while the focus of the world has been on European bank runs (for fear of bank failure and redenomination risk), 21st Century Business Herald now notes that these bank runs have spread to China’s industrial and construction-heavy city of Wuyishan. Queues were seen on various branches of China Construction Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China.

more from AlsoSprachAnalyst:

The reason which triggered the bank run was that there was a company that has just gone bust, with the founder and other executives ran away, brining probably RMB1 billion or more away with them.  The company in question looks like a Ponzi scheme.  It has set up an online shopping site which, on top of selling stuff, asks people to sign up and pay a certain among of money (e.g. RMB1,600), then the company will pay people back at a rate of RMB20 a day (a fee of 5% out of this RMB20 is deducted).  It sounds like a pretty good deal for the members, as far as it is working.  Based on the bank statement of the members obtained by 21st Century Business Herald, the company did pay back quite a fair amount, but, of course, the company has sucked up more than it has ever had a chance to pay back.

As the company went bust and the boss disappeared, the members of the website who have paid quite a lot of money in hope to be paid back even more became rather angry, and went to the office of this company in Fuzhou (which is actually not at all near Wuyishan) to protest and smash things.  However, as a lot of members of the website came from Wuyishan, people are worried.  On late 30 May, there was apparently some chatter that the government is dealing with the case, and will need to freeze personal bank accounts (presumably for investigations).  As a result of this, people started queuing up at virtually all banks the next day.  One local resident told the reporter that the city “has gone crazy”.

Read moreReport: Bank Runs Have Spread To China’s Industrial And Construction-Heavy City Of Wuyishan

Bank Run: South Korea Suspends Four Savings Banks For Six Months From Today Due To A Liquidity Crunch



Feb. 19 (Bloomberg) — South Korea’s Financial Services Commission suspended the business of four local savings banks for six months from today due to a liquidity crunch.

The four banks are Bohae Mutual Savings & Finance Co. and three subsidiaries of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank, and Jeonju Savings Bank, the financial watchdog said in a statement today.

“They have suffered a bank run” after the recent suspension of two other banks, the FSC said in a statement after a meeting at 7:30 a.m. today. “We concluded that they will not be able to meet demand for withdrawals, eventually hurting depositors’ interests and credit order.”

Busan Savings Bank and Daejeon Mutual Savings Bank were ordered to halt operations for six months from Feb. 17 due to soured construction project loans. The commission is tightening scrutiny of smaller mutual savings banks, with a plan to buy as much as 3.5 trillion won ($3.1 billion) worth of deteriorating loans made to builders and developers.

Read moreBank Run: South Korea Suspends Four Savings Banks For Six Months From Today Due To A Liquidity Crunch