Stress Fractures of the Banking Crisis Appearing in India and Italy

13.12.2016 • The Economy

By Julien Backhaus – Wealth Protection Today (Germany) –

In the past few days you have often read that Italy’s banks are under pressure.Still, this problem seems to be far away. However, you should know that there are alarm signals that are also important for us.

UniCredit Bank is headquartered in Italy. In the meantime, she is the mother of the HypoVereinsbank, whose certificates are, for example, many bank customers in Germany. Also, many of you own accounts at the HypoVereinsbank. In the UniCredit bank, however, commercial panic prevails.


Massive job cuts at UniCredit

According to a report from this morning the bank is building 14,000 jobs. Of course, this does not only happen where the employees had been bored to date. It expands services and thus also services for customers. This is not bad. However, the company also needs fresh capital from the financial market.

Now it was announced that she wanted to cash 13 billion euros with new shares. This also means that it needs the 13 billion euro, or at least a very large part of it. The bank had many bad loans in the balance sheet, according to credible rumors. Lazy are those loans whose repayment is not only in the stars, but probably even completely or at least partly fails.

As early as today, according to the initiate, the bank might announce the capital increase – or have already announced when you read these lines. But the capital increase is merely a wish to the financial market. There is no guarantee that the shares will actually find new buyers at the expected or hoped-for price.


Must we all save the bank?

Now it is interesting: in the meantime, according to a report on a member, the Bundesbank considers it possible that banks need to be helped, as they say. This means nothing else than that state money, ie your money in the form of taxes go to the banks or banks among themselves still earlier than thought of each other for each other.

In the worst case, joint liability, the mood could become restless. A run on bank accounts, as we did last a few years ago at the British bank Northern Rock. For fear of losing their money, long queues formed.

Is this idea so daring? Yesterday it was announced that India has frozen gold at a gold dealer. Since the beginning of November, there has been pure chaos. The government has declared invalidity of larger bills and is actually preparing for the ban on cash or at least implementing it with its actions. However, there has been a so-called negative bank run in India.


India shows that bank customers are no longer safe

The Indians had to pay high cash to the bank in order to get rid of their cash. This resulted in long queues during the deposit. Many Indians will nevertheless lose a lot of money, since it is assumed that the cash holdings in the households are high untaxed sums. They can no longer return them by making a deposit into legality.

In any case, it is clear that the banking landscape is facing considerable unrest. UniCredit is probably just the beginning. Although the beginning is spectacular. Customers of the HypoVereinsbank have nothing to worry about. The bank accounts are secured by the deposit insurance required by law. Certificate holders, on the other hand, have only debentures against the bank. Purely speculative: in the long term problems could arise.


The beginning within the banking crisis is made. UniCredit Bank is one of the largest institutions and has direct contact with the German banking market through its subsidiary HypoVereinsbank. We should be cautious as bankers.

-Read more at (German)-

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