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Crimea Bank Runs Begin As “Bail-In” Risks Arise
Zero Hedge
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.
