Bank tax

ei.sdraob

The latest EU brainflatulence seems to be a bank tax > http://www.irisheconomy.ie/index.php/2011/07/20/bank-taxes-and-buybacks/

Of course since we now own all the banks here and they bankrupt, that would mean more tax for taxpayers and passed on costs to customers :rolleyes:

waster81

Exactly we not only saved the banks, but going to have increased charges just to keep them in their cushy jobs

Sand

The bank tax seems to be on the same lines as the similar NAMA clawback clause - the intent appears to be punish shareholders, depositors and investors who didnt take the foolish risks, whilst insuring the investors who ought to be punished are repaid in full at taxpayer expense.

Its pretty stupid thinking which seems to miss what a bank actually is.

Glad to see Karl Whelan discussing the debt buy back plan - I was puzzled by this proposed plan when it was mooted.

The basic reality is that when Greece defaults it needs to do so in as simple and straightforward a manner as possible. All this faffing about is a waste of time and will only increase the cost of the default overall.

View

It might depend on the tax of course. A very large tax on let's say making large bets on the break-up of the Euro might concentrate some minds on the wisdom of such trades.

beeftotheheels

I have to say I like the idea even if I worry about the implementation. The harsh reality we live in is that governments will always step in to protect banks which are of systemic importance (AIB not Anglo or INBS). This means that governments are underwriting the risks of those banks. For which they should be paid a premium. A tax is as sensible a way to do this as any.

Now obviously if such a tax were seriously mooted then the banks would threaten to move offshore, but provided that the tax is levied on any banking activities within the EU rather than just on any banks HQed in the EU then it ought to be manageable (provided of course that the UK doesn't throw their toys out of the pram as they threatened to do so many times over the impact of the savings tax directive on the eurobond market - then again the UK now owns a couple of banks so the relative bargaining power of the city may have reduced).

If the crisis spreads to the US (and I have to say I really wonder whether the Goldman results were disappointing because Goldman is de-risking as they did in early 2007), and the US taxpayer is called upon to stand behind their banks again, then such a levy might gain traction there too, which could only be a good thing.

ei.sdraob - since I'd view the tax as an insurance which is unnecessary if we're also the investor I would think it could/ should be waived where the bank has already been mostly nationalized.

ei.sdraob

View wrote: »

It might depend on the tax of course. A very large tax on let's say making large bets on the break-up of the Euro might concentrate some minds on the wisdom of such trades.

They would just make those bets in any of the other 170 or so countries

beeftotheheels wrote: »

I have to say I like the idea even if I worry about the implementation. The harsh reality we live in is that governments will always step in to protect banks which are of systemic importance (AIB not Anglo or INBS). This means that governments are underwriting the risks of those banks. For which they should be paid a premium. A tax is as sensible a way to do this as any..

How about an easier solution, not allowing any bank to grow to big (erm "systemic") and splitting investment branches from daytoday banking, its not exactly a new concept it was done after the Great Depression. With a proper bank winddown and deposit transfer regime in place.

beeftotheheels wrote: »

ei.sdraob - since I'd view the tax as an insurance which is unnecessary if we're also the investor I would think it could/ should be waived where the bank has already been mostly nationalized.

Good point, they should call it a deposit insurance scheme then, the problem here is that it protects alot more than deposits, it also protects incompetency

edit: the main purpose of this tax is to collect money for more bailouts not to prevent this from happening again, which it wont

edit 2: comment from Desmond hits it on head

The targetting of non involved banks is irrational and unfair, and as such sets a very dangerous precedent for the Eurozone : what right minded investor or funder will touch a healthy European bank ?
The only reason for making all banks pay is that the politicians figure : it won’t hurt any one bank too much ; and that the banks aren’t popular. That is not a remedy…it is an excuse

later12

Interesting news on the Eurozone crisis just emerging now. The bank tax is being dropped in favour of a debt exchange, which is obviously more attractive to banks.

This is a pretty significant climbdown by Merkel in particular, it seems, since she has previously publicly opposed such a mechanism in strong terms.

http://online.wsj.com/article/SB10001424053111903554904576459310597648944.html?mod=googlenews_wsj

Germany and France have opted not to press for a bank tax to help finance the new rescue package for Greece, according to these people. The currently favored plan, following last night's Franco-German consensus, is to invite investors to exchange their Greek bonds for new, 30-year bonds bearing low interest and credit enhancement, officials close to the talks say.
Ms. Merkel and Mr. Sarkozy will present a proposal for private-sector involvement in the Greek package to Thursday's summit of euro-zone leaders in Brussels, these people said, without giving details. The French and German leaders agreed on a common proposal after talks lasting around six hours in the Berlin chancellery, which were joined late evening by European Central Bank President Jean-Claude Trichet.

fliball123

This is an absolute joke why not levy bank employees pay, pension and bonuses for this..

Irish Slaves for Europe

later10 wrote: »

Interesting news on the Eurozone crisis just emerging now. The bank tax is being dropped in favour of a debt exchange, which is obviously more attractive to banks.

This is a pretty significant climbdown by Merkel in particular, it seems, since she has previously publicly opposed such a mechanism in strong terms.

http://online.wsj.com/article/SB10001424053111903554904576459310597648944.html?mod=googlenews_wsj

So their plans aren't going to help Ireland in any way?

ei.sdraob

The plan is the same as ever, kick the can down the road, the two politicians pictured here have elections to worry about

later12

ei.sdraob wrote: »

The plan is the same as ever, kick the can down the road, the two politicians pictured here have elections to worry about

...And a bank tax would be likely to be far more popular with French and German citizens rather than Europe guaranteeing Greek debt, so I'm not sure why that should be relevant here.

It's not kicking the now well battered can down the well traipsed road by someone who ought to pursue fresher metaphoric activities, this anticipated move (if true) would imply a selective default, or a restructuring, of Greek debt.

That is significant and is a rare, welcome engagement with reality by the core European political leadership. Lets see how Austria, Finland and the Netherlands react, and what Trichet says later today.

later12

Irish Slaves for Europe wrote: »

So their plans aren't going to help Ireland in any way?

All in good time, I should imagine.

fliball123

later10 wrote: »

...And a bank tax would be likely to be far more popular with French and German citizens rather than Europe guaranteeing Greek debt, so I'm not sure why that should be relevant here.

It's not kicking the now well battered can down the well traipsed road by someone who ought to pursue fresher metaphoric activities, this anticipated move (if true) would imply a selective default, or a restructuring, of Greek debt.

That is significant and is a rare, welcome engagement with reality by the core European political leadership. Lets see how Austria, Finland and the Netherlands react, and what Trichet says later today.

You do realise the banks here are still fcuked ..where are they going to get this money..hint it begins with a "cust" and ends with "omers" the staff from the top down in all banks whould have their wages levied for this

ei.sdraob

later10 wrote: »

...And a bank tax would be likely to be far more popular with French and German citizens rather than Europe guaranteeing Greek debt, so I'm not sure why that should be relevant here.

Would it be popular there since they insist that their banks are all fine and dandy (or so we are told)?

beeftotheheels

later10 wrote: »

...And a bank tax would be likely to be far more popular with French and German citizens rather than Europe guaranteeing Greek debt, so I'm not sure why that should be relevant here.

It's not kicking the now well battered can down the well traipsed road by someone who ought to pursue fresher metaphoric activities, this anticipated move (if true) would imply a selective default, or a restructuring, of Greek debt.

That is significant and is a rare, welcome engagement with reality by the core European political leadership. Lets see how Austria, Finland and the Netherlands react, and what Trichet says later today.

Trichet was at the meeting and the FT seems to be suggesting that the Eurozone leaders now need to recap Greek banks

http://www.ft.com/intl/cms/s/0/36e18942-b372-11e0-b56c-00144feabdc0.html#axzz1SjJydggV

Stephanie made a good case for the ECB earlier in the week

http://www.bbc.co.uk/news/business-14203824

beeftotheheels

ei.sdraob wrote: »

Would it be popular there since they insist that their banks are all fine and dandy (or so we are told)?

Did you look at the stress tests/ Monday's markets???

Fine and dandy pffft!

later12

fliball123 wrote: »

You do realise the banks here are still fcuked

This really isn't about Irish banks. Nor should it be.

If you woke up this morning expecting a solution for the Irish banking system in any form, under any reasonable circumstances, you are far too optimistic an individual, and should spend your life as far removed from political and financial matters as possible, in order to protect said optimism.

Yes I do realise the Irish banks are still a bunch of juvenile scallywags, but at least some moves seem to be afoot which might help us improve their home and family situation.

Irish Slaves for Europe

later10 wrote: »

All in good time, I should imagine.

As in when we are about to default? Sick of all these short term solutions.

fliball123

later10 wrote: »

This really isn't about Irish banks. Nor should it be.

If you woke up this morning expecting a solution for the Irish banking system in any form, under any reasonable circumstances, you are far too optimistic an individual, and should spend your life as far removed from political and financial matters as possible, in order to protect said optimism.

Yes I do realise the Irish banks are still a bunch of juvenile scallywags, but at least some moves seem to be afoot which might help us improve their home and family situation.

So do you think that this decision to tax the bank will not effect our banks? My problem is that this tax will be levied against our non functioning broke assed banks..and if the customer does not pick up the tab the tax payer will so we will be paying that bit more to europe for the banks nice one

DJCR

ei.sdraob wrote: »

The plan is the same as ever, kick the can down the road, the two politicians pictured here have elections to worry about

Sorry to interupt, just a small observation.... Is Sarkozy actually taller than Merkal or is he standing on a box/camera angle etc.. she seems to be slouching.

Back on topic.... seems to me like another way to take tax payers money (in Ireland only) ..... very few of the other European countries own their banks so therefore the tax would be paid by private companies.

later12

beeftotheheels wrote: »

Trichet was at the meeting and the FT seems to be suggesting that the Eurozone leaders now need to recap Greek banks

http://www.ft.com/intl/cms/s/0/36e18942-b372-11e0-b56c-00144feabdc0.html#axzz1SjJydggV

Interesting, I hadn't seen that article. Imagine the conversation. I wonder if the market will get an opportunity to react to any official statement from the summit today.

The stark choice facing the Eurozone being integration or partial break up, and emerging reports, if accurate, are a clear and unambiguous move towards the former. Despite the slow moving steps of the great European mass, the direction in which it is headng, at least, is welcome. Yesterday evening I thought Ann Cahill of the Examiner was exaggerating when she said that today could be a pivotal day in the history of the Eurozone, but actually that could be quite correct.

edit:

LONDON — The euro tumbled on Thursday after Eurogroup chairman Jean-Claude Juncker said that eurozone leaders would not rule out a Greek debt default at their emergency summit in Brussels.

In late morning London deals, the single currency sank as low as $1.4139 as it was also hit by downbeat data. It later stood at $1.4168, compared with $1.4212 late in New York on Wednesday.

The Euro/ USD is down 0.18%, and incidentally gold is up by the same amount as investors flock to safety.

later12

Big improvements in Europe, as trading closes the CAC is up by 1.74%, DAX and FTSE up as well, the yield on Portuguese BS 2 yrs note is down 1.46%, the yield on Greek government bond 2 yrs note is down a pretty remarkable 4.18% (to just under 34%, of course...)

Can we have 7 more days of this please?

beeftotheheels

later10 wrote: »

Big improvements in Europe, as trading closes the CAC is up by 1.74%, DAX and FTSE up as well, the yield on Portuguese BS 2 yrs note is down 1.46%, the yield on Greek government bond 2 yrs note is down a pretty remarkable 4.18% (to just under 34%, of course...)

Can we have 7 more days of this please?

That's not the full picture - look at what happened in the opening hours of trading before the data was leaked to reuters.

http://www.bbc.co.uk/news/business/market_data/overview/default.stm

The euro was even further down, the torygraph blog speculated that the euro fall precipitated the detailed leak.

http://www.telegraph.co.uk/finance/financialcrisis/8651486/Eurozone-debt-crisis-summit-live.html

Liam Byrne

The targetting of non involved banks is irrational and unfair

So was the targetting of non involved citizens, but that didn't stop them.

ardmacha

It seems to me that a form of compulsory bank insurance might do the trick. This could charge more to dodgy banks, who should be required to provide equity if needs be.

View

beeftotheheels wrote: »

The harsh reality we live in is that governments will always step in to protect banks which are of systemic importance (AIB not Anglo or INBS).

In the context of the Eurozone - which after all we have been part of since 1999 - AIB is of little more systematic importance than either Anglo or INBS.

The Oireachtas' response to the crisis in Oct '08 was driven, not by the belief that these were of systematic importance to the Eurozone but, instead, by pure economic nationalism - the cry at the time was "Save the Irish banks", not "Save the Eurozone banking system".

View

ei.sdraob wrote: »

Alright, you can shoot Enda K with your finger then but, in that case, I get to shoot George Papandreou with mine...

beeftotheheels

View wrote: »

In the context of the Eurozone - which after all we have been part of since 1999 - AIB is of little more systematic importance than either Anglo or INBS.

The Oireachtas' response to the crisis in Oct '08 was driven, not by the belief that these were of systematic importance to the Eurozone but, instead, by pure economic nationalism - the cry at the time was "Save the Irish banks", not "Save the Eurozone banking system".

If you mean hard and fast systemic importance then AIB is not, but then again neither is BNP Paribas - ATMs in Germany and Finland and the Netherlands and Spain could continue to function if BNP Paribas failed.

In terms of a Lehmans, then a whole country's entire banking system (besides the bit operated by a subsidiary of a group majority owned by another EU State) could be just as systemic.

But, at the time of the guarantee, and probably still today, it is national governments who step in to bail out their banks, so they should levy the, now not being discussed, tax. If the EFSF gets the proposed job of bailing out banks (via national governments so still a little unclear here from the draft) then it should get the tax (collected by the national governments).

View

beeftotheheels wrote: »

But, at the time of the guarantee, and probably still today, it is national governments who step in to bail out their banks, so they should levy the, now not being discussed, tax.

Agreed - that is indeed what happened. Hence we have the solutions we have. In retrospect, it should be clear though that leaving it to the individual member states to regulate the banks and to bail them out was a questionable policy.

It is a bit akin to having an EU "Free Trade area" without having the ECJ to ensure it operates properly. In other words, one where the Commission proposes the standards but we leave it to the individual member states to police them in their individual states and we trust the member states will all do this properly and won't bail-out their domestic firms at the first sign of trouble with competition from other member states.

irishh_bob

later10 wrote: »

Interesting, I hadn't seen that article. Imagine the conversation. I wonder if the market will get an opportunity to react to any official statement from the summit today.

The stark choice facing the Eurozone being integration or partial break up, and emerging reports, if accurate, are a clear and unambiguous move towards the former. Despite the slow moving steps of the great European mass, the direction in which it is headng, at least, is welcome. Yesterday evening I thought Ann Cahill of the Examiner was exaggerating when she said that today could be a pivotal day in the history of the Eurozone, but actually that could be quite correct.

edit:


The Euro/ USD is down 0.18%, and incidentally gold is up by the same amount as investors flock to safety.

gold is down 20 euro an ounce this past 24 hours , down 13 dollars an ounce , markets were up today , im not saying a greek default isnt imminent but all signs suggest a deal is around the corner , whether its long lasting is another thing