An open invitation to risk my money, justice exists and aerobatics

This is it. I have warned about it a couple of times but now it's agreed: bail-ins will be possible as of 2016. The eurogroup finance ministers adopted a new "Bank recovery and resolution directive" that puts your savings at risk when your bank goes belly-up. What are the rules? Pretty simple:

• First the shareholders have to cough up. They have to take a minimum of 8% of the banks losses.
• Savings are guaranteed until 100000,- €, anything above that is up for grabs.
• Every member state has to establish within 10 years a 'resolution fund' that has to reach 1% of all deposits covered. All banks have to contribute to this fund.

Before you start applauding a couple of small remarks:

• The 8% minimum coverage of bank losses by shareholders will quickly become a maximum when the dirt hits the fan. Shareholders will argue that they only have to cover 8% of the losses before savings above 100000,-€ can be shaved. With many governments now shareholder of banks, I expect they will also argue this way.
• It is noteworthy that there is no cap above 100000,-€. In other words, you don't risk loosing a part of what you have saved above 100000,-€, no you risk loosing everything above 100000,-.
• There is no differentiation between a personal saving account or an account of a small or medium enterprise. They too will suffer the same fate.
• That 'resolution fund' only needs to be established within 10 years. I would surely hope that we are out of the woods by then! What happens in the mean time (if bank goes bust and no 'resolution fund' available yet) does not bode well for our savings.
• A 1% 'resolution fund' is not going to resolve anything if a big bank is in trouble. A quick calculation: in Belgium there is about 250 billion € on saving accounts. That means the fund will have to be at least 2,5 billion € big. This is peanuts if one of the bigger banks goes bankrupt as they hold tens of billions of € in savings! And it'll be interesting to see how banks can be convinced to depart from 2,5 billion €.
• A lot of that 250 billion € is on Belgian saving accounts but from foreign banks (example PNB Paribas, a French bank, that took over Fortis). So the Belgian fund has to guarantee savings deposited at and controlled by a foreign bank over which it has no control. Am I the only one who sees this as an open invitation for foreign banks to take risks with money collected abroad?

Justice exists in the financial world... but you have to go to Iceland for it. Those at the helm of the Icelandic Kaupthing Bank that threw the whole country into the abyss got sentenced to 5 years of imprisonment. The rest of the world could learn an important lesson from this.


One of my friends started his own company called AURTE: Aerobatic & Upset Recovery Training Europe. Anyone who followed civil aviation and pilot training discussions over the past years, knows there is an issue with degrading manual flying skills. So this new start-up is very welcome. But it made my heart beat faster for another reason. They are using a Corvus Fusion. Ultralight adepts (like me) know what this means: a fast aerobatic ultralight. Watch how they take it through its paces. In summary: I want one!!!