# Credit card companies ban the purchase of cryto currencies



## PaddyBloggit (5 Feb 2018)

*Lloyds Bank BANS credit card owners from buying cryptocurrency:*

https://www.express.co.uk/finance/c...redit-card-cryptocurrency-ripple-ethereum-usd


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## jman0war (5 Feb 2018)

How dare you try and spend money on things the Bank doesn't like!


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## ant dee (5 Feb 2018)

Just stick to using your credit cards for the bookies, no default risk there.


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## TheBigShort (5 Feb 2018)

Personally I agree with the bank ban on buying crypto with credit cards. I also agree with the sentiment of banning credit cards for gambling, or at least with credit restrictions.


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## MrEarl (6 Feb 2018)

It's a shame that the Banks were not as diligent when it came to protecting our money in various other ways, in the past.  

Personally, I don't think it's appropriate for the Banks to be preventing customers from buying cryptos with their credit cards.  Sure, it's big risk stuff, but the Bank has decided to take on the credit risk the day they approved the card for a customer, regardless of what the customer uses the card for. 

If someone goes off and buys €10k worth of disposable plastic cups and uses them, they are worthless ... so what's the difference between that and a potentially worthless cryptocoin etc. ?

The Banks retain the right to cancel someones credit card if they so wish, regardless of what the card is being used for.


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## Brendan Burgess (6 Feb 2018)

Hi MrEarl 

There are two good reasons why banks might consider such a ban.

Firstly, customers can claim that a refund if the goods or services were not delivered or if they were defrauded. So I would imagine that after the cryptos collapse, the buyers will seek to recoup their losses from the credit card companies. The best way to avoid such complaints is to not allow them buy cryptos in the first place. 

Secondly, if people pay real money for something which turns out to be worthless, they often don't treat the debt seriously. I am told that Credit Union's biggest losses are for wedding loans when the marriage doesn't last. Neither of them wants to pay the debt. So if you buy €5,000 worth of Bitcoin with your Visa card, when Bitcoin crashes, you might just welch on your debt. 

Brendan


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## Brendan Burgess (6 Feb 2018)

Actually, I see that the article Paddy linked to explains it

“Customers that entered at the top (close to $20,000) using a credit card will be panicking seeing their investments down over 60 per cent.

“The law regarding buying cryptocurrency on credit is a grey area and is in need of clarity. Banks are probably worried about being liable for losses.”


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## TheBigShort (6 Feb 2018)

I was thinking in lines of other investments too. I don’t think it is allowed to buy shares in a company with credit cards either? The opportunity to manipulate share prices, as well as crypto prices, and the potential adverse consequences are easy to spot.

Cancelling the card would effectively amount to banning the holder from buying anything at all on credit, which is not a good idea.


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## MrEarl (6 Feb 2018)

Brendan Burgess said:


> Hi MrEarl
> 
> There are two good reasons why banks might consider such a ban.
> 
> ...



Hi Mr. Burgess,

Both fair points, but neither justify a credit card company preventing the purchase of crypto currencies imho.

If someone buys perishable goods, then there is the risk that the goods will go off before they are used.  Credit card companies cannot be held responsible for such an instance and their payment protection insurance would not cover the purchaser.

Even if the credit card provider had genuine concerns about the risk of a purchaser trying to claim against their insurance (having bought cryptos and then lost the value of their investment), they could easily amend the terms of the cover provided. 

Credit card companies don't prevent people using their cards to make cash withdrawls at ATMs in casinos.  In my view, this is at least on par, if not an even greater risk, than permitting the cards to be used to purchase crypto currencies. 

For me, credit card companies charge high interest rates to cover their perceived credit risk.  If credit card companies were concerned about what funds were being used for, they might not permit cash withdrawls, they might prevent people spending more than "X" percent of their credit limit on a single transaction, they might prohibit cards being used in certain jurisdictions or after a certain time at night etc. but they do not.  That's because they have assessed a person's credit and concluded that they are worth the risk.  Thereafter, as long as its for something legal, the customer should be entitled to do whatever they want with the credit available to them, as they will be help responsible for the debt they accrue, regardless of how it is acrcrued.


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## tecate (6 Feb 2018)

I don't think it's smart to borrow money to buy crypto.  However, there's nothing altruistic about this stunt.  First the banks suggested they were protecting consumers.  Now they're saying its to protect themselves from potential bad debts.  There might be some truth in the latter - but if that's the case, surely payments to Paddy Power/Betfair/Ladbrokes would be on the same list, the ability to buy shares the same.
Visa at the same game.  They have now classified buying crypto as the same as a cash advance - so cash advance fee payable.  So they have concerns about consumers getting into bother with crypto's and react by making it far more expensive to purchase via credit card. They'll also say - no doubt  - that crypto is not legal tender, not a currency...yet they turn around and charge a cash advance fee.

This sort of stuff is what got me interested in crypto in the first place.


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## Brendan Burgess (6 Feb 2018)

MrEarl said:


> they could easily amend the terms of the cover provided.



Eh, no. It's in the Consumer Credit Act. 

It's a practical thing Mr Earl.   They will be inundated with complaints from people who lost money and they will be tied up with the Ombudsman. 

It's much simpler to just ban them using their Credit Cards to buy cryptos. They are doing their customers a huge favour.

Brendan


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## MrEarl (6 Feb 2018)

Brendan Burgess said:


> Eh, no. It's in the Consumer Credit Act.



Sorry, what exactly is in the Consumer Credit Act (that a credit card provided cannot stipulate, or amend, what is or is not covered by the insurance they have provided on card purchases) ?




Brendan Burgess said:


> It's a practical thing Mr Earl.   They will be inundated with complaints from people who lost money and they will be tied up with the Ombudsman.
> 
> It's much simpler to just ban them using their Credit Cards to buy cryptos. They are doing their customers a huge favour.
> 
> Brendan




If the card providers are doing their customers a hugh favour, please explain to me why they are not prohibiting the use of cards for other things where there are similar high risks, like use of ATMs for cash withdraws in casinos (or to purchase alcohol) for example ?

Complaints to the Ombudsman will be treated just like all other complaints, with customers having first gone through the complaints procedure with the card provider (and the claim having been rejected).  A couple of quick and clear decisions by the Ombudsman's office is all that will be required, if even that.  I'm sure the Ombudsman's office could easily put something on their website to indicate that they won't consider such claims, if it were ever to become an issue where they were receiving a lot of "time wasting" complaints.


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## Brendan Burgess (6 Feb 2018)

MrEarl said:


> Sorry, what exactly is in the Consumer Credit Act (that a credit card provided cannot stipulate what is or is not covered by the insurance they have provided on card purchases) ?



Hi Mr Earl

I thought it was in our Consumer Credit Act, but it's not. (It's in the Consumer Credit Act in the UK.) 

The practice is set out here: 
https://www.askaboutmoney.com/threa...aying-by-credit-cards-and-debit-cards.181375/


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## TheBigShort (6 Feb 2018)

Are you allowed to buy shares with credit cards? I wouldn't have thought so?


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## MrEarl (6 Feb 2018)

TheBigShort said:


> Are you allowed to buy shares with credit cards? I wouldn't have thought so?



Sorry, I honestly don't know.  Do you ?

From a practical point of view, I can't see many stockbrokers accepting credit card payments.  Perhaps some of the online guys accept credit card payments, but I would doubt that Goodbodys, Davys or Cantor Fitz. do, if I were to guess.

However, from the card providers point of view, you are purchasing a tangible asset.

I have seen personal loans granted for the purpose of investing in quoted equities (or even non quoted shares, on occasion).


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## TheBigShort (6 Feb 2018)

MrEarl said:


> Sorry, I honestly don't know. Do you ?



I dont know either, I would assume its not allowed.

I just logged onto mobile app for De Giro. I cant see a facility to add credit card.


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## jman0war (6 Feb 2018)

It's cartelism and it's the opposite of what a market economy should look like.
If there is a demand for consumer credit to purchase something (that isn't illegal), the market should fill that demand.

Banks are determining what you are allowed to purchase, regardless of legality.
It's either manipulation or nanny-statism, pick your poison.


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## MrEarl (6 Feb 2018)

Hi jman0war,

I am inclined to agree, given some of the other things that we can use our credit cards for.

I actually see it as part of a bigger long term strategy to frustrate the use of crypto currencies, given the banks and card providers are rivals to the crypto currencies and see them as a threat (offering potentially faster and cheaper payment options worldwide).

While I very much respect the point that Mr. Burgess is ultimately making here about the serious risk of investing in crypto currencies, I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good - simply because they don't take similar steps to protect us from other high risk transactions.


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## TheBigShort (6 Feb 2018)

MrEarl said:


> I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good - simply because they don't take similar steps to protect us from other high risk transactions.



Agree totally.


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## Brendan Burgess (6 Feb 2018)

MrEarl said:


> I just cannot accept that the card providers are trying to prevent us from buying these currencies with our credit cards for our own good



I have not said that, in case you are attributing it to me. 

They are doing it because 
1) Customers will try to get charge backs claiming that they were scammed 
2) Customers will be less likely to pay when the crypto they buy goes to nothing.

The credit card companies are doing to protect themselves.

But, by doing that, they are doing their customers a favour. 

Brendan


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## jman0war (6 Feb 2018)

Credit card companies make money when people don't pay their bills on time.

*How Credit Card Companies Make Money*
https://www.investopedia.com/articl...0916/how-credit-card-companies-make-money.asp

-Credit card companies charge stores approximately 2% to 3% of each credit card purchase.
-A significant amount of card users do not pay their bills in full each month. The customer’s unpaid credit card balance starts to incur interest at rates as high as 12% or more, which goes to the credit card company.
-Credit card companies tag on a variety of fees in addition to their late fees


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## tecate (6 Feb 2018)

I accept that there is an upside for customers in this regard by being prevented from buying crypto on credit.  However, it's very much a secondary outcome - this is not the purpose of the banks here.  Their purpose is to smother crypto.

As regards chargebacks for being scammed, if they bought crypto through an exchange, there's no earthly reason why such a chargeback should be validated.  In terms of such customers being more likely to default, wouldn't that be true of anyone faced with a loss...if I whipped out the visa card right now and put 2k on LikelyLad in the 2.30 at Haydock, maybe I wouldn't feel like paying my debt either?  I can't see how there would be a distinction.
If the banks are getting altruistic on us (oxymoron), then they can come out and ban all credit card expenditure on gambling also.


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## Brendan Burgess (6 Feb 2018)

tecate said:


> As regards chargebacks for being scammed, if they bought crypto through an exchange, there's no earthly reason why such a chargeback should be validated.



But how much time do you think that the bank is going to have to spend defending these complaints. 

And these people will have lost their money so they will be grasping at straws. 

I would not lend to anyone to buy crypto.

Nor would I lend to them to back Likely Lad. 

Brendan


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## jman0war (6 Feb 2018)

Credit Card companies are happy when people are late with payment, that's one of the very ways they make money.
They stick the person with high interest penalties and fees.


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## Brendan Burgess (6 Feb 2018)

Yes, but one of the way they lose money is when people buy something which is no longer worth anything, they lose the wish to repay. 

Brendan


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## jman0war (6 Feb 2018)

Shortly after the last economic crisis a story was in the IT about a guy that was giving talks to Banks regarding processes to get consumers to pay off their CC debt more quickly and efficiently. Basically with the goal of reducing delinquency. During his talk he became aware of discomfort in the room. Finally one of the bankers in the back spoke-up and said his speech was all well and good but that it was a waste of everybody's time.
He explained that late CC penalties comprise a significant revenue stream so they are not interested in changing anything.

But i don't have the link to hand.


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## MrEarl (6 Feb 2018)

Brendan Burgess said:


> I have not said that, in case you are attributing it to me.



No, I was not.  

To be honest, I would have named you if intended to attribute it directly to you 



Brendan Burgess said:


> They are doing it because
> 
> 1) Customers will try to get charge backs claiming that they were scammed
> 2) Customers will be less likely to pay when the crypto they buy goes to nothing.



I do not understand how you conclude that customers will try and get charge backs, unless they were genuinely scammed.

Granted, there are websites which are claiming to sell Bitcoin and are not, but these are fraudsters.  In these instances, the customer should be protected, just as someone should be protected if they try to buy a pair of boots online and the website that they purchase from looks legit, but is later found not to be and won't refund the money or supply the goods required. 

As for the second point, I don't think it would be any more likely to occur than someone who ran up their credit card bill in Vegas gambling for example.  How often does that happen, or prove to have much success with the card providers I wonder ?



Brendan Burgess said:


> The credit card companies are doing to protect themselves.
> 
> But, by doing that, they are doing their customers a favour.
> 
> Brendan



I agree entirely that they are taking steps to protect themselves.  However, whether they are really doing their customers a favour or not is debatable and certainly, isn't their primary reason for taking such actions as refusing transactions that relate to crypto currencies.


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## tecate (6 Feb 2018)

Brendan Burgess said:


> But how much time do you think that the bank is going to have to spend defending these complaints



Where's the personal responsibility in that? It should be a case of a template response back IE. We acknowledge your complaint but preliminary review deems that the validity of your complaint is null & void.


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## MrEarl (6 Feb 2018)

Hi,

Does anyone know if you can pay for the Lotto or Euromilions online by credit card ?


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## tecate (6 Feb 2018)

@Mr.Earl: Yes you can.


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## MrEarl (6 Feb 2018)

Hi tecate,

Thank you for the reply.

I think this gives a very good example of where the credit card providers did not take action to protect their customers, or to prevent the risk of customers refusing to repay them when they lost the money gambling.

It would also be interesting to see if the Ombudsman received many complaints from credit card customers who lost their money gambling and felt the card issuer had a responsibility to cover such losses.

My _bet_ (pun intended ) is that the Ombudsman and credit card companies received very few, if any complaints, from those who lost their money gambling in this fashion.


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## TheBigShort (6 Feb 2018)

Brendan Burgess said:


> Yes, but one of the way they lose money is when people buy something which is no longer worth anything, they lose the wish to repay.



This is stretching things a bit isnt it? If it was as easy as 'losing the wish to repay' to actually get out of paying then the cc industry would collapse. 
The reality is, regardless of the 'wish' to repay or not, if debts are incurred, that debt will follow you wherever you go until you have repaid it.


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## Firefly (7 Feb 2018)

MrEarl said:


> I think this gives a very good example of where the credit card providers did not take action to protect their customers, or to prevent the risk of customers refusing to repay them when they lost the money gambling.



I would imagine that the vast majority of bets people put on the Lotto are a small fraction of what people have bet on Bitcoin..


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## MrEarl (7 Feb 2018)

Firefly said:


> I would imagine that the vast majority of bets people put on the Lotto are a small fraction of what people have bet on Bitcoin..



Hi Firefly,

I would agree.  

However, I would also expect that lottery transactions would be far more frequent then the number of crypto trasactions, so over time the amounts at risk for gambling with the lottery competitions could be far greater.

Anyway, for me it's the principal of the matter


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## Firefly (7 Feb 2018)

MrEarl said:


> Hi Firefly,
> 
> I would agree.
> 
> ...



At least with the Lotto you have some chance of winning


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## MrEarl (8 Feb 2018)

Firefly said:


> At least with the Lotto you have some chance of winning



Take a look at the volatility in the price of the various crypto currencies and tell me how you can't ever win by investing (and getting out) at the right time ?

The odds are far better betting on cryptos than the lottery.  When you put your money on cryptos, the prices either goes up or down... with the lottery, the odds against you picking the correct numbers are far higher.


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## Pexus1976 (20 Feb 2018)

You would want to be daft to use credit to invest in any investment vehicle never mind Crypto.


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## MrEarl (20 Feb 2018)

Pexus1976 said:


> You would want to be daft to use credit to invest in any investment vehicle never mind Crypto.



I'm not sure I'd go as far as saying any investment vehicle, but certainly borrowing to invest in crypto would be a very bad move.

The ability to get funds into an exchange like Coinbase instantly via credit card, is the main advantage here.  If the credit card is in credit (i.e. pre-funded), then there's only the cash handling fee to consider, which might justify it as a payment method if you want to do something quickly.


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## jman0war (20 Feb 2018)

Here is news of a digital currency exchange startup in Israel that has been denied having a normal Deposit account by all Israel banks.


> Bitflash LTD, a new Israeli company which was established to provide digital currency trading services based in Acre, has asked the Tel Aviv District Court on Sunday to order all 11 banks in the country to open a current account without credit for it. The company claims that the banks’ refusal to open an account for it is in violation of the law and shows lack of good faith, as some of them manage similar accounts for competing companies.
> 
> According to Bitflash, since its establishment over a month ago, it approached a number of branches of each Israeli banking corporation for the purpose of opening an account, but was outright refused on the grounds that its business in digital currencies is not to the liking of branch managers. In some of the branches the company was told explicitly that *“the bank’s policy is not to open accounts for those who deal with digital currencies, regardless of the nature of the business*.”


 https://news.bitcoin.com/israeli-bitcoin-company-sues-banks-for-not-letting-it-open-accounts/

The cartelism of private banks is really glaring, and it's basically hurting economic activity.
Is this really the purpose of banks -  To pick and choose winners and losers?


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## TheBigShort (20 Feb 2018)

jman0war said:


> Here is news of a digital currency exchange startup in Israel that has been denied having a normal Deposit account by all Israel banks.
> https://news.bitcoin.com/israeli-bitcoin-company-sues-banks-for-not-letting-it-open-accounts/
> 
> The cartelism of private banks is really glaring, and it's basically hurting economic activity.
> Is this really the purpose of banks -  To pick and choose winners and losers?



Exactly the point I was making elsewhere. The whole concept of free trade is the right to transact and do business all within a set legal framework of course. 
Unless, by law, crypto currencies are declared illegal, then the bank has no business denying anyone to trade with anyone else, assuming the traders are operating legally. Otherwise I think it would be questionable, if such an occurrence took place in EU, whether that bank should be afforded its license.


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## jman0war (20 Feb 2018)

It's troublesome though that the only people that appear to care about this blatant cartelism is people into crypto.

Does this mean that others here are supportive of this move?
Denying service to competing and legal industry.


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## Negotiator (20 Feb 2018)

TheBigShort said:


> Exactly the point I was making elsewhere. The whole concept of free trade is the right to transact and do business all within a set legal framework of course.
> Unless, by law, crypto currencies are declared illegal, then the bank has no business denying anyone to trade with anyone else, assuming the traders are operating legally. Otherwise I think it would be questionable, if such an occurrence took place in EU, whether that bank should be afforded its license.



Agreed, it's outrageous they are allowed to do this. They are clearly trying to use these pathetic tactics to try to fight back at Cryptos. You can use your credit card to wager a 100/1 bet that you're almost certain to lose and yet they are trying to say you can't use it to buy an asset, albeit a risky one. Anyway as you said, they have no business saying what we should or shouldn't buy with our own money!



jman0war said:


> It's troublesome though that the only people that appear to care about this blatant cartelism is people into crypto.
> 
> Does this mean that others here are supportive of this move?
> Denying service to competing and legal industry.



I guess it's one of those things where it doesn't effect a lot of people so it goes below the radar unfortunately!


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## MrEarl (21 Feb 2018)

Banks will continue to do what they want, as long as they are permitted to do what they want.

Customers who are not happy with a Bank policy such as refusing to process crypto related transactions, need to vote with their feet and be very public about it !

... that said, we will never see action like that happen in Ireland, as we just like to bitch and moan in the pub, at the ICA, or on discussion based websites like this one 


.


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## jman0war (21 Feb 2018)

MrEarl said:


> Banks will continue to do what they want, as long as they are permitted to do what they want.
> 
> Customers who are not happy with a Bank policy such as refusing to process crypto related transactions, need to vote with their feet and be very public about it !
> 
> ... that said, we will never see action like that happen in Ireland, as we just like to bitch and moan in the pub, at the ICA, or on discussion based websites like this one


But how does one vote with their feet if the banks in said country are colluding?


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## jman0war (21 Feb 2018)

Here is the Central Bank of Poland, quietly spending $27,000 on a smear campaign against crypto.
The ad didn't disclose that it was sponsored content, as is required.



> The Central Bank of Poland has admitted to sponsoring a smear campaign against cryptocurrencies on Facebook, Google and Youtube. This news was first reported on a Polish news portal, money.pl.
> 
> It is illegal in Poland to create sponsored content without explicitly mentioning it. There is no law against cryptocurrencies in Poland which makes people wonder why the Central Bank had to sponsor a smear campaign in the first place. Also, money.pl has questioned the NBP for a reason behind this smear campaign, and they haven’t received any response yet.


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## jman0war (26 Feb 2018)

Maybe this deserves it's own thread, but you may have already heard that one of those well regulated EU banks appears to be going bust:

https://www.reuters.com/article/us-...lure-raises-8-bln-euro-question-idUSKCN1GA1FQ

Something about illicit funding:
_



			But after the U.S. Treasury singled it out as a recipient of illicit financing it lost around a fifth of its 2.7 billion euro deposit base in a week. At the weekend, the European Central Bank declared it at as likely to fail.
		
Click to expand...

_Will depositers get their funds back?
Maybe, up to 100,000 euros:
_



			ABLV, which controls 13 percent of Latvian banking assets and deposits, will now be wound up in accordance with local laws, the ECB says. Latvian authorities, mindful of the painful 2008 bailout of Parex Bank, do not want to use taxpayers’ money. This might be feasible. *Paying back deposits up to 100,000 euros, which are guaranteed by EU law*, should cost 470 million euros, local regulators say. At the end of September 2017, ABLV had around 3.6 billion euros of assets on its balance sheet including 600 million euros in cash or the equivalent, 800 million euros of securities and about 1 billion euros of loans.
		
Click to expand...

_I guess we'll just have to hope that contagion is limited here and they don't start raiding tax payers like has happened in recent times.


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## TheBigShort (26 Feb 2018)

jman0war said:


> guess we'll just have to hope that contagion is limited here and they don't start raiding tax payers like has happened in recent times



Ssshhh! don't mention the 'c' word!

https://www.bloomberg.com/news/arti...tened-to-deutsche-bank-s-warning-on-contagion


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## TheBigShort (26 Feb 2018)

According to this article, in the last 4 years Europes banks have off-loaded €228bn of bad debt.

https://www.bloomberg.com/news/arti...ope-s-bad-loan-problem-with-these-five-charts

There is still €944bn to go!

I dont know what would be an acceptable level of bad debt, but I'm guessing we are still some way off it?

Time to buy more bitcoin.


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## TheBigShort (26 Feb 2018)

Whats this all about?

https://www.rte.ie/news/business/2018/0226/943678-cbl-insurance-central-bank/


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## Leo (26 Feb 2018)

TheBigShort said:


> Whats this all about?



The potential wind-up of an insurance company, so best dealt with elsewhere.


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