July 24, 2012 at 8:30 am #56946
Would you leave large amounts in Spanish Banks or move them to German Euro Accounts or into other currencies?
Is there evidence of large amounts still leaving Spain? 🙄
July 24, 2012 at 8:49 am #111112
Absolutely. Huge amounts have left Spain in recent weeks. Anyone who is trapped with yield loss should consider the end game. I have and cut my losses. Risk requires a premium return and there’s non available. If the Euro collapses national currency will return and your cash deposits halved in value overnight.
Here are the signs of that end game.
The likely scenario runs like this.
1. Spain is given a €300bn bailout under harsh terms. More austerity and across the board labour reforms are demanded. Plus an all state asset sell off at knock down prices. GDP plunges.
2. Meanwhile Greece falls out of the Euro and defaults on all it’s debt. Euro drops to near Dollar parity, 1.10 maybe.
3. Contagion hits Italy and it’s too big to bailout. http://www.telegraph.co.uk/finance/financialcrisis/9421599/Ten-Italian-cities-at-risk-of-bankruptcy-schools-may-not-reopen.html
4. Spain struggles on for about 2-3 years but it’s economy is crippled by austerity and debt. Eventually it too falls out of the Euro and defaults.
5. Eurozone collapses within that period amid wailing, gnashing of teeth and much recrimination and I told you so.
July 24, 2012 at 9:11 am #111113
Thanks logan I thought you would know this : 😉
What about those who live in Spain and post on here, are any sending monies to Germany or back to UK? We have friends in Spain who now only keep small amounts there and convert just enough Sterling each month to their Spanish account. 🙂
All this surely has more impact on those Spanish Banks already under the cosh, so could it be deemed as a ‘run on the Banks’ so to speak? : 🙄
July 24, 2012 at 11:23 am #111115
I believe it is quite hard to open a bank account in Germany unless you are resident there (as with the UK and Spain) so transferring money there may not be an option for most people. I’m sure there are plenty of alternative international/offshore accounts that you can transfer money to instead though.
Personally I transferred the few savings I had in euros to sterling about a year ago, using an account with Citibank in Spain. However I don’t consider this money to be 100% safe from being converted to pesetas should Spain leave the euro. It is possible the Spanish government might say that all Spanish accounts must be converted to pesetas, regardless of whether they are in euros or pounds, so as it gets closer to end game I’ll transfer that money to my UK bank account. However I don’t want to do that just yet in case we end up needing the money in Spain, since transferring money backwards and forwards between countries can end up being quite expensive.
As far as runs on banks are concerned, they are happening right now in slow motion. However I believe there is a mechanism called Target2 which is designed to rebalance inbalances in bank deposits across the eurozone. I don’t know/understand the details but I believe there is some kind of cycle whereby money is moving into German banks, which then ends up being deposited at the Bundesbank, and the Bundesbank is then obliged by Target2 to deposit that money back with the Spanish banks in order to balance the system. The net result is that the Bundesbank ends up holding large deposits with Spanish banks, which has caused some concern in Germany (not least because it makes it harder for Germany to leave the euro). I’m not sure if I have got this exactly right so maybe someone will correct me, but it was in the news quite a bit a few months ago.
July 24, 2012 at 12:24 pm #111116
I’m not sure about this chopera, but if you open an account in Spain say with a British Bank or German Bank (or one linked to one of those), then I thought you could repatriate your funds to one of their branches back in UK or Germany, in one move, maybe get a free transfer if within the same group. Not entirely sure of this, but our UK Bank accounts have links to their group within Spain, France, Cyprus for example and were offering free transfers between countries.
If I had a lot of funds in Spain now, I would certainly be sending it back to UK etc even with a transfer cost involved. The present situation with Greece, Spain, Italy could see countries close access if a proper run started, better to be safe than sorry, you can always move it back once crisis blows over 🙄
July 24, 2012 at 1:03 pm #111117
I move money all the time between Eurozone banks without costs and by using their on line facilities. Most banks will open a non-resident account for you without difficulty which will give those web rights. In Spain you pay an annual tax for the privilege.
In the European banking rules banks cannot impose transaction charges between other EZ banks. I know some do but it’s illegal. Change your bank if they do.
July 24, 2012 at 5:38 pm #111119
It’s been a while since a looked into this, but when I last checked it was impossible to open a regular account with say Barclays UK even if you have a Barclays Spain account. In general you need to be resident where you are trying to open the account. Also the main banks quoted terrible exchange rates when I last looked into it, and Spanish banks charge for transfers between Spanish banks, let alone international transfers. It’s not something I’d want to do on a regular basis if I can avoid it. Maybe things have improved, but last time I moved large amounts of money around I ended up using a specialist forex company. It worked out a lot cheaper than the banks. Of course if like Logan you are moving money around eurozone banks the exchange rate isn’t an issue (I only have experience of moving money between Spain and the UK).
As I mentioned in my post, you can open international accounts quite easily these days, but I suspect it’s a lot easier for say a British expat to open an international account with a UK bank than it would be for a Spanish person.
July 24, 2012 at 7:42 pm #111121
I will not keep any funds in Spain irrespective of the curency. When the Titanic sank it did not descriminate. Similarly the Banks may sound English, German they are registered in Spain & are governed by Spain’s Banking rules & regulations.
You will find that the deposit guarantee will only cover local currency. ( We all know what guarantee’s mean’s in Spain ) besides it will take them months if not years to pay back. How is one going to sustain oneself without the Rioja & the Bacarones ??
Moving funds from Country to Country will only raise suspecion of money laundering or sending money to your friends in the Bora Bora local branch. remember these dates you are guilty & you prove otherwise.
When the doomsday arrive it will not give any more signals than what one is getting now.
If one has a mortgage than the best thing is to deposit funds in the same Bank. This was way atleast one has a chance of offsetting against the mortgage amount. This option is not for the people who do not want to play the currency exchange game.
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