Tag Archives: Cyprus

Recap: How Greece’s Bank Safe Deposit Boxes Fared During Latest Debt Crisis Flare Up

Regrettably, I took my summer break from Offshore Safe Deposit Boxes right when the Greece sovereign debt crisis was flaring up (again) and capital controls were imposed, including on Greek bank safe deposit boxes.

Last time I wrote about the situation, access to these boxes was still prohibited.

I’ve been curious as to how it all played out, so today I’ll be recapping and discussing the ramifications of the event.

Simon Shuster reported on the TIME website on June 29 (the same day capital controls were announced by the Greek government):

“The Greek government’s desperate push to raise tax revenue has meanwhile made people question the wisdom of storing their money in safety deposit boxes, where the tax police could still seize it. And the fact that people all over Greece are stashing their savings at home has driven an epidemic of burglaries. Put all that together and a strongbox starts to seem like a good investment.

‘Everything has its risks,’ says [George] Moschopoulos, who has been in the safe business for nearly 40 years, according to the licenses that hang on the wall of his shop. ‘If you stuff your money in the mattress, it’s a thousand percent certain you will get robbed.’ The most secure option, he admits, is still a safety deposit box inside a bank vault. ‘But there’s always the chance that some law will get passed to investigate what’s inside all those boxes, and they could all be frozen.’

(Editor’s note: Bold added for emphasis)

And frozen they were. At first the press reported it was just cash in these secured containers. Reuters’ Lefteris Papadimas and George Georgiopoulos reported on July 5:

Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place, a deputy finance minister told Greek television on Sunday…

(Editor’s note: Bold added for emphasis)

But then it was reported any access to bank safety deposit boxes was restricted. From the Associated Press on July 6:

No one has access to their safe deposit boxes either, where some Greeks are thought to have stashed cash savings…

(Editor’s note: Bold added for emphasis)

Those capital controls on safe deposit boxes would last until July 20, when Greek banks reopened. Lefteris Papadimas reported on the Reuters website July 19:

“‘The banks are ready to open and we don’t expect any major problems on Monday,’ an official at the Central Bank of Greece told Reuters.

As well as getting a weekly limit instead of a daily one, customers will also be able to access their safety deposit boxes and withdraw money without a credit card.

Deposit boxes are not affected by the capital restrictions and clients can therefore take whatever they want from them, bank officials said…”

(Editor’s note: Bold added for emphasis)

Eventually, Evgenia Tzortzi would go on to report on the website of Kathimerini, a daily newspaper in Athens, on August 12:

Over 50 billion euros in cash was stashed away in homes and safe deposit boxes in July, the first full month when capital controls were in force in Greece…

Now, back on July 6 I blogged:

Something tells me confidence in bank safe deposit boxes is going to plummet…

Almost three months after total access to bank safe deposit boxes and their contents was restored by the Greek government, I can’t help but think that confidence in these containers stored in financial institutions has got to be shredded as a result of what transpired this summer in conjunction with the involvement of the banking system in wealth confiscation activity since the 2008 global economic crisis reared its ugly head and one more alarming development.

Just this Wednesday I published the most recent timeline of that “activity,” and lest I remind readers of the following events:

• Cyprus, March 2013, banking system “bailed-in”

• Spain, July 2014, all bank account deposits subject to blanket taxation rate of 0.03 percent

Bank safe deposit boxes went untouched in these episodes. But by summer 2015, while no wealth confiscation took place, the boxes in Greece were impacted.

Growing talk of a “War on Cash” by the banks probably shouldn’t be ignored either.

Whether it’s domestic or offshore safe deposit boxes, many prospective customers have to be questioning the wisdom of securing personal belongings within a bank vault when private, non-bank alternatives are becoming more available with time.

By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)

Sources:

Shuster, Simon. “Meet the One Greek Business Profiting From the Run on Banks.” TIME. 29 June 2015. (http://time.com/3940801/greek-crisis-eurozone-safes/). 8 Oct. 2015.

Papadimas, Lefteris and Georgiopoulos, George. “Greeks cannot tap cash in safe deposit boxes under capital controls.” Reuters. 5 July 2015. (http://finance.yahoo.com/news/greeks-cannot-tap-cash-safe-175906924.html). 9 Oct. 2015.

“Greeks are feeling optimistic Hoping ‘no’ vote will produce a better deal.” Associated Press. 6 July 2015. (http://www.rep-am.com/articles/2015/07/09/business/893065.txt). 9 Oct. 2015.

Papadimas, Lefteris. “Greek banks re-open today, and a lot of people are psyched to get back into their deposit boxes.” Reuters. 19 July 2015. (http://www.businessinsider.com/r-greek-banks-ready-to-open-monday-expect-long-queues-2015-7). 8 Oct. 2015.

Tzortzi, Evgenia. “Over 50bln in cash stashed away by Greeks.” Ekathimerini. 12 Aug. 2015. (http://www.ekathimerini.com/200468/article/ekathimerini/business/over-50-bln-in-cash-stashed-away-by-greeks). 9 Oct. 2015.

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Who Needs An Offshore Safe Deposit Box?

It is my belief that offshore safe deposit boxes will be increasingly demonized in the coming years.

If registering interest in one of these overseas asset protection tools to another party, be prepared to hear something along the lines of:

“Why do you want an offshore safe deposit box? Are you doing something illegal?

While I would expect this out of the mouth of someone who watches too much crap being peddled by Hollywood, those who possess the skill of thinking before speaking might realize there are several perfectly legitimate reasons why someone would need an offshore safe deposit box.

And those reasons are?

Way back on March 2, 2014, I mentioned the following:

• American citizens living/working/studying abroad need these safe deposit boxes to store personal belongings in
• Investors use these safety deposit boxes to achieve increased asset protection via geographic diversification of their holdings (think gold bullion, for example)
• Geographic diversification is also strived for by preppers/survivalists with the use of these secured overseas containers, concerned about the inability to access belongings in a nationwide emergency/disaster
• Finally, I talked about the threat of wealth confiscation. To update what I wrote in a February 26, 2014, blog post (and which I referred readers to in the March 2, 2014, post):

Critics argue that government and the banks don’t pose a threat to personal assets. However, recent events suggest concerns about wealth confiscation by these entities aren’t unfounded:

• Argentina, October 2008, private pension funds nationalized
• Ireland, March 2009, national pension fund assets used to help pay for EU/IMF bailout
• France, November 2010, national pension fund assets used to pay for welfare system debts
• Hungary, November 2010, private pension funds nationalized
• Bulgaria, January 2011, private pension funds partially-nationalized
• Cyprus, March 2013, banking system “bailed-in”
• International Monetary Fund, October 2013, talk of a “capital levy” in IMF’s October Fiscal Monitor Report, a “one-time tax on private wealth” possibly at “a tax rate of about 10 percent on households with positive net worth”
• European Union, December 2013, agreement by EU finance ministers to implement Cyprus-style “bail-ins” in the event of future banking crises
• Spain, July 2014, all bank account deposits subject to blanket taxation rate of 0.03 percent
• Germany, July 2014, plans approved for creditor (may also mean depositor) bail-in of banks beginning in 2015, a year earlier than required under European-wide plans setting rules for failing financial institutions
• In November 2014, the G-20 Group of Nations endorsed a proposal which offshore experts The Nestmann Group says “profoundly changes the rules for banking globally, and not in a good way. Deposits in banks that are ‘too big to fail’ will be ‘promptly recapitalized’ with their ‘unsecured debt.’ This avoids those nasty taxpayer-funded bailouts that proved so politically unpopular during the 2008-2009 financial crisis. And the largest chunk of unsecured debt is your bank deposits. Insolvent banks will recapitalize themselves by converting your deposits- checking accounts, but also money market accounts and CDs- into stock. Thus, when you deposit money in a bank, you’re taking the same risk as someone buying a stock.”

Considering the steady devolution of the United States as an economic superpower and the federal government’s refusal to significantly curtail borrowing and spending, no one can say for sure that personal wealth won’t be confiscated in some future major financial crisis.

In fact, such an event already took place in America. Wealth preservation expert Mark Nestmann wrote back in February 2008:

One of the most important precautions is not to keep precious metals in a U.S. safety deposit box. President Roosevelt ordered all safety deposit boxes sealed when he issued his March 9, 1933, gold confiscation order. My grandparents couldn’t retrieve their holdings from their safety deposit box until government thugs had rifled through it.

(Note: Bold added for emphasis)

A legitimate concern of Americans convinced hard economic times are ahead of us is that good ol’ Uncle Sam will go “rogue,” where privately-held assets 100% legal to own in the United States as I type this suddenly becomes subject to confiscation with the stroke of a pen in the Oval Office.

There’s one final reason I can think of right now why someone might want an overseas safe deposit box. That’s because they’re traveling abroad for an extended period of time, and rather than leave valuables like jewelry to the safekeeping of relatives or a hotel, they insist upon more secure arrangements.

So there are several good reasons, in my opinion, as to why a person would want an offshore safe deposit box.

“Are you doing something illegal?”

Do you believe everything you see on TV and the Big Screen?

By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)

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Greece On Track To Confiscate Private Wealth Via Banking System?

A big reason why offshore private vaults have increasing appeal for Americans and others is government-sponsored confiscation of private wealth via the banking system. I’ve chronicled this latest bout on this blog’s sister site- Offshore Private Vaults. From the “Why Offshore Private Vaults?” page:

Critics argue that government and the banks don’t pose a threat to personal assets. However, recent events suggest concerns about wealth confiscation by these entities aren’t unfounded:

• Argentina, October 2008, private pension funds nationalized
• Ireland, March 2009, national pension fund assets used to help pay for EU/IMF bailout
• France, November 2010, national pension fund assets used to pay for welfare system debts
• Hungary, November 2010, private pension funds nationalized
• Bulgaria, January 2011, private pension funds partially-nationalized
• Cyprus, March 2013, banking system “bailed-in”
• International Monetary Fund, October 2013, talk of a “capital levy” in IMF’s October Fiscal Monitor Report, a “one-time tax on private wealth” possibly at “a tax rate of about 10 percent on households with positive net worth”
• European Union, December 2013, agreement by EU finance ministers to implement Cyprus-style “bail-ins” in the event of future banking crises
• Spain, July 2014, all bank account deposits subject to blanket taxation rate of 0.03 percent
• Germany, July 2014, plans approved for creditor (may also mean depositor) bail-in of banks beginning in 2015, a year earlier than required under European-wide plans setting rules for failing financial institutions
• In November 2014, the G-20 Group of Nations endorsed a proposal which offshore experts The Nestmann Group says “profoundly changes the rules for banking globally, and not in a good way. Deposits in banks that are ‘too big to fail’ will be ‘promptly recapitalized’ with their ‘unsecured debt.’ This avoids those nasty taxpayer-funded bailouts that proved so politically unpopular during the 2008-2009 financial crisis. And the largest chunk of unsecured debt is your bank deposits. Insolvent banks will recapitalize themselves by converting your deposits- checking accounts, but also money market accounts and CDs- into stock. Thus, when you deposit money in a bank, you’re taking the same risk as someone buying a stock.”

These days, it looks as if cash-strapped Greece could soon be added to the above list. It’s being reported that while the country managed to sign off Friday on a repayment of around €350 million of loans to the International Monetary Fund, it’s facing a second quarter shortfall estimated at €5.7 billion. Marcus Bensasson and Nikos Chrysoloras of Bloomberg News reported earlier today:

Greek daily deposit outflows accelerated to a one-month high Thursday, two people familiar with the matter said. At this pace available liquidity could be exhausted in a matter of days, one of the people said.

The Bank of Greece has plugged cash shortfalls by tapping the reserves of other public sector entities, including pension funds, hospitals, and universities. How much money these entities have and how easily the government can directly access these funds is critical to knowing how long Greece can keep paying its bills. Officials directly involved in the bailout talks have said they don’t have a clear picture.

“Although visibility on the exact liquidity position is low, reports continue to suggest that the Greek authorities’ ability to continue to meet their liabilities is measured in weeks,” Malcolm Barr, a JPMorgan economist based in London, wrote in note to clients Wednesday.

The public sector held €12.3-billion of deposits in the Greek banking system at the end of January, including €3.4-billion from the social security fund and €2.2-billion from local governments, according to the most recent data available from the central bank…

(Editor’s note: Bold added for emphasis)

There’s been a good deal of talk the last several days of the Greek government raiding social security funds. Kerin Hope and Peter Spiegel reported on the Financial Times (UK) website on March 10:

Greece’s cash-strapped Syriza government is pressing the country’s social security funds to hand over hundreds of millions of euros immediately to ensure that pensions and civil servants’ salaries are paid this month.

The unprecedented transfer of bank deposits, which is opposed by pension and welfare funds, follows an unexpectedly sharp fall in tax revenues in January that has left the finance ministry scrambling to raise funds to make a €1.2bn loan repayment to the International Monetary Fund due by March 20…

(Editor’s note: Bold added for emphasis)

“€1.2bn loan repayment to the International Monetary Fund due by March 20”

Yet, it’s being reported Greece signed off Friday on a repayment of around €350 million of loans, and that a crisis had been averted.

Oh well. Greece still looks to be in serious financial trouble for the near future.

Here’s hoping they don’t go rogue and start seizing private wealth, including assets stored in bank safe deposit boxes.

By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)

Sources:

Bensasson, Marcus and Chrysoloras, Nikos. “Greece given ‘final political push’ as coffers running empty.” Bloomberg News. 20 Mar. 2015. (http://www.theglobeandmail.com/report-on-business/international-business/european-business/greek-pm-assures-eu-creditors-reforms-coming-to-unlock-cash/article23551122/). 20 Mar. 2015.

Hope, Kerin and Spiegel, Peter. “Greek government presses social security funds to hand over cash.” Financial Times. 10 Mar. 2015. (http://www.ft.com/cms/s/0/6f80896e-c738-11e4-9e34-00144feab7de.html#axzz3Uw8bEstd). 20 Mar. 2015.

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