Can someone pls explain what a Bank 'Bail-in' is?

[fourandsixpants]

read comments like below, that follow an article:

The thing that worries me is the recent G20 undertaking to support banks with “bail-ins”. Should people with significant funds in banks remove them pre-emptively?

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Just turn it into equity now instead of waiting for teh bail-in. What could possible go wrong?.......etc etc

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I’ve diversified to several banks to make sure I don’t overrun the government deposit guarantee. In addition, I reckon if there is a bail in, the precious metals will take a moon shot...................etc etc

 http://www.macrobusiness.com.au/2015/01/bill-gross-goes-all-out-bear-for-2015/

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Thanks in advance

[fourandsixpants]

and also what is a 'lock down' in same subject pls?

[freddie*rooster]

Not 100% sure paints but a 'lock down' sounds to me like if there was a GFC they freeze your savings as in only allow a certain % withdrawal but again i'm just trying to pretend I know it all.

[poddster · Accepted solution]

A mass 'bail-in" is  a misquote for "ball-in" when bank officials  and government officials to throw their balls in the air and juggle for all they are worth :).

Mass "Ball-ins" invariably evolve into a "Mass Balls Up" when everyone has to pay the price of those ventures 😞

[fourandsixpants]

Yes freddie. I am not sure but i thought the same as you. I have only heard about this from people that have written about the runs on banks in the 1930's i think it was and depositors were literally waiting outside their respective bank buildings, in queues because the bank/s had locked the front doors.

I don't know what a bail-in is though.

[fourandsixpants]

All dressed in clown suits I presume?

[icyfroth]

"a bail-in, a term first popularised in the pages of The Economist, forces the borrower's creditors to bear some of the burden by having part of the debt they are owed written off. (In the case of Cyprus, the creditors in question were bondholders, and depositors with more than €100,000 in their accounts.) At the height of the financial crisis, governments avoided resorting to bail-ins out of concern that it might cause panic among the creditors of other banks; even the bondholders of Irish banks were initially spared. But as time has passed, and the cost of government bail-outs has risen, the appeal of asking private-sector investors to take a hit has increased. Ironically, it was one such bail-in—the restructuring of Greek government debt—that led to the problems faced by the Cypriot banks, which were big holders of Greek bonds.

Entire Article Here

[fourandsixpants]

thanks icy for the link.

Last sentence says

 But one thing is clear: bail-outs will now be accompanied by bail-ins.

All-encompassing rescues are becoming a thing of the past.

[prophecyfulfilled]

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@paintsew007 wrote:

thanks icy for the link.

Last sentence says

 But one thing is clear: bail-outs will now be accompanied by bail-ins.

All-encompassing rescues are becoming a thing of the past.

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As Icy said.If a too big to fail goes belly up the depositors have to buy shares.Your deposits are turned into shares to keep it running.It is law in NZ now and probably will be here soon enough.

[fourandsixpants]

....so, you mean if you have any money in a savings account at a major bank and this bank folds then it will be made legal for the bank to keep your money to pay for it to stay open? Stay open for what purpose if the clients no longer have any money there?!