by John Galt
March 16, 2015 05:45 ET
The cured, resolved, or fixed nation of Spain which is the big “S” in the PIIGS has long been lauded as one of the economies whose problems have been solved by European Union economic voodoo. This morning, that took a turn for the worst when one of the largest banks in the country, Banco Madrid was forced into bankruptcy and depositors were informed that they will have no access to their funds until a judge allows the bank to re-open. From the Spanish news site, The Local:
Banco Madrid will enter insolvency proceedings and suspend all activity, after significant deposit withdrawals, the country’s central bank announced in a statement on Monday.
The news came days after the entire board of Banco Madrid resigned and handed management over to the Bank of Spain on Thursday, March 12th.
The change of management came after the central bank launched an investigation into accounts at the lender for suspected money laundering activities.
This came about after legal action was taken by US law enforcement authorites on Tuesday against the parent company of Banco Madrid, Banca Privada de Andorra (BPA).
“This decision comes in response to the sharp deterioration of Banco Madrid’s financial situation as a consequence of the important withdrawals from client funds after the latest events which have affected its capacity to meet its obligations,” Banco de España said in a statement, released on Monday morning.
Deposits were protected by the Spanish deposit guarantee fund of up to €100,000 ($105,350) per client, the bank said.
With only €100,000 in protection for depositors, the question now becomes as to what happened with those assets under corporate control and how many other banks this will spread to in the Spanish nation. Odds are this is only the beginning of another PIIGS banking crisis and not the end even though the propagandists will insist that this is an isolated incident. With the collapse of the Euro and ongoing currency wars, one would have to be a fool to believe that the PIIGS financial crisis will not flare up again, this time with more severe outcomes for the European Union.