- LiberBank is teetering in the wake of Banko Popular’s sale to Santander.
- The ECB admitted it is policy-trapped last week.
- European financials will see capital flight, front-running the next bail-in.
The ECB signed its own death warrant with last week’s abrupt bail-in and resolution of Spain’s Banko Popular (OTCPK:BPESY) in which rival Santander (NYSE:SAN) acquired the lender for $1. The financial press is crowing about this swift action but it sets up a much more dangerous future outcome.
By invoking its authority in this way, the ECB may have stopped a wider contagion event but, it also now tells investors in European bank stocks that your risk of complete loss is 100%/