In the past the economy of Crimea largely depended on tourists visiting from the mainland of Ukraine. That era would seem to be over now, as the region has voted to sever its ties with Ukraine and join the more distant and less prosperous neighbor, Russia. The split is more serious than just a formal political action; Russian armed gangs roam the streets and Ukrainians who visited Crimea today would risk getting beaten, kidnapped, or shot. The way things look now, it is hard to imagine the tourism business recovering soon. But this also means the economy of Crimea will shrink permanently and its population will have to decline as workers seek jobs elsewhere, even if this decline occurs mostly from Ukrainians fleeing the region. Of course, a declining population means that real estate development can come to a stop, and many loans in Crimea are unlikely to be repaid as building projects are abandoned. It is hard to imagine the banks going back to normal business short of a forced currency conversion and financial system bailout from Moscow, and that scenario is less likely now that the treaty between Crimea and Russia has already been signed. In the meantime, ATMs in Crimea are out of cash.
Bankia, one of Spain’s most desperate banks, today promised shareholders a dividend starting next year as it tries to persuade investors and regulators that it will be able to continue to operate. It has paid out €1 billion to small investors it (and its predecessors) defrauded in the run-up to its crash, and it hopes to complete that arbitration process this year. Most of these small investors were merely account holders whose savings accounts were converted to bank stock or similar securities.
In the United Kingdom, the Royal Mint will begin producing a new £1 coin in 2017. The 12-sided coin will incorporate security features similar to those found in most current bank notes. It is estimated that 3 percent of the current one-pound coins in circulation are counterfeits.
Regulators have warned that new rules that limit bankers’ bonuses in the European Union do not just apply to the traditional annual bonuses, but also if bonuses are paid quarterly or monthly. HSBC and others have started to pay bonuses in small monthly increments to try to avoid the new limits on bonuses, but it appears that strategy won’t be sufficient to get around the new rules after they go into effect at the end of this year.
China, it appears, is beginning to let overextended business go bankrupt. The high-profile case this week is Zhejiang Xingrun Real Estate, a real estate developer in the southeast which defaulted on about $500 million in debt, most of it owed to state-run banks. Though insolvent, the company has not declared bankruptcy and is said to be working on a way to continue operating. In the past, the government has taken extraordinary measures to rescue businesses before they got to this point, partly to protect banks from the consequences of bad loans.
One U.S. credit union was liquidated today. Parsons Pittsburg Credit Union in Kansas had been in conservatorship since January. It had 1,466 members. Member accounts have been transferred to Golden Plains Credit Union.