How does the iron bank eventually get back it's money they loaned ?

[Corvo the Crow]

.

[John Suburbs]

On 10/21/2022 at 6:11 AM, Tyrosh Lannister said:

A kingdom borrows a huge sum of money from the iron bank. The iron bank asks them to pay them back. The kingdom is unable to pay them back and refuses to.

The iron bank then funds a rebel lord to take over the kingdom . Rebel lord becomes king. Rebel lord now king also unable to pay kingdoms debts owed to iron bank and refuses to. Iron bank funds another rebel lord. and so the cycle continues...

As you can see the iron bank keeps on funding rebels and doesn't get its money back. They are losing money. How are they still afloat and how do they get their money back eventually?

 

This is Illyrio's plan, which Littlefinger is helping to carry out. The Iron Bank will not get its due from the Iron Throne, and eventually depositors will realize this and create a panic that will drive the bank into insolvency, just like what happened to the Rogares.

Then, with the Braavosi economy in tatters, Pentos regains its autonomy and dominates trade on the Narrow Sea, including slaves, and rich men like Illyrio get even richer.

After that, Petyr can do what he likes with whatever is left of Westeros.

[John Suburbs]

On 10/21/2022 at 6:21 AM, Craving Peaches said:

I think that the Iron Bank and the Faceless Men are two sides of the same coin. So the Bank would have access to all the money made from those assassinations.

Presumably they would usually get their money back plus interest because people are wary of their reputation and so repay the loans.

With the interest and money from the assassinations I don't think they'd ever really run out of money completely.

I assume they have assets other than gold as well such as property, shares in business, renting out vaults for storage etc.

Even if all their debtors defaulted at once, I think they'd be able to keep going. They likely have other sources of income and a contingency plan.

Not this time. Let's say Illyrio's man, Aegon, takes the throne and declares the debts incurred by usurpers and rebels to be their responsibility, not the crown's. So the Bank sends an FM after him, which only depletes its coffers even more. If Aegon has an heir by this time, the crown is put under a regency secretly selected by Illyrio, which will continue the same policy. Now the bank sends more FMs after the heir, the regent and anyone else . . . and all they get for their troubles is another civil war that will most likely devolve the continent back into seven independent kingdoms, none of which owes a dime to the Iron Bank.

Westeros is not like Essos, where anyone with enough money and muscle can become a new archon or triarch. The Iron Throne is inherited, so a claimant must have a legitimate blood tie or they must conquer at least six of the seven great houses, including the Rock and the Eyrie -- which will be very expensive and take a long time.

Right now, the bank's last hope is Stannis. If he dies, the bank will fail. And won't that stir up the plot some.

 

[John Suburbs]

On 10/21/2022 at 6:58 AM, chrisdaw said:

Because the crown can pay the IB back but refuse to. If the crown had not the means to pay back the loan the IB wouldn't have leant to them in the first place.

The crown refuses to pay the IB, the IB responds by backing a rebel lord, the rebel lord wins and becomes king and they pay back the IB because they want to stay king and if they don't pay back the IB it will back the next rebel lord and they won't stay king for long.

The treasury is empty. Three successive MoCs have stated this. Petyr's "financial wizardry" was nothing more than a shell game, financed by Illyrio.

Backing just any rebel lord will take massive amounts of gold and take a very long time, including the submission of extremely redoubtable fortresses like Casterly Rock, the Eyrie and Storm's End.

The Iron Bank will not get it's due this time, and it's only a matter of time before depositors realize this and start a panic -- probably instigated by Illyrio, who's been funneling the loans that Petyr has been taking out back into the bank under hundreds of small proxy depositors. 

With the bank gone and the Braavosi economy in tatters, Pentos regains its autonomy and dominates trade on the Narrow Sea, including slaves, making Illyrio even richer. And then Petyr can do whatever he wants with what's left of Westeros. 

[John Suburbs]

On 10/21/2022 at 5:40 PM, James West said:

Funding wars and successions is but a small part of what they do.  The bank lends to businesses large and small.  Essos has more advanced commerce and can support the growth of the bank.  They made bad loans to Westeros.  The loans to Stannis and Jon are not secure.  Tycho will be in deep sh!t very soon with his employer.  

The bank took a chance with Stannis. Pretend for a short minute that Stannis became king.  The bank would impose austerity measures on Westeros (like we did to Greece).  Stannis would tax the hell out of the people and try to force the lords to pay more.  His time on the throne will make Truss' time as PM an eternity.  

The loan to the watch is not secure but the bank got lucky when Marsh killed Jon.  Their chances of getting their money back just doubled.  Marsh is a good administrator while Jon Snow sucked.  It is still a bad loan even if the chances of getting it back doubled.  Winter is upon them.  Revenue is not coming.  

The Night's Watch has wood, lots of it. Wood is rare and valuable in Braavos. So the watch will trade wood for wheat and barley and seafood, which Braavos has in abundance. So this is a far more secure loan that either Stannis or the Iron Throne.

But let's look at what else the bank is doing. It is calling in loans across Westeros, supposedly as a power tactic against the throne. But if it is, it is bound to fail. How is the crown supposed to pay back its debt if the bank intentionally throws a wrench into the Westerosi economy? Whenever a bank starts calling in performing loans, it's a sign of trouble. It means it must sacrifice future profits to raise cash now.

The NW watch is also evidence of this. When Jon first brings up the subject, the answer is a hard no -- no way, no how, not ever, impossible. Only through negotiations did the impossible become possible, and later we see how this was done: the watch will hand over the wildling treasures, meager as they are, as collateral, with the balance paid in wood. So the wealthiest, most powerful bank in the world cannot come up with a few thousand gold to pay for basic foodstuffs for a few thousand people over the winter? But then all of a sudden it can? The key is the wilding treasures, which brings an instant cash infusion into the bank, which it desperately needs.

The bank is on the brink of collapse, and if Stannis dies so do its hopes of getting its money back. And once depositors realize this (which Illyrio will demonstrate with all the proxy depositors he has set up using the very money the bank loaned to the crown), the bank will crash, taking the Braavosi economy with it. Then Pentos gets its autonomy back, becomes the dominant power on the Narrow Sea, and Illyrio gets richer beyond even his wildest dreams controlling trade, including slaves.

[John Suburbs]

On 10/21/2022 at 9:15 PM, Rondo said:

Through taking back financed property or selling the collateral.  Most borrowers pay though.  The bank would have folded long ago if that were not the norm.  The interests income make up for the loans they write off.  Robert ruined the Westeros economy and put that kingdom in heavy debt.  Whoever takes the throne, which most probably will be Daenerys Targaryen, will honor the debt and pay it off.  

Aegon will not do this, though. He will declare the debts of usurpers and murderers to be theirs and theirs alone. Sure, the IB can kill him, but so what? That just throws the realm back into civil war that will likely result in seven independent kingdoms, none of which owes a dime to the Iron Bank. Now, it will take one champion years, and incalculable amounts of gold, to gain the throne -- taking virtually impregnable fortresses like Caster Rock, the Eyrie and Storm's End in the process.

Once depositors realize that this time the bank will not get its due, it won't take much to start a panic that could drive it into insolvency in a day. And who do you suppose would benefit from that?

[John Suburbs]

9 hours ago, Ring3r said:

They're basically working a debt-economy, much like ours.  So long as not all debts get called at once, they can continue to turn a profit on interest that does get paid, and afford to write off losses, even large ones.

And they simply kill those who reneg on their debts, either by sending a faceless man, or by supporting a rival.  That serves as a deterrent in nearly all cases, the exception being Cersie, because she's a psychotic moron.

This won't work if Aegon takes the crown. He's going to declare all debts by usurpers and murderers to be theirs. So sure, the bank will send an FM after him, depleting its coffers even more. And all they'll get for their troubles is another civil war that will most likely devolve the realm into seven independent kingdoms again, none of which owes a penny to the Iron Bank.

And if Stannis is dead by this point, the bank has no rival to support because there are no more legitimate blood ties to the Baratheon regime -- save for Shireen, and who's going to support her? That means even more time and enormous amounts of gold to subjugate all of the great houses -- including impregnable fortresses like Casterly Rock, the Eyrie and Storm's End. Remember, Westeros is not Essos, where anyone with enough money and muscle can become the new triarch or archon.

So at some point, bank depositors will realize that this time the IB will not get its due and the resulting panic could drive it into insolvency in a day. And who would benefit from that, I wonder?

[Loose Bolt]

Another thing what could happen to any king who won't pay back his loans to Iron Bank is raids and embargoes carried out by navy of Braavos. For instance if victorious king X tries to refuse to pay all loans of Iron Throne he would find out that he could not feed his soldiers and his subjects bc  warships with purple sails hunt down every ship sailing either from or to any harbor loyal to him. Or very soon he would have huge problems with very angry and hungry people and any potential leader who would want use those people for their own purpose.

[Aldarion]

2 hours ago, Loose Bolt said:

Another thing what could happen to any king who won't pay back his loans to Iron Bank is raids and embargoes carried out by navy of Braavos. For instance if victorious king X tries to refuse to pay all loans of Iron Throne he would find out that he could not feed his soldiers and his subjects bc  warships with purple sails hunt down every ship sailing either from or to any harbor loyal to him. Or very soon he would have huge problems with very angry and hungry people and any potential leader who would want use those people for their own purpose.

That will not work on anyone other than lords of Dragonstone / Narrow Sea, because all the food Westeros needs is grown in Westeros. This is not modern Earth or World War 2 Britain, or Ancient Rome: there is no mass transport of food, even cities are fed by their countryside. So blockade of the sort you are describing simply wouldn't work.

Granted, winter might change that...

[chrisdaw]

6 hours ago, John Suburbs said:

The treasury is empty. Three successive MoCs have stated this. Petyr's "financial wizardry" was nothing more than a shell game, financed by Illyrio.

Casterly Rock is not empty, and if it were the bank can accept land. Cersei can pay back the bank, she chooses not to.

[John Suburbs]

18 hours ago, chrisdaw said:

Casterly Rock is not empty, and if it were the bank can accept land. Cersei can pay back the bank, she chooses not to.

Sure, but in the first place, Casterly Rock is a virtually impenetrable fortress that will require years and enormous sums of money to crack, and very likely the gold, if it even exists, will be gone. Remember, Tywin loaned even more money to the crown than the IB, and it's gone.

Secondly, land is no good. It will take years to draw significant income from land, and it will require substantial upfront costs to establish an effective management system. The bank needs cash, now. All signs show that its coffers are running dry, and it hasn't even felt the hit from Dany's disruption of the slave trade yet, which affects all trade.

Third, Cersei cannot pay back the bank even if she wanted to. Again, the treasury is empty. Has been for years. It was only Petyr's shell game that kept the money flowing, and this was most likely bankrolled by Illyrio. Those days are over. So now her dromonds are gone, her money is gone. She has nothing.

And finally, the plan is to replace Cersei with fAegon anyway. And he will not only refuse to pay back the loan, he will disavow it altogether. If Stannis dies, it won't take long for depositors to realize that the bank is not getting its due this time. Westeros is not Essos, where anyone with enough money and muscle can become the next triarch or archon. Finding another champion and putting them on the throne will take years and come at an exorbitant cost. All Illyrio has to do to crash the bank is send in his proxy investors (who started their accounts with the same money that Petyr embezzled from the loans in the first place) to withdraw their funds and when the windows close the panic takes it down in less than a day -- just like what happened to the Rogares.

This is the plan, anyway. There is no guarantee that it will work, especially since Dany is now the wildcard.

[John Suburbs]

23 hours ago, Loose Bolt said:

Another thing what could happen to any king who won't pay back his loans to Iron Bank is raids and embargoes carried out by navy of Braavos. For instance if victorious king X tries to refuse to pay all loans of Iron Throne he would find out that he could not feed his soldiers and his subjects bc  warships with purple sails hunt down every ship sailing either from or to any harbor loyal to him. Or very soon he would have huge problems with very angry and hungry people and any potential leader who would want use those people for their own purpose.

All this becomes moot if the bank crashes. The Braavosi economy goes down with it, and then there is no money to hire sailors, equip ships or do anything. The entire city descends into turmoil and chaos, and can no longer project power over the Narrow Sea, and especially over Pentos.

Meanwhile, there is still plenty of food in the Reach, Vale and even the westerlands to feed soldiers and subjects. The Reach and Westerlands can be brought into the king's peace by forgiving their loans to the crown, while Petyr runs the Vale and he's on team Illyrio.

All that's needed is for Stannis to die and will become obvious that the Iron Bank will not get its due this time. Then, the ensuing panic, orchestrated by Illyrio, can bring it down in a day and the Braavosi economy with it.

[Corvo the Crow]

.

[Craving Peaches]

If the IB were to collapse I imagine it would affect everyone in Essos. I don't see why Illyrio and Pentos would be spared the economic fallout.

[Loose Bolt]

2 hours ago, John Suburbs said:

All this becomes moot if the bank crashes. The Braavosi economy goes down with it, and then there is no money to hire sailors, equip ships or do anything. The entire city descends into turmoil and chaos, and can no longer project power over the Narrow Sea, and especially over Pentos.

Existing ships and their crews would not disappear but instead at least some of them would go rogue or become pirates and raiders if economy of B will collapse. After all sailors and mariners in those ships need some way to support themselves and their families . So if IB goes down then northern Narrow Sea would have huge pirate and raider problem and there is even a possibility that some of new warlords will decide to sack Pentos. After all P is very rich city but has very weak military. 

 

23 hours ago, Aldarion said:

That will not work on anyone other than lords of Dragonstone / Narrow Sea, because all the food Westeros needs is grown in Westeros. This is not modern Earth or World War 2 Britain, or Ancient Rome: there is no mass transport of food, even cities are fed by their countryside. So blockade of the sort you are describing simply wouldn't work.

 

Could one really feed 500k people in KL without using ships for that purpose? After all one would need at least 1/2 million kg (over 1 million pounds) of food everyday to feed that city. So I am almost certain that any major city in Westeros would have huge problem if ships would stop coming to their harbors.

[Aldarion]

1 hour ago, Loose Bolt said:

Could one really feed 500k people in KL without using ships for that purpose? After all one would need at least 1/2 million kg (over 1 million pounds) of food everyday to feed that city. So I am almost certain that any major city in Westeros would have huge problem if ships would stop coming to their harbors.

Yeah, but King's Landing is on a river. I'd assume most of the food for the city comes downriver, rather than over the sea. I might be wrong, but I don't really see Westeros as having the capability to organize long-distance transport the way Romans did with Egyptian grain for Rome. Same goes for other major cities other than Gulltown, IIRC.

[SeanF]

I sometimes wonder if the Directors of the Iron Bank are like the rich old bastards who organise Squid Game.

They just organise wars for the sheer fun of betting on the outcome.

[chrisdaw]

5 hours ago, John Suburbs said:

Sure, but in the first place, Casterly Rock is a virtually impenetrable fortress that will require years and enormous sums of money to crack, and very likely the gold, if it even exists, will be gone. Remember, Tywin loaned even more money to the crown than the IB, and it's gone.

Secondly, land is no good. It will take years to draw significant income from land,

How defensible Casterly Rock is is an irrelevancy, the crown can draw upon the wealth of the realm to pay back the IB, the wealth exists but the crown (the extremely near sighted Cersei) in this instance refuses to draw from it.

They're a bank, they only know the long game.

[Here's Looking At You, Kid]

On 10/21/2022 at 12:17 PM, sifth said:

The one plot in the series I don’t understand is the Iron Bank and it’s involvement with Stannis. Is that plot going anywhere and if not, why was it even added into the story? 

To make Stannis competitive if he's still alive.  He needs funds to fight Tommen. 

[sifth]

23 minutes ago, Here's Looking At You, Kid said:

To make Stannis competitive if he's still alive.  He needs funds to fight Tommen. 

Yea, but the show kills him off, around the time he would have made that deal. So is the whole thing a red herring, or is Stannis actually going to live a lot longer in the novels.