Cyprus parliament delays vote on deposit levy to Monday
Source: Reuters
NICOSIA | Sun Mar 17, 2013 2:07pm GMT (Reuters) - Cyprus's parliament has postponed until Monday an emergency session to vote on a levy on bank deposits after signs that lawmakers might block the surprise move agreed in Brussels to help fund a bailout and avert national bankruptcy...
... Anastasiades's right-wing Democratic Rally party, with 20 seats in the 56-member parliament, needs the support of other factions for the vote to pass. It was unclear whether even his coalition partners, the Democratic Party, would fully support the levy.
Cyprus's Communist party AKEL, accused of stalling on a bailout during its tenure in power until the end of February, would vote against the measure. The socialist Edek party called EU demands "absurd". "This is unacceptably unfair and we are against it," said Adonis Yiangou of the Greens Party, the smallest in parliament but a potential swing vote.
Many Cypriots, having contributed to bailouts for Ireland, Portugal and Greece - Greece's second bailout contributed to a debt restructuring that blew the 4.5 billion euro hole in Cyprus's banking sector - are aghast at Europe's treatment...
Read more: http://uk.reuters.com/article/2013/03/17/uk-eurozone-cyprus-idUKBRE92F07R20130317
kristopher
(29,798 posts)Along with loans adding up to 10 billion euros from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and from a 6.75 percent one-off haircut on all bank accounts with a balance up to 100,000 euros, rising to 9.9 percent on accounts exceeding 100,000 euros.
...Depositors will get shares of the banks they are clients of in return for the capital lost, of the same value as the haircut their accounts have suffered.
...This is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself. In addition to that there is a levy on interest, too, and an increase in the 10 percent corporate tax that has been one of the main driving forces behind Cypruss financial progress after the 1974 Turkish invasion, generating growth by attracting foreign direct investment.
...Tax on interest will amount to between 20 and 25 percent....
http://ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/03/2013_488169
Ghost Dog
(16,881 posts)AFP - The controversial proposed tax on savings in Cyprus looks set to hit Russian pockets hard -- with experts estimating that Russian deposits in Cypriot banks amount to at least $20 billion.
"Confidence in Cyprus as a safe place to deposit money is going to be reduced to zero," Anatoly Aksakov of the Russian association of regional banks told Interfax news agency...
... "Russians have lost up to 3.5 billion euros in one day," an editorial on the site read. "The news of a 10 percent tax on deposits in Cypriot banks has sown panic among the richest Russian businessmen."
According to Interfax, the regional banking association's vice president Alexander Khandruiev has suggested that Russia negotiate a deal with Cyprus to reduce, or even eliminate the tax in return for further financial aid.
Cypriot Finance Minister Michalis Sarris is due in Moscow this week...
/... http://www.france24.com/en/20130317-russian-deposits-20-billion-face-cyprus-tax
Ruby the Liberal
(26,219 posts)and don't think this is going to have any negative fallout. Idiots.
Trillo
(9,154 posts)The days of earning interest from your savings is so yesterday, so old school.
Glimmer of Hope
(5,823 posts)Eugene
(61,969 posts)Source: Reuters
By Michele Kambas
NICOSIA | Sun Mar 17, 2013 6:06pm EDT
(Reuters) - Cyprus was working on a last-minute proposal to soften the impact on smaller savers of a bank deposit levy after a parliamentary vote on the measure central to a bailout was postponed until Monday, a government source said.
In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighboring Greece.
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The originally proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that.
The Cypriot government on Sunday discussed with lenders the possibility of changing the levy to 3.0 percent for deposits below 100,000 euros, and to 12.5 percent for above that sum, a source close to the consultations told Reuters on condition of anonymity.
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Read more: http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317
muriel_volestrangler
(101,391 posts)...
Before the vote, which is too close to call, the government was working to soften the blow to smaller savers by tilting more of the tax towards those with deposits greater than 100,000 euros. Many of these depositors Russians and the planned levy has already elicited an angry reaction from President Vladimir Putin.
...
A Cypriot source told Reuters the introduction of a tax-free threshold for smaller bank deposits - maybe up to 20,000 euros - was under discussion but not yet agreed.
The parliamentary speaker said debate on the bank levy would be delayed until 1600 GMT on Tuesday, suggesting banks, shut on Monday for a bank holiday, will remain closed on Tuesday.
http://uk.reuters.com/article/2013/03/18/uk-eurozone-cyprus-idUKBRE92F07R20130318
If they don't keep the banks closed, there would obviously be a run on them.
slackmaster
(60,567 posts)Tell depositors you plan to seize some of their money.
Munificence
(493 posts)a really big deal!
First the "tax" is going to be retro-active so pulling money is kind of futile. However moving forward this should really make folks wake up and see the light when considering keeping more funds in their bank account vs what is needed to pay their bills.
This is but a small proving ground to see the reaction...coming to a community near you in the near future.
slackmaster
(60,567 posts)In the mattress?
This is but a small proving ground to see the reaction...coming to a community near you in the near future.
I must plead near complete ignorance of the constitution and laws of Cyprus, but it seems outrageous to me that a government could be allowed to conduct a blanket seizure of lawfully held assets.
First the "tax" is going to be retro-active so pulling money is kind of futile.
It will be a lot harder to collect money that isn't sitting in a bank account.
quadrature
(2,049 posts)how is that for planning ahead!
Munificence
(493 posts)it will be a lot tougher collecting the money that isn't in account. For this go-round the banks had to retain those assets, so if you had $100 in the bank you can withdraw $100 - % tax.
Moving forward this will kill the confidence in the EU regarding bank accounts.
Sure we all shout from the roof tops "These banks need to fail", but in reality we'd all fall (governments) with them if they did, so call it a "catch-22".
Now with seizing these assets, if one understands "Fractional Reserve Banking" then there is another can of worms being opened!
In closing: And in regards to the "In the Mattress"....bird in hand! I mean keeping money in a checking/saving account is really of any benefit other than for paying monthly bills and for safe keeping. Our dollar has declined by roughly 7.8% since 2008 so in essence one has lost money if they had $100K setting in a checking/savings account since 2008. Sure they probably got around 1% interest but that equates to be 4% over the 4 years so they are still losing 3.8%.
Me, I seen no reason in keeping money in the bank, especially if you are financing something at greater than 7%, so we pulled nearly all of our funds from banking 2 months ago (kept in maybe $10K) and paid off nearly all of our debt (still have $3k left on an auto and $24K left on a house) but my family has absolutely no other debt outside of the two mentioned. By paying off roughly $65K in debt (credit cards, student loans, 2nd auto) we in essence will save around $9K a year just in financing those loans/depreciating dollar...which with losing around 4% with it setting there and financing $65K in in debt at an average of 11% our net difference is about 15%....15% on $65K = $9750/yr...can't get that rate of return nearly anywhere.
Sure my bank account is nearly down to nothing ($10K) but man oh man does the feeling of no towing these lenders/banks anything feel good.
Pay off the debt.
Sure some might say "what about getting a large lump of cash if needed"....Well, we have around 4 credit cards with zero balance and with a limit of around $35K...I can roll into any debit machine and turn a percentage of that into cash pretty quickly (I think around 30%).
Sorry to ramble, just my thoughts.