Deposit Haircut Back On The Table: Reports

[Berlin Expat]

Source: Cyprus Mail

THE government ordered banks to stay shut until next week as the proposal to tax deposits – at lower rates – was back on the table to avert a financial meltdown.

"We don't have days or weeks, we have only hours to save our country," ruling DISY deputy chairman Averof Neophytou told reporters as crisis talks in Nicosia dragged into the evening.

Reports suggested the government may submit a bill tomorrow proposing a haircut on deposits but at lower rates than legislation that was rejected by parliament on Tuesday.

Read more: http://www.cyprus-mail.com/bailout/deposit-haircut-back-table-reports/20130320

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No surprise for me, I have to say. The Russians have so far turned a cold shoulder to the pleas of Cyprus, most likely as they don't want to jeopardize their trade relations with the European Union, in particular Germany, which are really good right now. So, it looks like it's back to square one for the Cypriot parliament, and barring any unforeseen events, Cyprus will stay in the EU, with the Euro as its currency, but the days of Cyprus being the Cayman Islands of the Mediterranean are effectively finished.

[Paul E Ester]

1. When they take the money out of Grandmas bank account who gets to keep it?

It goes somewhere.

[jberryhill]

2. Grandma is not parking six figures in Cyprus

[Berlin Expat]

3. In this case, it'll

likely go to the European Central Bank and the IMF.

I had a feeling the Russians were going to pass on this one. They might help in some small way, perhaps delaying loan repayment for a couple years, but I'd be surprised if they did anything more than that.

This move is not going to go down well in Cyprus, with either Cypriots or the expat community there. They were all cheering and dancing last night, and now that this deeply unpopular move is back on the table (albeit tweaked), combined with the banks being closed until the 26th, it means there's going to be a lot of anger down Nicosia way.

[dipsydoodle]

5. The ECB's liquidity support was due cease tomorrow - Thursday.

Its been extended for now. If they pulled the plug the banks would immediately become insolvent. Its illegal to trade while inolvent. If that situation remained the population of Cyprus would lose considerably more than 10% of deposits and would wait months while administrators worked out what was what between debtors and creditors - skint in the meanwhile.

Those cheeky fuckers in Greece actually suggested today that they take over some of Cyprus's banks. It was Greek write down on their bonds which largely caused this mess.

[Berlin Expat]

10. I really don't know

what the Greek word for "chutzpa" is, but the Greeks certainly seem to have it.

The Cypriot Finance Minister is still in Moscow, and apparently there's supposed to be a second round of talks tomorrow, but the look on his face from earlier today pretty much spoke volumes. It was that "we're totally screwed" look.

They took a gamble that the Russians would ride to the rescue. It's looking like the Cypriot parliament has realized they have precious few other options open to them at this point other than to approve the "haircut". Like you said, if those big banks go insolvent, the Cypriots are going to lose a hell of a lot more than 10%. They'll be wiped out entirely.

[dipsydoodle]

11. He has however stayed there.

So - all is not lost. Probably some haggling going on behind the scenes.Its 3am in Moscow so maybe more news in the morning.

[dipsydoodle]

8. Its the IMF

who reached the conclusion they couldn't sustain a bailout of more than 10 million euros. The cost of credit default insurance on loans to Cyprus went through the roof days ago.

[rdking647]

4. heres what they should do

the banks are effectively broke.
they should close the banks,wiping out the shareholders and bondholders.
anyone with deposits under teh deposit insurance amount should be make whole. anyone with money over that should lose an equal percentage of their accounts.
start a new bank from scratch.

pretty much like we do in teh US when a bank goes bust

[dipsydoodle]

6. Dream on.

Insolvency isn't treated that way in Europe.

Details here : http://news.bbc.co.uk/1/hi/business/1578896.stm

[marybourg]

13. I haven't seen anything in news reports about them actually *having*

deposit insurance, but if not, they could do as Iceland did - make whole with government money their own small depositors and let large foreign depositors absorb the haircut.

[slackmaster]

15. Wiping out the shareholders, then bondholders, then employee pension funds would make more sense...

...than seizing the assets of depositors. People who buy stocks and bonds are accepting known levels of risk, stocks being inherently more risky.

[Clear Blue Sky]

7. Wealth tax. Good idea. Level the playing field a little bit...nt

[slackmaster]

16. Given that the plan is to seize some assets from EVERYONE, albeit somewhat progressively...

...I don't see how it would be of benefit to ANYONE. If everyone loses, they may be on a more level playing field but the whole field is lower than it used to be.

[AndyTiedye]

17. Quite the Opposite. Would Hit the Wealthy Less Than Everybody Else

The wealthy don't keep that much of their assets in bank accounts. They prefer stocks, bonds, real estate, etc.
Working class people are likely to have it all in the bank.

[dipsydoodle]

9. You may find elsewhere

that Russia is saying fuck Germany and threating to substantially reduce gas supplies to them.

[dipsydoodle]

12. Cyprus finance minister to stay in Russia 'as long as it takes' to reach deal

Russia and Cyprus were set to launch a second day of talks in Moscow on Thursday over a multibillion-dollar loan to help save the Mediterranean island from a financial crisis that could have a disastrous impact across Europe.

>

To stem the damage, Cyprus is seeking a five-year extension on a €2.5bn loan granted in December 2011 that is due to mature in 2016. It has also asked Russia to refinance the loan and lend an additional €5bn.

With an estimated $31bn held in Cypriot banks by Russian banks, businesses and individuals, as well up to $40bn in loans to Cyprus-registered firms, Russia has been gripped by fear since the crisis began to unfold, with state-run television transmitting rare live reports from outside the Cypriot parliament.

Yet the Kremlin's reputation for seeking hard assets abroad in exchange for aid has prompted speculation that negotiations were dragging as it bargained for stakes in offshore gas fields and Cypriot banks.

http://www.guardian.co.uk/world/2013/mar/20/cyprus-crisis-minister-russia-deal

[slackmaster]

14. I am mortified that anyone would seriously propose such a thing.

If there was any hope of being able to repay them, the government of Cyprus could issue special bonds to allow them to borrow the money from investors.

If they can't do that, seizing peoples' assets would be a desperation move that cannot possibly fix the structural problems in their economy.

[freshwest]

18. '...Cyprus being the Cayman Islands of the Mediterranean..' Something funny going on there?

Guess they were laundering or hiding some billionaire bucks. It does have a touristy look like the Cayman Islands here:



Large in size but bulging with all the personality of a sassy Mediterranean hotspot, Cyprus woos visitors with profound legends of love, epic tales from over 10,000 years of colourful history, and a veritable smorgasbord of culinary treats.

After dining on salty halloumi, tangy dolmades (stuffed vine leaves) and chunks of kleftiko (seasoned slow-baked lamb), visitors will find many an all-night party pumping throughout Cyprus’ main towns – Ayia Napa in particular – and an assortment of pristine beaches on which to revive and rejuvenate the next day.

For an altogether slower pace, the café culture of Nicosia is well worth sampling, as are some gentle wanders around the country’s fascinating selection of UNESCO World Heritage sites. Whatever speed you choose to go, Cyprus is guaranteed to leave you wanting more.

http://www.youbookit.net/cyprus

Sorry, that's the first thing I found. Looks nice enough. Second thing was this:



The Cyprus Anomaly: Why the EU should give Britain more flexibility

Backbencher January 26, 2013

...The country is yet to agree terms of a bailout after an economic bust that revealed banking excesses and illegality that made Britishcyprus aerial banks seem positively prudent. A troika of the IMF, European Commission and European Central Bank have spent the last eight months in negotiations. Public sector pay cuts have been implement and thousands of unsustainable jobs done away with.

http://thebackbencher.co.uk/the-cyprus-anomaly-why-the-eu-should-give-britain-more-flexibility/

Article mentions Cameron, the EU (of course) and some issues about sovereignty and Turkey. As usual, I am clueless.

It doesn't look good with all that pay being cut along with what he calls unsustainable jobs.

Why would they be termed as unsustainable when they were working? And was Cyprus stealing from someone?