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Cyprus: That wasn't actually a bailout, at least not of Cyprus, anyway...
At least 5.5B of the ELA taken by the banks (I suspect it is more) was for losses in the Greek branches of the Cyprus banks. These branches have 15B of deposits that presumably could have also been haircut, along with the Cyprus-based deposits, to make up for the losses.
Yet, under tremendous time pressure, they were sold to a Greek bank for 17% of NAV, even post NPL haircuts (very suspicious), while the liabilities (the ELA) stayed in Cyprus and are now, beyond all logic, is being transferred to the Bank of Cyprus.
We can call this: “Cyprus Contribution To Recapitalization of Greece, Part II”. And since Greece is insolvent and illiquid without EU assistance, it is really assistance to the EU.
Given that, it is perfectly fair to subtract it from the EU’s assistance back to Cyprus. That takes us to -3B
Yet, under tremendous time pressure, they were sold to a Greek bank for 17% of NAV, even post NPL haircuts (very suspicious), while the liabilities (the ELA) stayed in Cyprus and are now, beyond all logic, is being transferred to the Bank of Cyprus.
We can call this: “Cyprus Contribution To Recapitalization of Greece, Part II”. And since Greece is insolvent and illiquid without EU assistance, it is really assistance to the EU.
Given that, it is perfectly fair to subtract it from the EU’s assistance back to Cyprus. That takes us to -3B
Pop Quiz: How Big Is the Bailout Of Cyprus?
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