Posted on 03/24/2013 5:15:07 PM PDT by Beave Meister
Wealthy Russians stand to lose billions of euros in Cypriot banks under draconian terms being hammered out on Sunday night in Brussels to prevent the Mediterranean tax haven becoming the first country forced out of the single currency.
Negotiations got underway amid a hardening of the stance held by the International Monetary Fund and Germany, who insisted that depositors must take the hit for bailing out the eurozone's latest crisis economy.
There were signs of panic in Cyprus as a €100 (£85) limit was imposed on ATM withdrawals, with more stringent capital controls to follow if a deal is reached.
The European Central Bank has threatened to cut off funds propping up Cypriot banks on Monday, precipitating the island's exit from the euro if agreement was not reached on Sunday night at the emergency meeting between eurozone finance ministers, the president of Cyprus Nicos Anastasiades, and the bailout troika of the IMF, European Commission and the ECB.
(Excerpt) Read more at guardian.co.uk ...
Agreed. This could cause some serious problems.
40%... that is it? Back in the S&L crisis bank depositors over 100K lost everything. Having trouble believing the bondholders are totally protected and only 40% haircut for Jumbo accounts. This does not pass the smell test since they were considered bankrupt hours ago.
to post 19.
does the parliament get a say on this?
Supposedly not since it’s a “restructuring” and not a tax.
There’s the 40% haircut plus money from the ECB I believe.
In the last of people I would want to piss off, the Russian Mafia would be at or near the bottom. I would imagine some Ministers in the EU or Cypriot govt will not be around very much longer.
Just can’t wrap my arms around the logic.
1. Bank survives.
2. Bondholders 100% whole.
3. Deposit 100K and under 100% whole.
4. ECB loans funds.
5. Jumbo accounts stolen.
Oddly no one knows where the money went. It’s just gone. At some point questions will be asked and then it unravels.
Think its 5 billion in haircuts (what the corrupt Euro’s call theft now) to get 10 billion in loans. Apparently they need 15 billion to be solvent in Euro’s. They can always go back to their own currency anytime they want. The issue will be its exchange rate with Euro’s and how many Euro bondholders end up getting stuck.
This whole situation is baffling. I think this is just the beginning of something big. How are Italy’s and Spain’s banks doing? I saw a blurb of an article about Spain’s banks...it was not good.
I think your numbers are correct. ( might be 5.9) I feel this is just another kick the can down the road “solution”.
If you lived in a different EU country and had a couple hundred thousand in savings, what would you do tomorrow?
Greece hold Cyprus bond and Cyprus holds Greek bonds. Everyone knows the Bonds are worthless but it looks good on the books. That is why the bonds must be paid 100%. Once the bonds are considered mark to market the music stops and no chairs available.
This will not end well.
Over 95% of the “bad bank” Laika bonds were already held by the ECB as collateral for Laika’s books and on the books of other banks, that’s part of the switch and bait parlor trick. The ECB will be nearly fully repaid for the impaired bonds over time, or there won’t be an ECB without further banking regulation consolidation.
Cyprus only has a population of 1.1 million people, in the bigger scheme of things they are just a very large municipal bankruptcy like the bankruptcy of Detroit, MI and Stockton, CA. Like Detroit, and the corruption in the GM bankruptcy, the time to pay the piper will occur decades after the current crop of politicians are retired, senile or deceased.
By that time, a cup of coffee in Cyprus will cost 20 Euros, and 15B Euros will seem trivial.
Cyprus only has ~250,000 employed workers, so 15B Euros is something like 78210.00 US Dollars of debt per employed worker.
There probably aren’t that many native Cypriots that have over 100k in the bank,
2011 estimates have only 10500 Cypriots worth over US$1MM .
http://www.google.com/url?sa=t&rct=j&q=cyprus%20household%20wealth&source=web&cd=7&cad=rja&ved=0CF0QFjAG&url=https%3A%2F%2Finfocus.credit-suisse.com%2Fdata%2F_product_documents%2F_shop%2F324292%2F2011_global_wealth_report_databook.pdf&ei=xNJPUdyBEIHC4AP5xoCoBQ&usg=AFQjCNEChB9VHtKj7c1fdrOpYTgZ4nFp_A&bvm=bv.44158598,d.dmg
They were sent to the wolves.
Anyone notice the bank withdrawal limits are still in place. How is insurance protection any good if you cannot withdraw the money.
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