Posted on 03/24/2013 7:11:45 PM PDT by blam
LIVE: Deal Reached On Cyprus Bailout
Matthew Boesler
March 24, 2013
The Eurogroup of euro zone finance ministers met in Brussels tonight to approve a plan to bail out the Cypriot banking system.
The new deal will see uninsured deposits at the country's two largest banks take a substantial haircut, but insured depositors those with less than 100,000 euros in their bank accounts will be spared from the one-off "tax" that was being considered just a week ago.
Reports of a deal between Cypriot and EU officials being reached prior to the Eurogroup meeting caused the euro and the Australian stock market to spike.
Now, the Eurogroup has signed off on the deal as well.
CNBC's Kelly Evans tweets that Cypriot President Nicos Anastasiades is pleased with the outcome:
Below are more details from Reuters on the plan:
It will mean that Popular Bank of Cyprus, the island's second largest bank which is also known as Laiki, will effectively be shut down.
Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus, the country's largest bank. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debts. It remains unclear how large the writedown on those funds will be.
No charges will be incurred against any Cypriot bank account with less than 100,000 euros in them, the officials said.
Because the process will be treated as a bank restructuring as opposed to a nationwide "tax" on bank deposits, it seems that the plan will not be subjected to another vote in the Cypriot parliament, which on Friday passed new laws enabling them to navigate the restructuring process more easily.
The Eurogroup press conference is now underway.
Dutch Finance Minister Jeroen Dijsselbloem,
(snip)
(Excerpt) Read more at businessinsider.com ...
I would imagine Spanish and Italians in their countries would be removing their deposits toot sweet, if they haven’t already.
They need to use the proper language so that the theft of money doesn't sound so bad.
So it’s okay for the bondholders to lose nothing? I seem to remember that they should lose every penny before a depositor loses a single penny.
So this DOESN’T amount to theft against those with more than 100,000 Euros.... how?
Sequestered. Their money got sequestered.
Your silly little American brain just doesn’t get it.
Most of the accounts over 100K euros will either be laundered Russian money or Cypriot small/medium sized businesses, not an individual fatcat/playboy. I would think that these accounts would be way over the 100K threshold, otherwise this action wouldn’t solve anything.
So let’s look at Cypriot business owners.
So a Cypriot furniture store owner with 1M euros in the bank has now just lost 360,000 euros. Other small-medium businesses will likewise be hit hard.
Small businesses will close their doors and liquidate their assets, and maybe move away from Cyprus. People will lose their jobs.
Look for Cypriots with less than 100,000 in the bank to withdraw their savings. Because after they lose their job, they’ll need the money to buy food.
When the bank goes bust - no bailout! - how would the bond holders 'lose nothing' (they would, and should, lose everything)? I'm not quite sure I understand you correctly.
The bank's business model: Offer interest on deposits/investments waaay above what others offer. Ooops, that didn't work ---> bust! Now why should anyone else (the taxpayers of those countries that finance the bailout - mostly small savers themselves) be on the hook for those that played a risky game (high interest = high risk)? The Cypriot local savers with their small deposits are insured anyway. The high rollers shouldn't reap the benefit if all goes well and be able to pass off a loss to others if it doesn't. IMHO.
What I read last night about the deal was that the bondholders were going to lose nothing. Today in the news it says they are going to lose money as well. I’m not a proponent of bailouts, the situation as I understood it has changed.
They need to raise 5.9 billion euros to receive 10 billion euros in bailout money. I think this EU experiment will not end well. It’s just a matter of how long will kick the can be played.
Next stop Spain and then Italy then the wheels really come off in the socialist utopia that is Europe.
They take already taxed money and “tax” it again.
This is just a bureaucratic way of boldly grabbing money from people. One can make a case for the interest on that principal being taxable, but to just grab money???
It tells everyone in the world to get their money out of accounts. They won’t do it, though. It’s too easy to leave it there for paying bills, moving it around, collecting that pittance of interest, etc.
Maybe I’m the only one noticing how similar Cyprus and Detroit are? About the same population and about the same debt. But the Detroits don’t apparently have any big-bucks Russian depositors to steal from. You folks in Detroit better keep your heads down.
Ha...cherokee1, they will wind up getting YOUR tax money as part of a bailout. You don't really expect anyone in Detroit to pay do you? Come on.
The committee set up by the state government will offer state money for a bailout if the federal government will make a federal GRANT (your money) into the bailout.(The federal bailouts will be made through the states to mask the federal give-aways to these DEMOCRAT run cities.)
This will happen again and again as other cities go bankrupt too.
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