“I’ve heard between 25 - 40 percent.”
If that’s the case, I expect there will be many companies that can’t meet their payrolls or pay vendors. Then what? I haven’t heard whether bondholders will be getting a haircut.
I’ll see if I can find out about the bondholders.
1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.
2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.
3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework,after having heard the Boards of Directors of BoC a nd Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.
4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.
5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with fullcontribution of equity shareholders and bond holders.
6. The conversion will be such that a capital ratio of 9 % is secured by the end of the programme.
7. All insured depositors in all banks will be full y protected in accordance with the relevant EU legislation.
8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus.
25-40% isn’t a restructuring, haircut, fleecing or scalping; that’s rape and pillage.
Anyone with money needs to put a good percent of their wealth into hard assets. Land (waterfront lots, farmland), gold/silver etc. REIT's are also a good place to be. You need some cash but you need to look average to almost poor. Hide your wealth. That's the great lesson here.
I also think there will still be a run on the banks for those under 100K euros.