Savers forced to bear costs in Cyprus bailout

[dipsydoodle]

Source: Reuters

(Reuters) - The euro zone struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros (8 billion pounds) , but demanded depositors in its banks forfeit some money to stave off bankruptcy despite the risks of a wider bank run.

Cyprus becomes the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial help in the wake of the region's debt crisis.

In a radical departure from previous aid packages, euro zone ministers forced Cyprus' savers, almost half of whom are believed to be non-resident Russians, to pay up to 10 percent of their deposits to raise almost 6 billion euros.

"I wish I was not the minister to do this," Cypriot Finance Minister Michael Sarris said after 10 hours of late-night talks where euro zone finance ministers agreed the package.

Read more: http://uk.reuters.com/article/2013/03/16/uk-eurozone-cyprus-idUKBRE92F02P20130316

[muriel_volestrangler]

1. The Iceland solution? Non-resident savers took a big hit there too (nt)

[dipsydoodle]

4. Interesting

I hadn't realised that. Non-residents, I'm guessing, would've been using those accounts for the high interest rates offered and high rates are usually associated with increased risk anyway.

In the case of Cyprus its not that their banks have been misbehaving. They were highly exposed in relation to loans to Greek banks which are now become delinquent debt. That's aside from loans to the collapsed construction industry in Cyprus itself. I've got friends from there I've known since the early sixties and the real estate market has gone right down the tubes.

Those elsewhere here who simply blame "the banks" without any form of specific searching on the subject are playing the same worn out 78 rpm record.

[bloomington-lib]

2. When they look at Greece, Ireland, Portugal and Spain, they think thats the solution for them?

[another_liberal]

3. Our Lords and Masters . . .

God forbid that the bankers themselves might have to pay the price of their own mistakes. That can never be allowed!

The mega-banks and the people who mismanage them never do anything wrong, and they are never forced to answer for the consequences of their personal greed. They are our Lords and Masters. They take what they want. We must deal with the bill.

[dipsydoodle]

5. They're not taking anything

Its the government of Cyprus taking it as a tax largely from those who can apparently afford it more than others.

[Ruby the Liberal]

10. To shore up the banks

SSDD. A handful of people got wealthy playing the game and now everyone has to chip in ~6% (under 100k euros) or ~10% (over 100k euros) to fix the shit the left in their wake.

[another_liberal]

18. The mega banks don't do anything which won't make them money.

Don't make me laugh! The mega banks don't do anything which won't, either short term or long term, make them money.

[dipsydoodle]

19. Don't make me laugh ?

Cyprus hasn't got any mega banks. The reason the banks they've got having a current liquidity problem is due to the haircut they were forced to take on Greek bonds and delinquent internal debt within the island with regard loans made to the construction industry.

[another_liberal]

22. Correct.

The mega-banks are entities such as the ECB, Deutsche Bank, the IMF, Goldman Sachs and etc. Smaller banks on Cyprus borrowed billions from much bigger banks (at their encouragement) when things were artificially booming a few years ago (which artificial boom was engineered and inflated by the mega-banks' policies). Cyprus should default and the banks should take the loss and fire their greed-blinded managers, instead of expecting savers to bail them out once again.

[another_liberal]

20. The mega-banks demanded the tax . . .

The mega-banks demanded the tax be imposed on savers, and the mega-bankers will, eventually, get the money it raises. Get serious already.

[dipsydoodle]

21. Yours comments convey

that you really don't understand this situation al all.

[another_liberal]

23. I think they convey . . .

I think my comments convey how shallow and one-sided your own arguments are when you go out of your way, reality be damned, to defend the greedhead bandits who control our current financial system. They are, in actual fact, little more than thieving pirates who have been well educated and dressed up in expensive business suits.

[dipsydoodle]

25. You had subsequently said

"The mega-banks are entities such as the ECB, Deutsche Bank, the IMF, Goldman Sachs and etc. Smaller banks on Cyprus borrowed billions from much bigger banks (at their encouragement) when things were artificially booming a few years ago (which artificial boom was engineered and inflated by the mega-banks' policies). Cyprus should default and the banks should take the loss and fire their greed-blinded managers, instead of expecting savers to bail them out once again."

Now provide links to demonstrate the above to be true.

[another_liberal]

27. I thought you knew . . .?

Read a news article in something other than the WSJ once in a while. There is a big picture out there that the masters of wealth and finance don't want you to see. Don't just meekly agree to be their shill.

[dipsydoodle]

28. I'm UK - why would I read the WSJ

The subject is solely Cyprus.

Do you really think Cyprus would've borrowed funds just to buy Greek bonds ?

Like I said - find a link to where they've borrowed other than the Russian loan.

[another_liberal]

29. They're in hock to the big banks . . .

Cyprus isn't doing this for fun. They are in hock to the ECB and the IMF, why else would those institutions be able to demand "sacrifice" from private Cypriot investors?

You seem to be under the illusion that mega-bankers do what they do out of the altruistic goodness of their hearts, with justice and freedom as their goals. I guess if you are in fact one of them, though, it might be pretty to think so.

[dipsydoodle]

30. Still no links ?

.

[Eugene]

6. Cyprus parliament to vote on savings levy

Source: Reuters

Cyprus parliament to vote on savings levy

By Michele Kambas
NICOSIA | Sat Mar 16, 2013 8:03pm EDT

(Reuters) - Cyprus's parliament will decide on Sunday whether savers must pay a levy on bank deposits under terms for an international bailout to avert bankruptcy - with approval far from certain.

The euro zone demand on Saturday that savers pay up to 10 percent of deposits as a condition for the 10 billion euro ($13 billion) bailout drew fury in the eastern Mediterranean island and caused some jitters elsewhere in the region.

Cypriots emptied cashpoints after news emerged of bailout terms which broke a previous euro zone taboo on protecting depositors in its efforts to address the regional debt crisis.

Newly elected Cypriot President Nicos Anastasiades said refusing the bailout would have led to the collapse of the island's two largest banks, badly singed by their exposure to bailed out neighbor Greece.

[font size=1]-snip-[/font]

Read more: http://www.reuters.com/article/2013/03/17/us-eurozone-cyprus-idUSBRE92E02220130317

[dipsydoodle]

8. Cyprus parliament postpones session to discuss bank levy

(Reuters) - Cyprus's parliament on Sunday postponed an emergency session to discuss a levy on bank savings imposed to partially fund an international bailout needed to stave off bankruptcy.

All meetings were postponed until Monday, the Cyprus News Agency reported. Earlier, Cypriot President Nicos Anastasiades postponed an informal meeting of lawmakers called for Sunday morning.

http://uk.reuters.com/article/2013/03/17/uk-cyprus-parliament-idUKBRE92G03K20130317

[quadrature]

9. very bad move

everyone will try to get
their money out.

not just in Cyprus

[christx30]

11. The bank runs have already started there

ATMs are running out of cash. The government has ordered some stores to close, to preserve the peace. The door to one bank has been blocked with an excavator, in protest.
It's scary there right now. I'm strongly considering pulling my cash out right now (and I'm in the US). You never know.

[quadrature]

12. there is big downside risk to this

for example.
everyone with the means to do so,
will take out a big wad of cash,
just to have some $$ when the
ATMs stop working in their country.
.
tourists tend to not like these kind
of things.
.
trade credit will dry up ( if there
is such a thing in Europe).

dirty money will go elsewhere

[christx30]

13. Right

if you can't trust that your money will be safe in the bank, then there's no reason to keep it in there.
I need every dime I have. if I suddenly lost 10$ (or 6.9%) of my cash, I'd really be hurting.
There's no reason the common people should have to pay for this problem. It wasn't caused by the guy working in the butcher's shop. It was caused by the criminal bankers. Let them suffer.

[quadrature]

14. Cyprus is a lot like Iceland

what do you do when the banks
of a small country, are overwhelmed
by unwanted money from the outside?
answer, they make bad investments, usually
in unwanted real estate.

whose fault is it?

[christx30]

15. I'd say the people

at fault are the ones that made the bad investments. If I make a mistake in my job, I'm held accountable. My customers don't get punished for my messups. I don't think just stealing 7% of everyone's money is right, or is going to help anything. And it sets a dangerous precedent. If they can do it there, they can do it anywhere. Your money would be safer in cash stuffed into your mattress.

[auburngrad82]

16. Isn't this double taxation?

If you put money in a savings account after you pay taxes, then taxing the savings is double taxation. I'd fight it with that reasoning.

[dipsydoodle]

17. It doesn't necessarily follow that all such funds are tax paid.

Some is suspected to be laundered. Aside from that this is a tax expressed in such a way that non payment becomes impossible.

[Bosonic]

24. Cyprus' Laiki Bank Lowers ATM Withdrawal Limit To €100

Woah. Laiki Bank withdrawals now limited to €100. Employee takes down old sign that said previous €260 limit.

https://twitter.com/MCaruso_Cabrera/status/315802966873481217

(Tweet from CNBC's Chief International Correspondent)

[dipsydoodle]

26. That's to prevent hoarding

pending the capital controls being put in place. I would doubt they need more than €100 for petrol and weekend shopping anyway.

For capital controls see here : http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2558471