Skip to comments.Cyprus weighs big bank levy; bailout goes down to wire
Posted on 03/23/2013 8:13:43 AM PDT by markomalley
Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank as it races to raise the funds for a bailout from the European Union and avert financial collapse.
Finance Minister Michael Sarris said "significant progress" had been made in talks in Nicosia with officials from the European Union, European Central Bank and International Monetary Fund.
He confirmed discussions were centered on a possible levy of around 25 percent on holdings of over 100,000 euros at Bank of Cyprus, and expressed hope that a package could be ready by the end of the day for approval by parliament.
Cyprus faces a Monday deadline to clinch a bailout deal with the EU or the European Central Bank says it will cut off emergency cash to the island's over-sized and stricken banks, spelling certain collapse and a potential exit from Europe's single currency.
Amid signs of momentum, Cypriot and EU officials said Cypriot President Nicos Anastasiades was expected in Brussels on Sunday to meet EU leaders including Council President Herman Van Rompuy and Commission President Jose-Manuel Barroso, as well as IMF Managing Director Christine Lagarde and the head of the ECB, Mario Draghi.
(Excerpt) Read more at reuters.com ...
To put this prospective. They split the banks off, without any input from customers or citizens. The banks with 100 Euro or less...are the ones without any real taxation (maybe one percent tax). It’s one hundred percent Cyprus citizen.
The accounts over 100 Euro ($130k dollars)? They all go into the bad bank and stand to be taxed at twenty percent (maybe twenty-five percent). Those are mostly Russian billionaires.
The logic here is that the Russians were given a chance to help the poor Cypriots out of the mess and just plain refused....so they don’t need to be part of the solution. They were part of the problem and will be treated as such.
It’s pretty much a fair deal if you ask me.
The Russian mob doesn’t care about “fair”. Any Cypriot politico who votes for this is a dead man walking. And they know it. They won’t care about whacking EU bureaucrats, either.
I would bet that Putin will get his revenge in some form.
Putin’s revenge will come to Merkel this fall. The German elections will be a major problem. This new Alternative Party for Germany....mostly a fake group to center on the Euro. I think Putin will be helping to finance them and hope to take ten percent of the national vote in Germany.
I wonder who fed the media the line that all of these big deposits are Russian mobster accounts. It sure makes confiscation easier for the masses to accept. It also shows that it is safer for the government mobsters to take a lot from a few than a little from many.
If this is truly Russian mobster money, I expect Cypriot politicians to start dropping like flies.
Cyprus made money thought tourism and laundering Russian money. Most of the tourists were from Russia. Say what you will about the Russian money, but it did not cause the problems. The greedy Cypriot bankers caused the problems through bad investment decisions.
Now the Russian depositors will be punished by having 25% of their assets seized, while the bankers go free.
Talk about biting the hand that feeds you. After the Russians get burned they will move on elsewhere. But who will Cyprus get to replace them?
So when Obama nationalizes all 401(k)s (which, if you read the full article is part of what happens here), you'll be OK with that?
So if you've saved up over your entire life and happen to have a little more than $130,000 in the bank, it would be OK for the government to "liberate" a quarter of it?
If that's what you think is acceptable, well, OK.
I understand that there is a need for creditors to be paid. But out-and-out theft doesn't seem like the right way to do it. But YMMV.
“If this is truly Russian mobster money, I expect Cypriot politicians to start dropping like flies.”
Is it possible that they could drop faster than Polish government officials traveling to arussia in a jet?
Yep. The only mistake the EU made was originally demanding that ALL bank depositors take a loss. But governments will learn from that mistake. In the future, they'll just pick a level high enough so that the average man in the street won't riot.
First it was 9.9%. The people protested, so not it’s gonna be 25%. I expect them to be out in the streets again, only this time really pi$$ed off.
I'll bet that the Russian mob was tipped off long before the "tax" was announced. Their money is probably somewhere else by now.
To make all these depositors whole would have completely negated any concept of risk/reward.
Merkel's popularity at home is SOARING because she refused to fund the bailout.
However, Cyprus still has a big problem. The haircut is effectively 100%. In addition to the 25% tax on big accounts, there must be very strict controls on $$ leaving the country..otherwise it will ALL depart the day the banks re-open...and as for any NEW $$ being deposited..you can forget it..even by small savers...
I'd like to own a Mattress Warehouse store Nicosia..that's gonna be a booming business
This is a tactic to scare the Russians into bailing out Cyprus
Rooskies beware !
A Mattress Warehouse outlet......
or a Mason jar/shovel manufacturing factory. That’s a good business bet as well.
You’re right about Merkel’s popularity increasing at home, which is important as she has an election coming up this year. She’s viewed as having stood up to a bunch of good-for-nothing, lazy, shiftless Greeks and their Russian mafia puppetmasters. That will translate into votes later this year.
>>But governments will learn from that mistake. In the future, they’ll just pick a level high enough so that the average man in the street won’t riot. <<
It’s the wealthy who can afford to hire professional hit men to take out the politicians who voted the wrong way. The common man doesn’t have the skills or resources for this type of operation. They are playing with fire whatever they do.
The idea was originally put forth by the Cyprus government itself. Of course, once it was on the table, those asked to fund the bailout demanded that it remain so.
But now the general spin is that those poor, innocent Cypriots are forced into something they never wanted and never precipitated in the first place (including their banks melting down due to stupid decisions). Yep, it's ALL the fault of those willing to GIVE money for a bailout. Paging Mr. Orwell, please pick up the white courtesy phone...
No one will deposit a penny in Cypriot banks, not even the natives. The Russian tourists might not come back, but the Europeans will flock there, if they can enjoy big discounts in lodging and meals.
That's it, the two industries that Cyrus relied on, tourism and banking, gone in a weekend. Time to look at other industries. Oil and gas? Agriculture?
“The logic here is that the Russians were given a chance to help the poor Cypriots out of the mess and just plain refused....so they dont need to be part of the solution. They were part of the problem and will be treated as such.”
This is a fast-moving story, so I expect that most haven’t been keeping up to date unless you have money in Cypriot banks.
Yesterday, the Cypriot energy minister was sighted in Moscow. It gives credence to the story that Cyprus is hammering out a deal with the Russians to give the Russian investors a stake in the natural gas deposits discovered in the Mediterranean Sea.
Cyprus needs 5.8 billion from the Russians to close out the 10 billion eurozone bailout package to rescue the nations banks.
It’s doable, but who knows how many pounds of flesh the Russians want?
Stay tuned. We promise to get very, very interesting next week.
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