Cyprus

[Typhoon]

ekathimerini | Shock in Cyprus as bailout brings bank account haircut

The Eurogroup reached on Friday night an unprecedented decision for bailing out Cyprus that dictates a haircut on all bank accounts on the island’s banks with immediate effect, while cash withdrawals are not allowed for the time being, generating unrest.

Along with loans adding up to 10 billion euros from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and from a 6.75 percent one-off haircut on all bank accounts with a balance up to 100,000 euros, rising to 9.9 percent on accounts exceeding 100,000 euros.

Already bank customers are gathering outside major and cooperative banks, Skai television reported on Saturday morning, as angry depositors demand their money.

Depositors will get shares of the banks they are clients of in return for the capital lost, of the same value as the haircut their accounts have suffered.

This is estimated to fetch some 6 billion euros to the state, bridging most of the gap between the 10 billion euros the ESM is offering to Cyprus and Nicosia’s requirements of an estimated 17 billion.

This is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself. In addition to that there is a levy on interest, too, and an increase in the 10 percent corporate tax that has been one of the main driving forces behind Cyprus’s financial progress after the 1974 Turkish invasion, generating growth by attracting foreign direct investment.

Notably, the account haircut does not affect bank accounts in Cypriot bank branches based in Greece, according to sources from the Greek Finance Ministry.

Tax on interest will amount to between 20 and 25 percent.

What?

[YMix]

Germany is taking the mostly-Russian tax haven apart brick by brick.

[Heracleum Persicum]

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European Union stealing Russian money

Well

Uncle Putin not liking this a bit

Putin will put an "equivalent" tax on all European investment in Russia (German, British, French) and indemnify those Russians who lost money in Cypress .. this as legal as the Cyprus tax

Anyone wanting to bet this will happen ? ?



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[Nonc Hilaire]

Still missing the point. The Euro banksters are not stupid, so why are they deliberately instigating a bank run in Cyprus?

I favor the theory is the real bank run target is Italy. The Commerzbank banksters have a real threat there, where about half of deposits are held by individuals and they are facing a populist uprising. A bank run is a smaller threat in Germany, where 95% of the wealth is corporate.

If Italy starts a bank run, then Italian banks would go on holiday and Germany/Monti could use that time to swap out cash for empty bonds before Grillo has a chance to step up. This could be spun as a purely Italian problem, public attention is focused on Cyprus, and Gazprom raises rates to pay back their KGB investors who are temporarily inconvenienced.

[Heracleum Persicum]

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Still missing the point. The Euro banksters are not stupid, so why are they deliberately instigating a bank run in Cyprus?

I favor the theory is the real bank run target is Italy. The Commerzbank banksters have a real threat there, where about half of deposits are held by individuals and they are facing a populist uprising. A bank run is a smaller threat in Germany, where 95% of the wealth is corporate.

If Italy starts a bank run, then Italian banks would go on holiday and Germany/Monti could use that time to swap out cash for empty bonds before Grillo has a chance to step up. This could be spun as a purely Italian problem, public attention is focused on Cyprus, and Gazprom raises rates to pay back their KGB investors who are temporarily inconvenienced.

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Monday 18 March 2013 .. 00:20 Central European time .. Euro has dropped already 2 cents against U$

meaning , this part of currency war .. Brussels wants lower Euro, France said this many times .. Already had it's effect

Euro could end up below 1.2 by coming weekend



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[Nonc Hilaire]

Monday is supposed a holiday in Cyprus. Is it an Italian holiday too? I hate to be such an ignorant American, but the only European holiday I can remember is August.

[YMix]

Monday is supposed a holiday in Cyprus. Is it an Italian holiday too? I hate to be such an ignorant American, but the only European holiday I can remember is August.

Not sure about Italy, but it seems to be a holiday in Mexico: Anniversary of the Oil Expropriation. I find this to be appropriate.

[Endovelico]

When will snipers start shooting politicians and bankers? When will Stingers start bringing down corporate jets? I wish I was 30 years old again...

[Taboo]

I have to say, with all the talk about the rule of law back when Romania was trying to get into the European Union, I didn't expect the eurocrats to cheerfully condone arbitrary seizures of private property.

Fascinating. To watch. From a distance. A safe, safe distance.


Any tickets to that Mars rover mission?


PS: I'm with Ymix here. The Euros have been trying to blow up tax havens for years. I guess this is as good as excuse as any. But sadly for them, there are plenty of tax havens the Euros can't reach.

[Heracleum Persicum]

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Vladimir Putin says NYET

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Mr Putin, at a meeting with economic advisers on Monday, was among several Russian leaders to criticise the bailout, which came without consultation with Moscow and could cost Russian depositors up to €2bn, according to Nicosia bankers.

“While assessing the proposed additional levy on bank accounts in Cyprus, Mr Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,” the president’s spokesman said following the meeting.

Anton Siluanov, Russia’s finance minister, also criticised the move, stressing the EU’s failure to discuss the proposal with Russia in advance.

“The decision on the tax on deposits, in our opinion, is not fair because the problems of the banking supervision and regulation are passed on to investors,” he told journalists after the meeting, adding: “I don’t pity our businessmen.”

.

Goldman Sachs says this could happen elsewhere

http://www.cnbc.com/id/100562482

http://www.cnbc.com/id/100562496


Folks , fasten seat belt



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[YMix]

The Cypriot government has betrayed its people

About a month ago I received a letter from an anonymous Cypriot. Across two typewritten pages, “W”, as the author signed themselves, set out detailed allegations of money laundering, terrorist financing, drug dealing and corruption.

“Cyprus has become the money laundering centre of Europe,” W wrote, adding poignantly: “I am ashamed to say that I am a member of one of the biggest families in Cyprus.”

W was responding to a report I had written in December that politicians across Europe were demanding a crack-down on suspected Russian money laundering as the price of any eurozone rescue.

My piece, in turn, had been partially informed by revelations in Germany’s Der Spiegel newspaper a month earlier that the German foreign intelligence service (BND) had identified about $26bn (£17bn) of Russian money deposited in Cypriot banks – more than the entire national output of the tiny eurozone state.

With the eurozone considering a possible €17bn (£15bn) bail-out for the stricken nation, the BND warned politicians that the beneficiaries would ultimately be, as Der Spiegel put it, “Russian oligarchs, businessmen and mafiosi”.

There's no way of verifying W's allegations but Cyprus does have a chequered record. A year ago, for example, the country got into hot water for letting a Russian ship carrying 60 tonnes of ammunition bound for the Syrian regime dock, refuel and leave in violation of an EU arms embargo.

I mention all this because Cyprus’s status as a recognised tax haven and suspected money laundering state is central to Brussels’ apparently ruthless handling of the country. It is one thing to rescue a country in distress, altogether another to prop up alleged criminal enterprises.

Europe drove a very hard bargain in its negotiations with President Nicos Anastasiades. In return for a €10bn eurozone rescue package, Cyprus was told to make those suspected money launderers and tax avoiders chip in as well. The government would have to find €5.8bn to qualify for the bail-out funds – about a third of its national output. In the UK, it would be equivalent to coughing up £500bn.

Clearly, Brussels insisted the money be grabbed from depositors. But the Cypriot government’s solution was brutal. Instead of just targeting the well-off, it hit all depositors – from the labourer to the granny.

Here, I confess I am straying into speculation because we don’t yet have the detail, but it seems highly unlikely that Brussels demanded ordinary Cypriots suffer. Germany is already seen as Europe’s evil emperor, and ordering the country to make victims of innocent pensioners hardly seems sensible. Besides, Germany’s truck was with those “oligarchs and mafiosi”.

I assume that the detail of the plan was left to the Cypriot government and, that being the case, it betrayed the people.

All deposits in Europe up to €100,000 are fully protected against loss if a bank goes bust. So any depositor with less than that amount must have felt absolutely safe. Instead, they will lose 6.75pc of their entire savings.

Those with more than €100,000 would have lost everything above the threshold. In other words, someone with €120,000 on deposit would have lost €20,000. Under the government’s tax plan, though, they will lose 9.9pc – or just €12,000. The deposit tax has saved them €8,000.

Extend that to depositors with €1m, and it gets far worse. Instead of losing €900,000, that super-rich saver ends up €99,000 out of pocket. That’s a direct transfer of €801,000 from Cyprus’ ordinary people to just one of those “oligarchs and mafiosi”.

In his statement yesterday, President Anastasiades suggested he could have restricted the tax to just those with over €100,000 but they would have suffered “losses of over 60pc”. In the domesday scenario he painted, that would have pushed the “whole banking system into collapse with all the attendant consequences”.

He may have had a point, and those with more than €100,000 on deposit would have also included honest local businesses. But a better balance could have been struck than 9.9pc to 6.75pc.

The deposit numbers also tell an intriguing story. Households have about €30bn deposited with Cypriot banks and non-financial companies another €17bn, according to the European Central Bank. Of that, about €27bn is foreign – including €2bn from Britain, €4.7bn from Greece, and an estimated €18bn from Russia. In other words, the deposit tax is an international bail-out in another guise – with very particular and wealthy partners.

There has already been criticism of Brussels’ decision not to force senior bondholders to take a hit, especially as they rank alongside depositors in the creditor hierarchy. But a bondholder bail-in would have spread panic across the eurozone, ensuring capital flight from Spain, Italy and Portugal.

The one rule of the bail-outs to date has been that creditors are not haircut to help preserve some semblance of stability in the bond markets. Private sector involvement in Greece’s bail-out has been “voluntary” and tortuously negotiated.

There are suggestions the Cyprus deal will lead to depositor flight in other countries but, realistically, the only ones at risk are other suspected money laundering havens and tax shelters. Latvia springs to mind. But not Portugal, Spain, Italy or Ireland.

There will be collateral damage in Cyprus, unfortunately, and perhaps more than necessary due the government’s decisions. But, for once, a eurozone bail-out was structured to ensure the private sector shared some of the taxpayer’s pain. And that should be applauded.

[Heracleum Persicum]

The Cypriot government has betrayed its people

About a month ago I received a letter from an anonymous Cypriot. Across two typewritten pages, “W”, as the author signed themselves, set out detailed allegations of money laundering, terrorist financing, drug dealing and corruption.

“Cyprus has become the money laundering centre of Europe,” W wrote, adding poignantly: “I am ashamed to say that I am a member of one of the biggest families in Cyprus.”

W was responding to a report I had written in December that politicians across Europe were demanding a crack-down on suspected Russian money laundering as the price of any eurozone rescue.

My piece, in turn, had been partially informed by revelations in Germany’s Der Spiegel newspaper a month earlier that the German foreign intelligence service (BND) had identified about $26bn (£17bn) of Russian money deposited in Cypriot banks – more than the entire national output of the tiny eurozone state.

With the eurozone considering a possible €17bn (£15bn) bail-out for the stricken nation, the BND warned politicians that the beneficiaries would ultimately be, as Der Spiegel put it, “Russian oligarchs, businessmen and mafiosi”.

There's no way of verifying W's allegations but Cyprus does have a chequered record. A year ago, for example, the country got into hot water for letting a Russian ship carrying 60 tonnes of ammunition bound for the Syrian regime dock, refuel and leave in violation of an EU arms embargo.

I mention all this because Cyprus’s status as a recognised tax haven and suspected money laundering state is central to Brussels’ apparently ruthless handling of the country. It is one thing to rescue a country in distress, altogether another to prop up alleged criminal enterprises.

Europe drove a very hard bargain in its negotiations with President Nicos Anastasiades. In return for a €10bn eurozone rescue package, Cyprus was told to make those suspected money launderers and tax avoiders chip in as well. The government would have to find €5.8bn to qualify for the bail-out funds – about a third of its national output. In the UK, it would be equivalent to coughing up £500bn.

Clearly, Brussels insisted the money be grabbed from depositors. But the Cypriot government’s solution was brutal. Instead of just targeting the well-off, it hit all depositors – from the labourer to the granny.

Here, I confess I am straying into speculation because we don’t yet have the detail, but it seems highly unlikely that Brussels demanded ordinary Cypriots suffer. Germany is already seen as Europe’s evil emperor, and ordering the country to make victims of innocent pensioners hardly seems sensible. Besides, Germany’s truck was with those “oligarchs and mafiosi”.

I assume that the detail of the plan was left to the Cypriot government and, that being the case, it betrayed the people.

All deposits in Europe up to €100,000 are fully protected against loss if a bank goes bust. So any depositor with less than that amount must have felt absolutely safe. Instead, they will lose 6.75pc of their entire savings.

Those with more than €100,000 would have lost everything above the threshold. In other words, someone with €120,000 on deposit would have lost €20,000. Under the government’s tax plan, though, they will lose 9.9pc – or just €12,000. The deposit tax has saved them €8,000.

Extend that to depositors with €1m, and it gets far worse. Instead of losing €900,000, that super-rich saver ends up €99,000 out of pocket. That’s a direct transfer of €801,000 from Cyprus’ ordinary people to just one of those “oligarchs and mafiosi”.

In his statement yesterday, President Anastasiades suggested he could have restricted the tax to just those with over €100,000 but they would have suffered “losses of over 60pc”. In the domesday scenario he painted, that would have pushed the “whole banking system into collapse with all the attendant consequences”.

He may have had a point, and those with more than €100,000 on deposit would have also included honest local businesses. But a better balance could have been struck than 9.9pc to 6.75pc.

The deposit numbers also tell an intriguing story. Households have about €30bn deposited with Cypriot banks and non-financial companies another €17bn, according to the European Central Bank. Of that, about €27bn is foreign – including €2bn from Britain, €4.7bn from Greece, and an estimated €18bn from Russia. In other words, the deposit tax is an international bail-out in another guise – with very particular and wealthy partners.

There has already been criticism of Brussels’ decision not to force senior bondholders to take a hit, especially as they rank alongside depositors in the creditor hierarchy. But a bondholder bail-in would have spread panic across the eurozone, ensuring capital flight from Spain, Italy and Portugal.

The one rule of the bail-outs to date has been that creditors are not haircut to help preserve some semblance of stability in the bond markets. Private sector involvement in Greece’s bail-out has been “voluntary” and tortuously negotiated.

There are suggestions the Cyprus deal will lead to depositor flight in other countries but, realistically, the only ones at risk are other suspected money laundering havens and tax shelters. Latvia springs to mind. But not Portugal, Spain, Italy or Ireland.

There will be collateral damage in Cyprus, unfortunately, and perhaps more than necessary due the government’s decisions. But, for once, a eurozone bail-out was structured to ensure the private sector shared some of the taxpayer’s pain. And that should be applauded.

Russian Mafia, Oligarchs and and and .. pretty much all of them .. move to and are in Tel Aviv (Israel) AND London UK, and, not in Cyprus .. this thing was coming long time, they would be i*diots keeping Billions in Cyprus




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[monster_gardener]

Monday is supposed a holiday in Cyprus. Is it an Italian holiday too? I hate to be such an ignorant American, but the only European holiday I can remember is August.

Thank You Very Much for your post, Nonc.

Actually per Clark Howard, the consumer expert, that may not as much as before when it was expensive to fly to Europe from Uz for vacations.......

Can get air fare specials for August..........

October and IIRC September are the more expensive times.......

Have not verified.........

But so says Clark...........

http://www.clarkhoward.com/

[Miss_Faucie_Fishtits]

http://seekingalpha.com/article/1281801 ... and-mining?

As I write these words, the markets have a risk-off reaction over the Cyprus news. EUR is plummeting against all currencies and against JPY in particular; USD is up: ES is falling and gold is up marginally but a base metal like copper is down. While the initial market reaction isn't necessary the sustainable reaction, the Cypriot event may serve as a catalyst for the resource sectors (and the metals in particular) to stage a turnaround and present themselves as the new market leadership. It will also prove to be an important market test for the price of gold (and the gold bugs), to see whether investors flock to USD assets or to gold in this instance of an unexpected eurozone confiscation tax of banking depositor assets.

[Heracleum Persicum]

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How Russia Could Take Revenge Over Cyprus Deal


‘Don’t Mess With Russian Mafia’



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[YMix]

Cyprus MPs reject EU-IMF bailout tax on bank depositors

Cyprus' parliament has rejected a controversial levy on bank deposits, proposed as part of an EU-IMF 10bn-euro (£8.7bn; $13bn) bailout package.

No MPs voted for the bill, with 36 voting against and 19 abstaining.

The finance ministry had modified the package, proposing an exemption for savers with smaller deposits, but opposition had remained fierce.

As MPs debated the plan, thousands of protesters filled the streets outside parliament demanding a "No" vote.

EU finance ministers have warned that Cyprus' two biggest banks will collapse if the deal does not go through in some form.

The parliament speaker turned down a request from the ruling party to delay a vote.

Meanwhile, the UK ministry of defence has said a plane carrying 1m euros is heading to Cyprus as a contingency measure to provide military personnel and their families with emergency loans.

The money will be used for British personnel and their families if cash machines and debit cards stop working.

[Azrael]

Germany is taking the mostly-Russian tax haven apart brick by brick.

I guess they don't like the competition.

[Heracleum Persicum]

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Germany is taking the mostly-Russian tax haven apart brick by brick.

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I guess they don't like the competition.

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Look, guys .. this Russian money laundering rubbish just "Russia bashing" .. garbage

the biggest money laundering is by Vatican Bank .. all S.A. drug money is washed by Vatican Bank, this no secret




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[YMix]

I guess they don't like the competition.

Cyprus is too small to defend itself. Same thing happened to Liechtenstein, a tax haven on Germany's own border. Netherlands, on the other hand, is too big and too closely connected to Germany to do anything about it. Although it should be noted that Netherlands does not require a bailout.

[Simple Minded]

When will snipers start shooting politicians and bankers? When will Stingers start bringing down corporate jets? I wish I was 30 years old again...

C'mon Brother, saddle up!

Look on the bright side Endo, you might not have the same testosterone level you did 30 years ago (Full of piss and vinegar, as they used to say), but you are more rational now than then, and us old farts are not long for this world, so we have a lot less to lose.

Kinda strange that we become more risk adverse as we get older and not less.

"Some times ya gotta roll the dice." - Paul

Absolutely fascinating how many talking heads are calling this tactic "shocking" and "unexpected." They must not have been paying attention the last 100 years or so.

[monster_gardener]

When will snipers start shooting politicians and bankers? When will Stingers start bringing down corporate jets? I wish I was 30 years old again...

Thank You Very Much for your post, Endo.

I'm not a big fan of Banksters and most politicos.........

My wishes for the pols and banksters runs more on the lines that they be turned out of office and be financially ruined.....

Like in Trading Places......

But careful of what you wish for before letting slip loose the leashes on the Dogs of War.......

When will snipers start shooting politicians and bankers?

Perhaps about the same time that Socialist/Anarchist students and professors start disappearing.............

If you want to do terrible things............

Expect terrible things may be done to you and those you love........

Better to wish upon the stars.........

And try to go there.........

[Mr. Perfect]

Still missing the point. The Euro banksters are not stupid.

Yes they are. People thinking this is how we got into the problem in the first place.

[Mr. Perfect]

When will snipers start shooting politicians and bankers? When will Stingers start bringing down corporate jets? I wish I was 30 years old again...

Careful, this will get you branded as a right wing teabagger.

[Heracleum Persicum]

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If in the name of social justice for Europeans, Russian depositors can be targeted today, what next
- Muslims tomorrow and Chinese investors the day after ?



Looks to me, West preparing to usurp Arab (Oil) money .. Saudi, Qatar, Kuwait will be f*cked





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[Simple Minded]

Seems like the very definition of "social justice" to me.

Thsoe with savings accounts have "abilities," the others have "needs."

So many love waving the banner of "social justice" that one would think more would enjoy participating in the application.

The difference between theory and practice, or ideology and administration?

people.....