Related: Keeping Current on the Cyprus Crisis
I have not, but I will now:
"Bernanke was asked at his news conference whether the flare-up in Cyprus signals that the US financial system might be more vulnerable than bank ‘‘stress tests’’ have shown. He sought to downplay the dangers posed by the tiny Mediterranean nation. Bernanke said that ‘‘at this point,’’ he sees no major risks to the US financial system or economy."
It is now only a question of when they come for your savings, not if.
Better go get your money:
No limits on local Cyprus card purchases
"Cypriot officials said the limits will be lifted gradually over the next weeks."
I thought there weren't any (sigh) limits.
"Reopening of banks is delayed in Cyprus; Bailout bid hits rich depositors" by Elena Becatoros and Menelaos Hadjicostis | Associated Press, March 26, 2013
NICOSIA, Cyprus — Cyprus has extended the closure of its banks for two more days, until Thursday, another postponement after the country’s leaders spent days struggling to develop a plan to raise the money needed to secure an international bailout.
Banks in the country have already been closed for more than a week to prevent a run on deposits. All except the country’s two largest lenders had been due to reopen Tuesday, after the country clinched an eleventh-hour deal with the 17-nation eurozone and the International Monetary Fund to provide Cyprus with a bailout.
Without that deal, the country’s banks would have collapsed, dragging down the economy and potentially pushing it out of the eurozone.
The decision to keep banks closed two more days was announced late Monday. The Central Bank said that ‘‘for the smooth functioning of the entire banking system, the finance minister has decided, after a recommendation by the governor of the Central Bank, that all banks remain shut up to and including Wednesday.’’
An initial deal to raise enough money to qualify for a bailout would have seized up to 10 percent of people’s bank accounts. That plan spooked depositors and was soundly rejected by lawmakers last week.
ATMs have been functioning, but many run quickly out of cash, and a daily withdrawal limit of 100 euros was imposed on the two largest lenders, Bank of Cyprus and Laiki.
Under the deal reached in the early hours of Monday morning in Brussels, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks to secure the $13 billion bailout.
The new plan allows for the bulk of the funds to be raised by forcing losses on accounts of more than 100,000 euros in Laiki and Bank of Cyprus, with the remainder coming from tax increases and privatizations.
Just a fancy way of saying STEALING!
People and businesses with more than 100,000 euros in accounts at Laiki face significant losses. The bank will be dissolved immediately into a “bad bank” containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation’s biggest lender, Bank of Cyprus.
Deposits at Bank of Cyprus above 100,000 euros will be frozen until it becomes clear whether or to what extent they will also be forced to take losses.
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"Cyprus crisis solution inspires little confidence; Account holders, experts see plan as a Band-Aid" by Liz Alderman and Landon Thomas Jr. | New York Times, March 26, 2013
NICOSIA, Cyprus — With her wedding three months away, Despina Charalambous is desperate to have access to her savings, frozen at the Bank of Cyprus for more than a week. She plans to take out all her money once the banks reopen, even though the new bailout plan for her country supposedly guarantees the safety of her deposits.
Because then it is UNDER YOUR CONTROL, not theirs!
“I have lost my trust in Bank of Cyprus and banks in general,’’ Charalambous, 33, a biologist, said, still bitter that just last week the president was ready to skim money from small savers like her to help secure a $12.9 billion lifeline to the nation’s banking industry.
You aren't the only one; the world is waking up to these a**holes in a big way.
Multiply her concerns by tens of thousands of account holders and it is apparent why average people, business customers, and many experts have a suspicion: that European leaders, by scrambling to cobble together a solution to the Cyprus crisis, have come up with little more than a Band-Aid for a growing wound.
Based on the reaction of the markets, analysts, and economists, there is little widespread confidence the measures hammered out Sunday night in Brussels will go nearly far enough to right all that is wrong with Cyrpus’s banks. Stocks were down broadly in Europe, and the borrowing costs of Spain and Italy spiked upward as the markets digested the news — and implications for the euro currency union.
Well, if the "markets" didn't like it....
While depositors with less than 100,000 euros in their accounts will be untouched, people with more money will take losses, in a first for eurozone bailouts.
It's still unfair. Why should savers be penalized to pay for bad bank bets?
So will senior bondholders in some of the banks, who have hitherto been untouchable in such bailouts. And now a eurozone country is taking steps to prevent people from taking their money out of financial institutions.
That's why you go get it now.
The measures, known as capital controls, have typically been used only in emerging countries like Argentina. Now Cyprus, a longtime money haven, is struggling to figure out how to prevent it from fleeing.
Oh, INVESTORS and BANKERS do NOT LIKE THOSE!
“This is just the beginning,’’ said Nicolas Veron, a visiting fellow at the Peterson Institute for International Economics in Washington. “For the first time, we have capital controls in the eurozone. We’ve just spent the last three years saying we can’t have that,’’ he said.
‘‘The next time there is a crisis somewhere else in the world, people will think of what happened in Cyprus and will try to get their money out much faster. These are the new rules of the game.’’
Peoples' lives are not a game.
The government late Monday ordered Bank of Cyprus and Laiki Bank — the nation’s largest financial institutions, with most of the accounts on the island — to stay shut through at least Thursday. And their automated cash withdrawals will be limited to 100 euros a day.
Under the bailout, Laiki will be restructured, with its guaranteed deposits transferred to Bank of Cyprus.
Bankers and lawyers still working on the bailout deal Monday said that a decision had not yet been reached as to whether Cypriots with deposits under 100,000 euros will be able to walk into their local branches and transfer their deposits to another, safer bank.
“They definitely will not be able send their money overseas,’’ said a person involved in the discussions who was not authorized to speak publicly.
To a large degree, Europe is betting that people like Charalambous will give policy makers a second chance by not heading for the exits when banks reopen.
But experts say that trust, once lost, is not easily regained.
Newspapers know the feeling.
In the case of Cyprus, the deep desire by Germany and the International Monetary Fund to make the private sector pay its share of Europe’s latest bailout may have long-term consequences.
“Burden sharing is fine,’’ said Adrian Blundell-Wignall, a member of the influential shop of central bankers called the Financial Stability Board. ‘‘But if you make people nervous about their deposits, you are playing with fire.’’
Or a Ponzi scheme.
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"Officials scramble to stabilize Cyprus; Work to right banks ahead of deadline" by Landon Thomas Jr. | New York Times, March 27, 2013
NICOSIA, Cyprus — The situation is now looking even worse than anticipated....
What?
At a news conference on Tuesday, the governor of Cyprus’s central bank, Panicos O. Demetriades, said that he expected big depositors at the Bank of Cyprus to get a ‘‘haircut,’’ or loss, of about 40 percent on their approximately $18 billion long-term deposits....
Except thi$ one won't grow back.
With many economists now estimating that the Cypriot economy will contract 5 to 10 percent this year, it could well be that the depositors will have to take a bigger loss so that the bank can free up cash to protect its rapidly deteriorating loan book.
Sigh. Why? Why must those who trusted the bank with their money fork it over to balance its books?
At Laiki Bank, which is even worse off, about $5.14 billion of deposits will be put in a bad bank and are most likely to be wiped out as the bank is wound down....
You mean stolen.
The government is also struggling to come up with some form of capital controls in a bid to prevent too much money from draining from the banks and leaving the country.
Given that more than 30 percent of the Bank of Cyprus’s long-term deposits belong to foreigners who would not hesitate to take their money out of the country, the restrictions on those funds are likely to be onerous, bankers say.
‘'That money is going to stay there for a very long time,’’ said one person who has been involved in the discussions, but who requested anonymity because he was not authorized to speak publicly.
Yeah, we know it's your money, but you can't have it because we need it to shore up the bank's bottom line because of its bad bets with your money.
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"Cyprus limits size of bank withdrawals" by Liz Alderman | New York Times, March 28, 2013
NICOSIA, Cyprus — The government announced severe restrictions Wednesday on access to funds held in Cyprus’s banks, hoping to curb what is nonetheless likely to be a rush to withdraw money when the banks open Thursday for the first time in nearly two weeks.
The measures, which are supposed to be in effect for a week but could be extended, prohibit electronic transfers of money from Cyprus to other countries. In addition, individuals will not be allowed to take more than 3,000 euros in cash outside the country, well below the current ceiling of 10,000 euros, or $13,000.
The cap on ATM withdrawals will rise to 300 euros per day, or about $422, from 100 euros, but credit and debit card charges will be capped at 5,000 euros per person per month. Banks will not cash checks, though they will accept checks as deposits. Bank clients will not be able to withdraw money from fixed-term deposits before their maturity date.
‘‘This is a typical set of exchange control measures, more reminiscent of Latin America or Africa,’’ said Bob Lyddon, the general secretary of IBOS, an international banking association. ‘‘There is no way these will only last seven days. These are permanent controls until the economy recovers.’’
To make sure enough cash is on hand, the European Central Bank sent an airplane filled with about 1.5 billion euros in a container to Larnaca airport near Nicosia. It was loaded onto a truck and escorted by police to the central bank, said a person with knowledge of the operation. The person said the ECB had indicated it would continue flying cash to the country as needed.
Finance Minister Michalis Sarris said a flood of withdrawals was bound to happen, but restrictions would at least help stem a mass flight of deposits.
Cypriot authorities are bracing for as much as 10 percent of the 64 billion euros on deposit to be pulled out Thursday.
Some experts predict a much bigger bank run whenever the controls are eventually lifted.
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Also see: Cyprus banks open after 2 weeks
"As Cyprus struggles, rivals seek its bank clients" by Andrew Higgins | New York Times , April 01, 2013
LIMASSOL, Cyprus — Bloodied by a bailout deal that drives a stake through the heart of its oversize financial industry, Cyprus now faces a further blow to its role as offshore tax haven: The vultures from competing countries are circling.
Yeah, the poor bloodied banks. Un-f***ing-believable. What a shit pre$$!!!
With e-mails and calls to lawyers and accountants who make a living helping wealthy Russians and others avoid taxes, rivals in other financial centers are promoting their skills at keeping money hidden....
“The banking sector is finished, but the service industry can survive,’’ said the group’s secretary, Andreas Marangos....
And neither is anything on which to build an economy.
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"IMF agrees to Cypriot bailout" by Menelaos Hadjicostis | Associated Press, April 04, 2013
NICOSIA, Cyprus — The International Monetary Fund said Wednesday it will contribute $1.28 billion to an overall financial rescue package of $12.8 billion for Cyprus.
The IMF’s managing director Christine Lagarde said the contribution would be made via a three-year loan that’s expected to be cleared by the fund’s executive board in early May.
Christine the crook.
Earlier this week, the final terms of the Cyprus bailout were agreed between the small Mediterranean island nation and the European Union and the IMF, following a protracted crisis that saw the country’s banking sector shut down for the better part of two weeks.
Lagarde and Olli Rehn, the top monetary affairs official at the European Commission, the EU’s executive arm, said ‘‘significant challenges lie ahead for Cyprus’’ as the government sets in motion a multiyear program of changes to rebuild its banking sector and austerity.
Apart from spending cuts and tax increases worth around 5 percent of Cyprus’s annual gross domestic product that have already been put in place, Lagarde said the country will need to do more. She said Cyprus will have to raise another 2 percent through measures such as a corporate tax rate hike from 10 to 12.5 percent, and the doubling of the interest rate tax to 30 percent.
Related: Christine Lagarde, scourge of tax evaders, pays no tax
How do you say huge hypocrite in French?
She's also the one who has scolded people to pay debt even if it was fraudulently incurred.
The IMF chief said an additional 4.5 percent will be needed over the medium term if the country is to achieve a budget surplus worth 4 percent of its annual GDP by the target date of 2018. That surplus is needed to get the country’s debt ‘‘on a firmly downward path.’’
**********************
To secure the bailout, Cyprus had to agree that bondholders, investors, and savers in the country’s two biggest banks — Bank of Cyprus and Laiki — take a hit....
New Finance Minister Harris Georgiades said restrictions on withdrawals would be lifted ‘‘gradually,’’ with Cypriot authorities expecting them to remain in place for around a month. Georgiades took over his new post on Wednesday from Michalis Sarris who stepped aside just five weeks into the job as an investigation got underway into what led the country to near financial collapse.
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"Bank of Cyprus executives scrutinized" by Landon Thomas Jr. | New York Times, April 05, 2013
LONDON — Two of the most senior executives at Bank of Cyprus may have deleted crucial e-mail documents last year relating to what proved to be a disastrous decision to invest heavily in Greek government bonds just before Greece’s international bailout in 2010, according to an investigative report commissioned by the central bank of Cyprus.
The report said forensic specialists found that the computer belonging to the bank’s former chief executive, Andreas Eliades, who was forced to resign last summer, had ‘‘wiping software loaded which is not part of the standard software installations’’ at the Bank of Cyprus.
Investigators also found such software on the computer of Christakis Patsalides, a senior executive in the bank’s treasury department who, according to the report’s findings, was the mastermind behind the decision to buy the Greek government bonds. Patsalides has also left the bank.
Efforts to reach Eliades and Patsalides late Thursday were not immediately successful. The report said Eliades did not ‘‘participate or assist’’ in the investigation, despite being urged to do so by the bank and its outside lawyers.
The Bank of Cyprus, long considered the better run of the two large banks that have been at the center of the Cypriot bailout debacle, decided to speculate in high-yielding Greek bonds in 2010, just as the Greek government was running out of money.
That decision resulted in the Bank of Cyprus sustaining a loss of $2.5 billion, when bond investors were eventually forced to take a 75 percent discount on the value of those bonds under the final terms of the Greek bailout, worked out last year.
That loss, and the larger one absorbed by the other big Cypriot bank, Laiki Bank, in a similarly misguided investment foray, together totaled $5.8 billion.
That was more than Cyprus, with a gross domestic product of only $23 billion, was able to sustain. And the losses led to the near-collapse of the Cypriot banking sector, leading the island’s government to seek a $12.9 billion bailout from the troika of international lenders: the International Monetary Fund, the European Commission and the European Central Bank.
Under the terms of the bailout, the banks’ biggest depositors will be forced to take losses of as much as 60 percent to help absorb the cost of cleaning up Cyprus’s financial mess.
Why do depositors have to pay?
The issue of how the banks became laden with Greek government bonds has become an explosive issue in Cyprus.
The situation has politicians and regulators scrambling to explain to furious taxpayers why the country has been forced to impose harsh measures on bank clients of all sizes, including restrictions on fund transfers and withdrawals.
A committee of judges has already been appointed by the government to get to the bottom of the matter.
Translation: It's a cover-up commission.
The report that surfaced Thursday was by the Cypriot central bank last August, well before the country’s bailout was made final.
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"Fallout from fiscal bailout intensifies for hard-pressed Cypriots" by Liz Alderman | New York Times, April 12, 2013
ATHENS — After a chaotic month in which Cyprus was pushed to the brink of default and a possible exit from the eurozone, Cypriots knew things would get bad. But not this bad.
According to an assessment released Thursday by its European partners, the Cypriot economy will fall into a downward spiral for at least the next two years, contracting by up to 12.5 percent over the period as the country cuts back an outsize banking sector that had ballooned to more than five times gross domestic product.
Shrinking growth means the country’s budget deficits are likely to grow, so it will need to raise more money to keep them in line with the terms for its $13.1 billion international bailout, secured last month. Because the government has also committed to improving the health of its banks, it must also generate further funds to ensure that those institutions have adequate capital....
So strapped is Cyprus that it has agreed to sell some of the family jewels to raise money. Chief among them are excess gold reserves held by the central bank.
Oooooooh! This is about GETTING CYPRUS'S GOLD!
In what would be the first such sale by a central bank in the eurozone, Cyprus had already agreed to sell 400 million euros worth of gold — an estimated 10 tons from its 13-ton stash.
What is more, a hornet’s nest of geopolitical tension could be agitated as Cyprus agrees with its international creditors to accelerate the exploration of major undeveloped natural gas fields within its waters. The hope, as stated in the commission’s assessment, is that the proceeds would be used to keep Cyprus’ debt under control as the economy slumps.
But Turkey, which occupies the north of Cyprus, last month already challenged any move by the island nation to speed exploration. Turkey warned it may ‘‘act against such initiatives if necessary.’’
That would mean war, wouldn't it?
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