Big Depositors in Cyprus to Lose Far More Than Feared

9.9%? 30%? 60%? 80%? Nope – according to the latest from Reuters, the cash-on-cash return to all uninsured depositors in the healthy, i.e., only remaining big Cyprus bank, will be a big, fat doughnut.

Nothing left….

Reuters report:

Big depositors in Cyprus’s largest bank stand to lose far more than initially feared under a European Union rescue package to save the island from bankruptcy, a source with direct knowledge of the terms said on Friday.

Under conditions expected to be announced on Saturday, depositors in Bank of Cyprus will get shares in the bank worth 37.5 percent of their deposits over 100,000 euros, the source told Reuters, while the rest of their deposits may never be paid back.

The toughening of the terms will send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island and bring steeper job losses.

Officials had previously spoken of a loss to big depositors of 30 to 40 percent.

Cypriot President Nicos Anastasiades on Friday defended the 10-billion euro ($13 billion) bailout deal agreed with the EU five days ago, saying it had contained the risk of national bankruptcy.

“We have no intention of leaving the euro,” the conservative leader told a conference of civil servants in the capital, Nicosia.

“In no way will we experiment with the future of our country,” he said.

Cypriots, however, are angry at the price attached to the rescue – the winding down of the island’s second-largest bank, Cyprus Popular Bank, also known as Laiki, and an unprecedented raid on deposits over 100,000 euros.

Who is next? Socialism is fine until you run out of other people’s money to give away. Europe has been living off America for decades there is no more. Meybe they should have tried something productive with their time, huh?

Cyprus Depositers face 80% Loss of Savings.

I think Europe is officially out of other people’s money. This ought to be a lesson to all. They are still trying to make it at least look like small depositors (under our FDIC max) will be OK, but that’s today’s message. Anybody want to wait for tomorrow?

Cyprus Finance Minister Michalis Sarris said today that depositors at Cyprus Popular Bank PCL could face losses of as much as 80% on their deposits.

FOX Business reported:

Cyprus’s finance minister said Tuesday that large deposit holders at Cyprus Popular Bank PCL (CPB.CP), the island’s second biggest lender, could face losses of as much as 80% on their deposits as the government moves to wind down its operations.

Speaking in a television interview with state broadcaster RIC, Michalis Sarris indicated that it could also take years before those depositors see any of their money returned.

“Realistically, very little will be returned,” Mr. Sarris said.

Asked if, like in other bank closures, it could take six to seven years before depositors get back there money, he said: “maybe yes. And the amount [returned], could be 20%. Certainly, for depositors above 100,000 euros it could be a very significant blow.”

Cypriot Youth Rise Up: “They Just Got Rid Of All Our Dreams”

There is a reason we think of youth unemployment as the ‘scariest’ thing in Europe.

After a few months of relative calm, it appears the youth are once again finding their hopes dashed and are protesting.

As Reuters reports, thousands of students and bank workers protested in the Cypriot capital Nicosia today.

“They’ve just gotten rid of all our dreams, everything we’ve worked for, everything we’ve achieved up until now, what our parents have achieved,” 

is how one young protester exclaimed his feelings, as a bank worker added, “we are scared.” It appears President Anastasiades comment that, “the agreement we reached is difficult but, under the circumstances, the best that we could achieve,” is not reassuring an increasingly volatile people.

Hey low information Obama voter, what do you think the Fed is doing to you right now? Devaluing our currency is just that.

 

Cyprus Fallout

When government moves to steal depositors cash in the bank, what do you call that?

CYPRUS TO SEIZE CITIZENS’ CASH…

40% grab on accounts above €100,000…

Russians stand to lose billions…

Prepare to quit Cyprus…

Destruction of a tax haven…

Clash with Germany…

Regulation wipes out profits for UK banks…

PAIN IN SPAIN…

It’s not about borrowing the 401K money it’s about stealing what you have saved … At all cost you do not want to turn over your savings to the federal government.

You’ve been warned, get ready for the great 401k theft. The plan on the table is to remove the tax deduction for new deposits, and turn over the cash to the fed. The fed will then pay 1-3% interest, far below normal rates of return. But no new principal deposits will be allowed. There is now over $19 Trillion in 401Ks.

FNC Video 401k here …

Deposit Shrinkage: Is Spain Next?

Afetr Cyprus took a 40% haicut on deposits over $129,000.

And Spain is now reviewing there options…

Spain Brings the Pain to Bank Investors

The Spanish government will impose heavy losses on investors at nationalized banks and hire external advisers to help it manage these banks’ assets, its latest efforts to overhaul a financial sector battered by the collapse of a decadelong housing boom.

Forcing shareholders and bondholders to share the cost of restructuring the country’s five nationalized banks was a politically costly step for the government of Prime Minister Mariano Rajoy, but one that was required under the terms of a European Union bailout of Spain’s ailing lenders. The decision to solicit advice in drafting a long-term strategy for these lenders came after the state-backed Fund for Orderly Bank Restructuring failed to sell one of them, midsize Catalunya Banc SA.

 

You’ve Been Warned, When Soicalism Goes Bust

You’ve been warned …

(Reuters) – Cyprus clinched a last-ditch deal with international lenders to shut down its second-largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians, in return for a 10 billion euro ($13 billion) bailout.

The agreement came hours before a deadline to avert a collapse of the banking system in fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund.

Without a deal, Cyprus’s banking system would have collapsed and the country could have become the first to crash out of the European single currency.

Swiftly backed by euro zone finance ministers, the plan will spare the Mediterranean island a financial meltdown by winding down the largely state-owned Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a “good bank”.

Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki’s debts and recapitalize Bank of Cyprus through a deposit/equity conversion.

Deposit equity conversion … translation stealing.

The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros, Eurogroup chairman Jeroen Dijssebloem said.

Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution.

When socialism goes bust we all pay … and it will. you soon run out of other people’s money to give away. Wasn’t it nice when money was real… gold and silver, that couldn’t be digitized, or carried around in suitcases.

As I watched Cyprus’ financial minister discuss the seizure of bank deposits in his country, I realized that this situation is a great lesson on the value of independent monetary policy, and the raw power that central banks can wield … Or in other words, a sound dollar is our only hope, not the Fed.

Ukip urges Brits to withdraw their money from Spanish banks

The UK Independence Party leader said that the European Union had “crossed a line” by trying to extract funds from savers under the terms of the abandoned Cypriot bail-out.

Mr Farage said: “Even I didn’t think that they would stoop to actually stealing money from people’s bank accounts.

“There is going to be a big flight of money and that flight of money won’t just be from Cyprus, it will be from the other eurozone countries, too. There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain.

“Now that we see the EU are prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, ‘Get your money out of there while you’ve still got a chance’.”

Mr Farage urged George Osborne, the Chancellor, to rule out any such levy on British savers.

 

Cyprus Still Bubbling

Europe is broke and it’s not pretty. As the squables about who pays, who gets blamed for their failed socialim. Who thought this whoole EU thing and capital controls was a good thing?

Central everything. When will the people figure it out, borrowing from one pocket to pay another just doesn’t work. Hello Bernanke. In fact socialism doesn’t work. Got that!

With the Cypriot government still ‘undecided’ about what to ‘take’ and the European leaders very much ‘decided’ about what to ‘give’, the fact of the matter is, as JPMorgan explains in this excellent summary of the state of affairs in Europe, that because ELA funding facility is limited by the availability of collateral (and the haircuts applied to those by the central bank), and cutting the Cypriot banking system completely from ELA access is equivalent to cutting it from the Eurosystem making an exit from the euro just a matter of time.

This makes it inevitable that capital controls and a capital freeze will be imposed, in their view, but it is not only bank deposits that are at risk. A broader retrenchment in funding markets is possible given the confusion and inconsistency last weekend’s decision created for investors relative to previous policy decisions.

And then there is Spain — Add to this the move by Spain, which announced this week a tax or bank levy (probably 0.2%) to be imposed on bank deposits, without details on which deposits will be affected or timing, and the chance of sparking much broader deposit outflows across the union are rising quickly.

Via JPMorgan,

Capital Control Risks

What was widely viewed as an ill-conceived Cyprus deal last weekend renewed fears of a re-escalation of the euro debt crisis. The original proposal to hit insured depositors below €100k caused a bank run and set a new precedent in the course of the Euro area debt crisis, with potential negative consequences for bank deposits not only in Cyprus but also in other peripheral countries. Once again, as it happened with the Greek crisis last May, the Cyprus crisis exposes the fragmentation of the deposit guarantee schemes in the Euro area and its inconsistency with a monetary union.

Cyprus makes frantic effort to prevent run on its banks

What did they expect, people are just not going to do this? Not while they can withdraw their cash and get out. Top down run your life EU was a bad idea from the start.

The UK Gaurdian reports:

Cyprus is embarking on emergency efforts to restructure its second largest bank and considering new rules to stop money flooding out of the country’s banks when they reopen next week after being shut for ten days.

Cyprus Banks To Remain Shut Until …

An official said banks, which been shut for days amid fears of a run on savings, will stay closed on Thursday and Friday, CNBC and Reuters reported. Monday is a public holiday.

Earlier, Germany said the banks were effectively insolvent and might never open at all unless Cypriot political leaders accepted a bailout deal.

Thousands of Cypriots withdrew savings after the unexpected European Union announcement that it would provide $12.9 billion in exchange for up to 10 per cent of the value of all bank deposits – a move that would have thrown the Mediterranean island a lifeline but hundreds of thousands of citizens out of pocket.

I suggest you have at least 30 days of cash you need to live on and pay bills. Just in case.

The EU is getting sicker, and sicker …