Calm Gives Way to Tension in Cyprus as Banks Reopen

Banks in Cyprus opened Thursday for the first time in almost two weeks, giving depositors access to their money with strict controls imposed by international lenders to prevent a bank run in the economically troubled country.

As the opening hour of noon approached, the earlier calm outside the banks began giving way to an edgier mood. Lines of 50 or more people had formed in front of the main branches of Bank of Cyprus and Laiki Bank, the country’s two largest banks. Customers at the front pressed their noses to the glass doors.

Similar scenes were playing out at the city’s other bank branches.

Inside the Bank of Cyprus main branch, tellers and security guards looked grim, bracing for the onslaught. Suddenly, two police motorcycles, blue lights flashing, appeared and circled the central square.

One of the customers in line, a 27-year-old businessman who would give only his first name, Miltos, shook the stack of papers in his hand. It represented nearly €40,000, or about $51,000, in bills he owed the suppliers of his small telecommunications company.

The bank closure since March 16 had damaged his business “terribly,” Miltos said. Unless he could persuade Bank of Cyprus to let him transfer more than the €5,000 limit for the month that the government has decreed, he said he feared he might soon have to declare bankruptcy.

On Wednesday, the government imposed stiff capital controls to clip the flight of money, including prohibiting electronic transfer of funds from Cyprus to other countries and capping at €3,000, or about $3,900, the amount of cash that can be taken abroad.

Withdrawals at automated teller machines will be limited to €300 per person; for the past few days withdrawals have been capped at €100.

Credit and debit card charges will be limited to €5,000 per person per month. Banks will not cash checks; they will accept checks as deposits, but many people will no doubt be reluctant to put more money into a bank here.

Bank clients also will not be able to withdraw money from fixed-term deposits before their maturity date.

 

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 Banks Close, €100 Limit on Withdrawals

With its banks indefinitely closed, and capital controls already in place making it virtually impossible any material cash will leave the local bank branches or certainly the island (especially in direction Moscow), gas stations about to shut down due to lack of cash, next it was the turn of the ATMs.

Sure enough, as CNBC’s Michelle Caruso-Cabrera reports on the ground from Nicosia, moments ago the nation’s second largest, and second most insolvent bank, Laiki Bank, announced that withdrawals are now limited to €100. The picture below from MCC shows as an employee takes down old sign that said previous €260 limit. At this pace, in lieu of some grand bargain, we expect it is only hours before the final limit is imposed: withdrawals now limited to €0.

“Employee takes down old sign that said previous €260 limit”

Source: Michelle Caruso-Cabrera

I went thorugh the mess of bank failure, have cash. You’ve been warned.

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 “Bank Holiday” Gets Another Extension, Bank Reopening Now Set For Thursday

Note the APs word choice.

What was initially a single-day Bank Holiday has now morphed into three days as the farce that is the wealth tax in Cyprus will now keep the citizenry from their money until Thursday according to the latest from the Central Bank…

Cyprus (AP) — Cypriot central bank: Banks will remain closed until Thursday amid talks on savings seizure.

Which begs the question “Which Thursday?”

Bank Accounts In Cyprus Taxed With No Say So By Depositers(formerly known as voters)

Dictatorship’s are so much easier, especially when you have no Constitution…

And then for some that’s just a mere speed bump, to be ignored.

For those who read the previous article on the topic of last minute chaos and confusion in Cyprus, and Europe, it will come as no surprise that the previously scheduled Monday bank holiday (aka Green Monday) has been extended into Tuesday. So prepare to not be surprised.

From Kathimerini:

The Cypriot cabinet has declared Tuesday a bank holiday, for fear of capital flight, and this may even be stretched to Wednesday, as depositors are certain to withdraw huge sums from the Cypriot banks after the haircut imposed.

Nicosia postponed from Sunday to Monday the tabling in Parliament of the bill including the measures for the Cypriot bailout – including a bank account haircut and a tax hike on interest and corporate earnings – but the European Central Bank insists on a rapid voting because there are already signs a domino effect will follow across European lenders and markets from Monday.

There is genuine fear of market unrest on Monday morning when stocks may crumble in the eurozone and bank accounts in other southern European bank may suffer.

Skai radio reported on Sunday that the Bank of Greece has sent between 4 and 5 billion euros to Cyprus in order to help Cypriot banks respond to cash requirements by their clients.

So, if the official name of the March 18 holiday was “Green Monday“, will the March 19th ad hoc holiday be called “Red Tuesday“? Inquiring minds want to know.

Government now moves into outright theft???

EUROZONE COUNTRY: Surprise! We’re Putting At Least a 6.75% Tax On Bank Deposits

People with bank accounts in Cyprus were shocked Saturday to learn that as part of an agreement reached with international creditors, the government has imposed a tax on all deposits to help bail out the nation and its banks.

While the island nation may be small, it’s an international favorite for offshore banking– particularly for wealthy Russians.  The tax will range from 6.75% to 9.9%, depending on how much is in the account.

“This is a clear-cut robbery,” Andreas Moyseos, a former electrician who is now a pensioner in Nicosia, told the New York Times. Iliana Andreadakis, a book critic, further added: “This issue doesn’t only affect the people’s deposits, but also the prospect of the Cyprus economy. The E.U. has diminished its credibility.”

And indeed, following the massive run on banks in Cyprus, many are concerned that a minor panic could spread to the rest of the Eurozone.  After all, it has just set a precedent for taxing private bank accounts at exorbitant rates without warning.

ut first, here’s a little more background on the plan via the Associated Press:

As one of 17 nations that use the euro currency, Cyprus can to raise or lower taxes whenever it wants. Early Saturday, it secured a (EURO)10 billion ($13 billion) bailout from its European partners and the International Monetary Fund to save the banking sector and avoid bankruptcy. In return, the island nation has imposed the new tax, among other moves.

 Banks have already acted to seal off the amount of the levy – a 6.75 percent tax on deposits under 100,000 euro and 9.9 percent on those above – so depositors can’t access it. Bank customers still can draw on the rest of their funds via ATM machines this weekend, although banks that usually open on Saturdays had limited hours and many said they were out of cash by the end of the day. No international transfers will be able to go through until Tuesday, since Monday is a holiday. Cyprus’ parliament is expected to meet Sunday to pass the required legislation. The deal also needs the approval of several eurozone parliaments; it’s unclear how fast they can act and what will happen to bank deposits in the meantime. [Emphasis added]

The really shocking aspect of the policy is that it targets “ordinary savers,” in the words of the New York Times.