Cyprus bank run

[ricohflex]

Let's see what others say.

Quote from Forbes headline:

"The Cyprus Bank Bailout Could Be A Disastrous Precedent: They're Reneging On Government Deposit Insurance"

EndQuote

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Cyprus is treated differently from Greece, Spain, Portugal, Italy.
It proves there are second class member countries within the EU.

What kind of help is it when a 10 Billion Euro loan is offered - but only if Cyprus can raise 5.8 Billion Euro as collateral - by Monday 25 March 2013. EU already knows that Cyprus is poor, and yet EU sets this kind of condition before a loan is given.

Understand this difference clearly. If the Cyprus bank depositors are taxed with a mandated levy of 6.75% (on deposits of less than 100,000 euros) or 9.9% (on deposits of 100,000 euros and above); that money is gone forever. The depositors will never get it back. But the EU will get back the 10 Billion Euros that they loaned to Cyprus.

Lousy Cyprus bank executives made bad decisions but the ordinary depositor has to pay for it.

 

[Shizuma]

Stop talking nonsense laa. They are not reneging this guarantee. Guarantee just mean in the event of bank runs, the government, via central bank (or like the federal depositors insurance in the US) will give you your money, up to the guaranteed amount.
What they were planning is to tax people by directly debiting their savings in the bank. Not essentially the same thing, but effectively achieve same effect, which is to take the people's money.
The problem now is.. by rejecting the tax, EU will not bail out the banks. Without it.. the gov will not have the money to back the guarantee.
So.. its their choice.. taxed 6.75%.. or risk to lose 100%.

their deposit tax to prevent or guarantee funds in case of bank run is causing a bank run! how did these guys get up there so high? bunch of silly morons. i can do better.

 

[ArchRival]

It's finally happening! The banks will seize the Cypots' cpf money! 20% for those over 100k, 4% for those below. No one is spared!

 

[ricohflex]

Cyprus's economy is small. Only 0.2% of EU. So hard to raise 5.8 billion Euros. The US military spends that in about 4 days.
Cyprus's banks were mismanaged and they got into this mess. Bad mistakes by bank managers. Now the bank depositors have to pay for the bank managers' mistakes.

But what if the opposite happened? If the Cyprus economy is booming?
Cyprus bank managers will say, see how clever we are? We deserve Million Euro bonuses - just like their counterparts in London+USA.
The bank depositors will get nothing extra in such a scenario.

Singapore got something in common with Cyprus.
Both are small, although Cyprus is 12 times bigger than Singapore.
Both are islands.
Both are surrounded by big neighbours.
Both were former British colonies.
Both got multi-races living in the country.

So how did we do so well?
Our banks got financial muscle. See slide below (credit: Reuters)
Little Singapore got 2 banks in the top rungs. Not too bad at all.

Singapore got zero natural resources.
Cyprus has huge undersea natural gas reserves; and yet they are in such bad shape today.

After Cyprus takes the 20% levy, maybe the big depositors will get fed up with Cyprus and the billions of hot money will flow to Singapore.

 

[ManWearPants]

Have you bought your metal tin?

 

[ricohflex]

A Cypriot politician interviewed by reporter today, suggested that there is a hidden agenda behind EU's refusal to help Cyprus.
EU wants to squeeze Cyprus until it is desperate. At the last moment, powerful countries (probably Germany and France) leading the EU will demand that Cyprus cede partly its rights to the Aphrodite natural gas reserves; in exchange for the bailout loan.

 

[Shizuma]

bloomberg news
25 Mar 2013 10:58 GLO BAL MAR KE TS - EU R O,

* MSCI Asia ex-Japan soars 0.8 pct, buoyed by Cyprus deal * Nikkei rises 1.5 pct, inching closer to 4-1/2-year peak

* Euro jumps away from last week's 4-month low vs dollar

By Chikako Mogi

TOKYO, March 25 (Reuters) - The euro and Asian shares rose on Monday after Cyprus did a last-ditch deal with international lenders for a 10 billion euro ($13 billion) bailout hours before a deadline to avert a financial collapse on the Mediterranean island.

The euro rose to a session high of $1.3050 from around $1.2980 on the news, moving away from a four-month low of $1.2844 hit on Tuesday. The euro climbed 0.8 percent against the yen to 123.54 while the Australian dollar touched a high of 99.25 against the yen, inching closer to a 4-1/2-year peak of 99.99 yen hit earlier this month.

Gains in the euro and currencies typically linked to risk appetite weighed on assets favoured as safe-haven, such as gold,

which was nearly flat around $1,608 an ounce .

Cyprus agreed with the European Union, the European Central Bank and the International Monetary Fund on Monday for a bailout that will shut down its second-largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians. [ID:nL5N0CH01B] [ID:nB5E8KL012]

The plan was swiftly endorsed by euro zone finance ministers and deposits below 100,000 euros will be transferred to the Bank of Cyprus to create a "good bank". German Finance Minister Wolfgang Schaeuble said Cyprus's parliament will not need to approve the bailout deal.

"This will likely limit the euro's downside, with those who shorted the euro covering their positions, and improve general risk sentiment," said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo. "But it's hard to see the euro testing $1.35 levels, given prospects euro zone interest rates will not rise."

For the same reason, the yen's rebound was likely to be limited to last week's high of 93.45 yen against the dollar, he said, with solid U.S. economic recovery seen driving the dollar higher against the yen.

"The Cyprus issue was likely used to adjust bloated yen short positions. After last week's rebound, yen bear positions have lightened, putting the dollar/yen on course for a further rise," Maeba said.

The dollar rose 0.3 percent to 94.81 yen . Against a basket of key currencies, the U.S. currency was down 0.6 percent .

The MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.8 percent, bouncing off its lowest level in three months struck earlier last week.

Australian shares extended gains, rising 0.6 percent on the Cyprus news as well as on support from bargain hunters following last week's fall and a recovery in iron ore prices.

South Korean shares jumped 1.4 percent after closing the previous week at a 5-week low.

Japan's Nikkei stock average advanced 1.5 percent to inch closer to a 4-1/2-year high. [.T]

U.S. crude futures edged up 0.2 percent to $93.93 a barrel. [O/R]

"This is certainly very good for risk appetite overall and that's going to have a positive impact across oil markets, so we should see some positive sentiment reverberate through energy markets overall for at least the next 24 to 48 hours," said Ben le Brun, an analyst at OptionsXpress in Sydney.

Market sentiment on Friday was partially lifted when hopes rose that Italy could end the political deadlock left by last month's inconclusive elections after President Giorgio Napolitano asked centre-left leader Pier Luigi Bersani to assess whether he can win enough support in Italy's divided parliament to form a government. [ID:nL6N0CEB8M]

Also on Friday, Greece's Piraeus Bank struck a deal to take over the Greek branches of Cyprus's troubled banks,

helping to shield Greek banks from the island's crisis and allowing Cyprus to shrink its bloated banking sector. The deal is subject to approval by European competition authorities. [ID:nL6N0CE7I8] ($1 = 0.7694 euros)

(Additional reporting by Jessica Jaganathan in Singapore; Editing by Eric Meijer)

Keywords: MARKETS GLOBAL/

 

[ricohflex]

Oh, the money already flowed to Singapore according to this report.
How a bank run in Cyprus could destroy the euro | Column | Opinion | The London Free Press
Quote:
"So rather than make the Cypriot banks’ investors (mostly other banks) pay the price of their folly, Schaeuble made the depositors pay it instead. Some of them were very rich Russians — though the really big deposits were probably moved to Singapore or Dubai a year ago, at the first hint of trouble — but most of them were ordinary Greek-Cypriots who were seeing their savings taken to pay for rich people’s greed and stupidity."
UnQuote

http://finance.fortune.cnn.com/2013/03/19/cyprus-bank-run/
This statement is true.
Quote:
You will run on your bank if you think you will lose 100% of your deposits, and you will also run if you think you will lose 10%.
UnQuote
If they can do it to Cyprus, they can do it to Italy, Spain, Greece, Portugal.
e.g. a Russian oligarch has 300 million Euros in Cyprus banks. He is going to lose from 20% to 40%.
That is 60 Million to 120 Million Euros. A lot of money.
He will never trust any bank in the EU again.

Much of it will flow to Singapore.

 

[hanzohattori]

I believe one of the reason why the EU demanded 5.8 bln EUR is to deflate Cyprus' economy and retake $$ from money laundering and all other criminal activity.
Money is like water, too much money floating around is not good, it can do damages. If you think a big chunk is coming to singapore.. then watch out :angel:

 

[ricohflex]

Mega rich Indonesians + PRC have long been parking money in Singapore. North Korean politicians and Myanmar generals come to Singapore for medical treatment. Robert Mugabe too. What crime? We don't want to know. Just put their money here.

The Russians will be so angry with EU + Cyprus, they will take the remainder of their money out ASAP.
This is a very bad move. To pass a law and seize other people's money in the bank.
There is a precedent. Libya's money or Gaddafi's family money (billions) in EU banks was seized.

If the big depositors in Cyprus were Americans, instead of Russians, the EU would not dare to do this. Anyway, not our problem.
We just benefit from other people's wrong doings.

EU finance ministers approve Cyprus bailout deal, funded by bank assets seizure | Fox News

Quote:
Imagine waking up to find out that as much as 40 percent of the money you thought was safely deposited in the bank was seized, without your permission, to bail out a near-bankrupt government.
UnQuote

 

[Shizuma]

great next thing you know a Russian oil tycoon will buy over Tanjong Pagar FC and you will see Drogba playing for them. ha ha ha.

 

[raptor1988]

(Reuters) - Cypriots are expected to descend in their thousands on Thursday on banks, which reopen with tight controls imposed on transactions to prevent fleeing depositors from cleaning out the vaults in a catastrophic bank run.

The east Mediterranean island fears a stampede at banks almost two weeks after they were shut by the government as it negotiated a 10 billion euro ($12.78 billion) bailout package with the European Union to escape financial meltdown.

On Wednesday night, container trucks loaded with cash pulled up inside the compound of the central bank in the capital Nicosia to prepare for the reopening, a Cyprus central bank source said. A helicopter hovered overhead and police with rifles were stationed around the compound.

Cyprus to reopen banks, impose capital controls | Reuters

I sense real panic in Cyprus. Confidence in the Eurozone will be shaken as well..

 

[Shizuma]

i am buying the Euro for a very short term, limited risk speculative punt based on techs. wish me luck.

 

[ricohflex]

Cyprus has to blame itself because its banks stupidly bought lots of doomed Greek govt bonds.
Cyprus has to re-invent itself to survive.
Cyprus is an island with Mediterranean climate. Clear blue waters. Ideal tourism resort island magnet.
Cyprus has to get out of EU and delink with Euro.
Cyprus has to be in charge of its own currency.
Cyprus has to be in charge of its own country - and not let EU (or indirectly Germany) dominate it.
Cyprus needs to get back its sovereignty.

(example: Germany's parliament will vote on the terms of the Cyprus bailout deal. Why is Cyprus parliament not voting on something that decides how Cypriot citizens' bank accounts will be raided?)

Since Russia refused to help even though Cyprus Finance Minister personally asked, then offer to USA to station a big naval base in Cyprus.

Germany (the defacto Lau Da of EU) will never allow Cyprus to continue as an off shore banking tax haven. It has killed that.
Germany wants to remove any other challenger to Frankfurt as the premier European financial centre.
That means Germany would have plans to replace London as the premier European financial centre.
Fortunately for UK, it was clever not to join the Euro.

Soon the UK will choose whether to leave the EU. BBC News - David Cameron promises in/out referendum on EU

 

[Shizuma]

i blame the producers of Battle of Red Cliff for not making it in the 1990s when the European politicians were formulating policy

 

[dniwkh]

Cyprus has to blame itself because its banks stupidly bought lots of doomed Greek govt bonds.

but that is the problem. The decisions are make by greedy bankers who bought all the high yield bonds. I mean those bankers probably made enough money in the few boom years to last a lifetime. They don't care what happens after that.

I think cyprus should claw back all the money paid to the bank executives to help pay for the bailout. But this almost never happens. In the end who takes the ****???

I don't think why should Cyprus as a nation suffer for the decisions made by a few greedy bankers?

same for singapore. I mean look at the property craze recently. Lets the prices of property sykrockets and those speculators makes a tons of money. What happens when the crash comes??? EVERYONE gets killed including those who did not speculate in property. Look at Spain. Who made money? those smart ones who got out before the crash. This why you cannot rely on the people to stop a bubble because logical everyone will try to make money during the bubble, because if you don't you end up with no profits and all the pain at the end.

 

[Shizuma]

but that is the problem. The decisions are make by greedy bankers who bought all the high yield bonds. I mean those bankers probably made enough money in the few boom years to last a lifetime. They don't care what happens after that.

I think cyprus should claw back all the money paid to the bank executives to help pay for the bailout. But this almost never happens. In the end who takes the ****???

I don't think why should Cyprus as a nation suffer for the decisions made by a few greedy bankers?

same for singapore. I mean look at the property craze recently. Lets the prices of property sykrockets and those speculators makes a tons of money. What happens when the crash comes??? EVERYONE gets killed including those who did not speculate in property. Look at Spain. Who made money? those smart ones who got out before the crash. This why you cannot rely on the people to stop a bubble because logical everyone will try to make money during the bubble, because if you don't you end up with no profits and all the pain at the end.

Do not gather and heap up and store up for yourselves treasures on earth, where moth and rust and worm consume and destroy, and where thieves break through and steal.
But gather and heap up and store for yourselves treasures in heaven, where neither moth nor rust nor worm consume and destroy, and where thieves do not break through and steal;
For where your treasure is, there will your heart be also.

 

[ricohflex]

Cyprus has no bank run? Tell Cyprus don't bluff themselves. Try lifting all capital controls (some tv networks say in EU law capital control is illegal) and see whether everyone will take all the money out the same day.

It is a slow motion bank run. Cypriots have already made up their minds to take the money out in small potions until all have been taken out. Cypriots will never trust their banks again.

It is a fake impression of calm and orderliness.

Cyprus has lost its sovereignty and traded its citizens' futures to save its mis-managed banks.

 

[Shizuma]

not bank run. hence bank jog or bank walk?

 

[ricohflex]

Ouch!

For bank depositors with more than 100,000 Euros in the account, the tax levy is not 40%.

It is now 60%.

Worse is to come.
The remaining 40% will not be given back to them in money form. It is given back as bank shares in a failed bank.
The failed bank shares are likely to be almost worthless.



What is especially ridiculous in this sorry saga, is the arbitrary manner of deciding the 100,000 Euro cut-off point.

Bank depositor A has 99,999 Euros left in the bank, because he is a spendthrift and just bought a Canon 1DX. His money is safe.

Bank depositor B has 100,001 Euros in the bank, because he believed in saving for his children's education - now he is going to suffer losses.

The difference between the two is only 2 Euros.