Cyprus: panic as savings levy is imposed

Cypriots rush to ATMs before savings are docked as part of a bailout deal agreed in Brussels

Cypriots reacted with shock that turned to panic on Saturday after a 10% one-off levy on savings was forced on them as part of an extraordinary 10bn euro (£8.7bn) bailout agreed in Brussels.

People rushed to banks and queued at cash machines that refused to release cash as resentment quickly set in. The savers, half of whom are thought to be non-resident Russians, will raise almost €6bn thanks to a deal reached by European partners and the International Monetary Fund (IMF). It is the first time a bailout has included such a measure and Cyprus is the fifth country after Greece, the Republic of Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis. The move in the eurozone's third smallest economy could have repercussions for financially overstretched bigger economies such as Spain and Italy.

People with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said, while those with greater sums will lose 9.9%. Without a rescue, president Nicos Anastasiades said Cyprus would default and threaten to unravel investor confidence in the eurozone. The Cypriot leader, who was elected last month on a promise to tackle the country's debt crisis, will make a statement to the nation on Sunday.

This is going to CAUSE a bank run.
This is DELIBERATE.
The banks will suddenly be over leveraged come Monday and theres nothing they can fugging do. There's no way in hell they didn't foresee this.
They're going to need another immediate bailout on the order of tens of magnitude greater than the one they just got ffs!!!?!?

Cyprus state broadcaster CyBC reported on Saturday that German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated on Saturday that this had also been the proposal of the International Monetary Fund.

ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/03/2013_488169

'German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts'

Bloody hell!!!

A well-placed official rings to tell me why investors should not be panicking that the punishment of Cypriot depositors is a precedent, or that lenders to Spanish and Italian banks will be spanked as well before too long.

He says the structure of the Cypriot bailout has been determined by German politics. (Aren't all eurozone bailouts fixed in that way?)

Here is the logic behind imposing a hefty levy on Cyprus deposits, according to this official:

1) Regulators and politicians are convinced that a vast amount of cash in Cypriot banks belongs to Russian money launderers.

2) Few German politicians of any persuasion would have voted for a Cyprus rescue that simultaneously rescued these launderers.

3) So the only way to get the bailout through the Bundestag is for the launderers to be taxed to the tune of almost 10% of their allegedly ill-gotten cash. And if innocent savers are hurt too, that is the way this particular "Keks" will crumble.

On that analysis, private sector lenders either to Spanish banks or to the Italian government - as two topical and relevant examples - need not fear that it is their turn next to take a write-off.

That may be seen as comforting by investors, up to a point.

Good work, Peston, here's your six-figure salary.

Which he'll take along with his bonus after the reduction to 45% tax from 50 no doubt.
Fucking tossers :/

This cyprus situation can have an almighty fecking knock on effect and they KNOW it fucking tossers.
Its a bank hol here in Ireland too chrissake, I'm gonna have to get my money out on tuesday now.

The UK has a bloody 2bn bank in cyprus of all the shit ffs.

andyh wrote: We all know it's coming sooner or later, if not this time then a little later down the track. I guess you can't do much other than the little that's possible to protect yourself.

I did tell you in another thread that Cypriots were being robbed.

I did tell you in another thread that Cypriots were being robbed.

pheony wrote: I didn't see that, I don't get much chance to read the forum lately. I've only just read about this.

I'm worse than dawnbreak for posting links and pics...so I just post about a subject and hope that people will investigate for themselves.