Cyprus surprise - Cypriot depositors to take a 'haircut'

HAMISH_MCTAVISH

grizzly1911 wrote: »

Presumably insolvency would test out the EU cash compensation arrangements.:eek:

Presumably.

This move seems to have attracted the ire of some on this thread, but in reality it's little different to, for example, the huge increases in household tax being collected via electricity bills in Greece.

What do people expect?

Bailouts come at a cost.

The alternative is usually more costly.

That's why governments agree to them....

Many of you are in favour of taxes rising elsewhere in other bailed out countries, but don't like this tax.

Why?

grizzly1911

michaels wrote: »

If I had savings in one of those Indian banks who were recently offering high rates or even in ING I wold be seriously thinking about this. I believe Santander UK is a separate legal entity and safe from any Spanish Govt asset grab?

If an Indian Bank is in India (outside the EU) or has an authorised UK subsuidary why is it an issue?

I can understand ING but their UK business was taken over by Barclays.

Arguably an Indian Bank may be a better bet.

ChiefGrasscutter

moneyistooshorttomention wrote: »

After all, wasn't British income tax supposed to be a temporary thing to fund one of the wars (?back in the 17th?/18th? century). Some "temporary" considering that it's still with us hundreds of years later.....

Correct.
It was a temporary measure to finance the war against France.
and as it is still in place - I conclude we are still at war against France.

Hamish - The bondholders in Cyprus are not being haircut - does that not seem rather odd - that depositors rank behind bondholders?

melanzana

Can an EU resident in the Eurozone open a bank account in the UK now?

Is if safe FGS even in UK!

Put it Under the mattress, or in the underfloor safe now!

Or Norway?.. Will they let us?

grizzly1911

HAMISH_MCTAVISH wrote: »

Many of you are in favour of taxes rising elsewhere in other bailed out countries, but don't like this tax.

I don't think I have raised any views over taxation been raised for bailouts.

The only view I have on taxes is that they always go up (in aggregate).

wotsthat

Graham_Devon wrote: »

Why should those with some savings have to bail out the reckless borrowers, banks and the EU?

...because they've got some savings.

Tapping up skint people to provide bailout funds would be fruitless.

Cyprus doesn't have the same negotiating position as Greece or Spain - they did have a choice though and decided the alternative was worse.

To a degree it seems like a good idea. Putting cash in a bank should be seen as an investment rather than a risk free exercise.

The silverbugs will be along soon to say how clever they've been by burying coins in the back garden.

downshifter98

A HUGE mistake - just as some calm had descended on the euro area this risks igniting it all again. I appreciate that what is happening in the UK is also devaluing the cash that we hold but to simply tear up the 100% guarantee re bank deposits and to impose this overnight on everybody is just frightening - for any financial system to work there has to be a belief in the basics of that system - ie paper money saved in banks is boring but safe; if inflation is undermining that then it is upto the individual to consider moving their money elsewhere but for the government to treat all with savings as investors (in the bank) is crazy - for the sake of a few billions the whole financial system is undermined and put at risk. Anyone regarding this as simply an alternative tax is mistaken and does not understand basic human behaviour; taxes annoy people - what has happened today will scare them (and throughout Europe) with unpredictable consequences. I've been taking the hint for a while that cash savings are bad and this confirms it.

Finally, I love the way that pensioners with cash savings have been lumped together with Russian !!!!! types - to impose it merely on amounts over the guaranteed limit (100,000?) might have made a little sense in Cyprus' example but to impose it on all is beyond comprehension. Scary times indeed.

wotsthat

ChiefGrasscutter wrote: »

The bondholders in Cyprus are not being haircut - does that not seem rather odd - that depositors rank behind bondholders?

Depositors are more likely to be Cypriot than German.

Bondholders are more likely to be German than Cypriot.

That probably explains it.

tberry6686

I doubt if this could happen in the UK. If it can then the government would have to revoke the law that allows employers to pay salaries only through the banks otherwise it would effectively be a large hike in income tax and would be very strongly resisted by an already overtaxed workforce.

Mr_Mumble

The bust up between the EU and Eurogroup will be worth watching:

“The Cyprus bailout deal is a disaster for EU rules and Single Market principles” – BOWLES

March 16, 2013 2:26 PM

Sharon Bowles MEP, Chair of the European Parliament's Economic and Monetary Affairs Committee, has said she is appalled by the Cyprus bailout, which includes 'bailing-in' some guaranteed deposits - i.e. swapping them for shares.
Sharon Bowles MEP said:

"This grabbing of ordinary depositors' money is billed as a tax, so as to try and circumvent the EU's deposit guarantee laws. It robs smaller investors of the protection they were promised. If this were a bank, they would be in court for mis-selling.

"The lesson here is that the EU's Single Market rules will be flouted when the Eurozone, ECB and IMF says so. At a time when many are greatly concerned that the creation of the 'Banking Union', giving the ECB unprecedented power, will demote the priorities of the Single Market, we see it here in action.

"Deposit guarantees were brought in at a maximum harmonising level so that citizens across the EU would not have incentive to move funds from country to country. That has been blown apart.

"What else will be blown apart when convenient? All the capital requirements we have slaved over, what about the new recovery and resolution rules? What does this mean for confidence in cross-border banking and resolution and preventing the fragmentation of the banking sector?

"When the dust has settled on this deal, which I hope it never does, we will see that the Single Market has been sold down the river for a shoddy price. All the worse as the consequences for Cyprus of the Greek bond haircuts were obvious."