Cyprus surprise - Cypriot depositors to take a 'haircut'

socrates

Guys can you take the conversation about Bedroom Tax to another thread this is about Cyprus - with all due respect

wotsthat

Masomnia wrote: »

I wonder if the queues have already started. The sooner you get into the bank the more likely you are to get your cash.

Wouldn't fancy being a bank cashier today....

StevieJ

wotsthat wrote: »

Wouldn't fancy being a bank cashier today....

Small queues at the open but no queues now, no obvious panic.

CLAPTON

StevieJ wrote: »

Small queues at the open but no queues now, no obvious panic.

it seems a little unclear what you can actually do at the bank except withdraw 300 euro at the ATM
everything else seems to need paperwork which I guess most people wouldn't have yet.

socrates

Rumours on the ground are that people want to pay down their debt - restructure their finances as they fear that a second currency is to be put in place a Cypriot Euro which has less value

Mr_Mumble

Wowza, another Friday night surprise for Cypriots...

Big depositors in Cyprus to lose far more than feared

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.

Two points here:

1. With Laiki depositors over 100K losing 80% and Bank of Cyprus depositors 62.5% it does mean that, if a second bailout is ever needed, there is a very small buffer of equity that bailed-in ex-depositors can take on before you have to hit insured depositors.

2. Bank of Cyprus was supposed to be the good bank! I thought it odd how 7bn euros extra of good (insured) Laiki deposits was supposed to compensate for the extra 9.2bn euros of Laiki ELA money that Bank of Cyprus was to be lumbered with. Plainly this is a bad deal for the Bank of Cyprus, a deal I'm not sure how the board of governors could have agreed to. This is a poison pill purchase and it shows that bankers ultimately cower and bend over at the behest of politicians (who have the power of force, arrest and imprisonment). The similarities between Bank of Cyprus and Lloyds TSB becomes ever more striking.

Generali

Just a thought: who the heck keeps more than EUR100,000 in cash? You've gotta be mad, a money launderer or a big business to do that.

vivatifosi

Generali wrote: »

Just a thought: who the heck keeps more than EUR100,000 in cash? You've gotta be mad, a money launderer or a big business to do that.

Yes in the long term, no in the short term. I did see a couple being interviewed who had sold their house and were waiting for the new purchase to go through. They, as a result, had more than 100,000 euros in their account. It's people like that you have to feel terribly sorry for. Measures like this will always hit a small but unfortunate group who are having to make big-money life changes at exactly the wrong time.

Graham_Devon

Generali wrote: »

Just a thought: who the heck keeps more than EUR100,000 in cash? You've gotta be mad, a money launderer or a big business to do that.

Apparently lots in Cyprus do? The news commented that they save for pensions and the like, often pooling family resources.

Not sure how accurate it all is.

ChiefGrasscutter

Generali wrote: »

Just a thought: who the heck keeps more than EUR100,000 in cash? You've gotta be mad, a money launderer or a big business to do that.

Eh?
The savings boards on MSE are full of people either being advised or worrying about seperating out the savings accounts above £85K (ie E100K) into groups with different banking licences to ensure they are fully covered by the FSCS.
So (among those who save in the UK!) keeping up to £85K in a high yielding fixed term savings account and indeed 'cash ISAs' seems pretty normal.
Its not just current accounts in Cyprus which are being stuffed - its all accounts.