So much for €100,000 protection - Cyprus bailout

socrates

http://www.standard.co.uk/panewsfeeds/bailout-tax-shock-for-cyprus-savers-8537170.html

A bit more detail

opinions4u

p00hsticks wrote: »

But I'm not sure that the references to the FSCS or the 100,000 Euro protection are really relevant in the circumstances described ? Surely that refers to cases where an individual bank goes under ?

While you're right there are two reasons that I referenced investor protection.

1) The EU has passed legislation protecting savers against bank failure. Then forces those self same savers to lose some of their savings due to financial instability. If I had savings in an Italian bank I would move them immediately. This confirms that the EU sees your savings, my savings and Giuseppe's savings as fair game for a tax take. Nothing to protect us from this.

2) Cypriot banks have offered best buy rates in the UK in recent years. I was speculating (note the word "assume") on the potential for these deposits be part of the EU bail out and suggested that the FSCS may be an indicator of being classed as a none-Cypriot deposit.

In this country, we generally get taxed 20% at source in our savings interest. If the government suddenly decided to increase that rate, or to impose some sort of one-off 'windfall' tax on savings of the type described (v unlikely, I know), I don't see that the FSCS guarantees would come into it at all ?

It wouldn't. But see above.

JohnRo

When central banksters rule the world... Don Corleone would be impressed.

SliAbhaile

I have £4 remaining in Cyprus (declared). I've just lost 27p.

Ouch.

Mands

opinions4u wrote: »

http://www.bbc.co.uk/news/business-21797888

Ouch! That's a real kick in the gonads for prudent savers.

I'm assuming UK savers with Cyprus banks should check who protects their savings. Some will be FSCS, which I'm guessing is fine. What about the others?

Accounts in UK branches of the Cypriot banks are not affected.
Mands

atush

socrates wrote: »

There is a lot of undeclared money in Cyprus I suppose this is some kind of correction

Perhaps this is the start of similar behaviour by other European countries - perhaps to gauge the reaction

So, go after the big accts only?

Or do like the IOM and share information freely with the UK? I don't see the need to penalise the smaller savers in this smash grab.

ColdIron

What's different about this is and an emergency tax is it's levied against savings and not just interest. It's hard to see the difference between a bank robber and the state. The latter may be legal but neither seem lawful

It's worth remembering that events like this highlight the real purpose of gold. It's of limited use in ordinary times but in extraordinary times nothing else will do although in this case stashing your cash under your mattress would have served just as well

I wonder if this is going to spark a flight of money away from Cyprus's banks and where to?

ChiefGrasscutter

More likely to spark a flight of money away from Greek and Spanish banks....seeing that they might be next.

Mr_Mumble

From the FT:

What does the bail out mean for UK depositors?
By Patrick Jenkins, Banking Editor

Customers of the UK units of Cyprus’s banks probably have nothing to worry about, according to people close to the situation.

The British subsidiary of Bank of Cyprus said depositors’ money would be unaffected by the haircut being applied to accounts operated by its parent company. Subsidiary structures, which hold ringfenced capital and funding and are more tightly supervised by local regulators, offer greater legal protection in this kind of incidence.

It is less clear whether UK customers of the other main Cypriot bank, Laiki – formerly known as Marfin – will be similarly protected. Laiki operates as a branch in the UK, rather than a segregated subsidiary. However, people close to the situation suggested it, too, was confident that customers in the UK would not be hit by the haircut decision.

talexuser

The logic seems to be that vast sums of money are Russian laundered money... so the euro politicians and regulators are sure. So fair enough to tax deposits of very large sums.

But why tax ordinary people with say up to 10 grand equivalent? Have a low tax up to say 100 grand for more affluent honest people - the tax is supposed to be a way of making people wary of saving in so called "dubious" banks.

But over a million in cash savings - why not tax at 50% unless people can prove where the money came from?

All this in the specific circumstances of the bank being now bankrupt and used to launder money. Otherwise you end up with what German politicians were specifically against - bailing out Russian gangsters and tax avoiders with European taxpayers money.