MSE News: EU deal spares small savers in Cyprus from bailout tax

jimjames

evenasus wrote: »

I have kept to the £85K per institution safety advice.

Is it just a particular bank that the [STRIKE]theft[/STRIKE] levy of savers money is being imposed on?
Or will the [STRIKE]EU[/STRIKE] Cyprus want 40% of savings off anyone with say, €400K split - €100K deposited in each bank?

Two banks as I understand it.

And as I understand you don't deduct the £100k out before the levy is applied. So if the levy happens to be 33% and you have £450k in the bank you would lose £150k of it.

Pincher

They are talking about an exodus of Russian money from Cyprus.

They can't take money out of Russia easily, so they can't take the money back there. The London property market is going up again.

Such a hassle having money. Let me help. Give me the money, and I'll take good care of it for you. When I have enough, I'll buy an island like Tivalu, and hold assets like gold and property in a sovereign fund. I will be King, of course.

evenasus

jimjames wrote: »

Two banks as I understand it.

And as I understand you don't deduct the £100k out before the levy is applied. So if the levy happens to be 33% and you have £450k in the bank you would lose £150k of it.

I didn't mean that the €400K was in one bank and that they would try and split it now.

I meant, if they had saved €400K but always €100K in each of the 4 separate banks.

The_Green_Man_2

poppy10 wrote: »

But we did stick to those insurance policies?

I'm afraid not. The government underwrote 100% of savings, even for those in Icelandic banks, hence why those banks are now nationalised. Had Northern Rock been allowed to fail, savers would have had the first £50k of those savings paid back to them and the rest would be used to cover Northern Rock's liabilities. If there was any money left over then it would be paid back to the depositers. The tax payer would not have held their debts.

VT82

Pincher wrote: »

I have a little cash, way below the £85k FSCS threshold normally, but if I sold a house, I could easily have £500k in an account. Further more,

£80k could be ear marked for capital gains tax from the sale.
The next house purchase could need £30k in stamp duty.

So, if I decided to sell first so I can be chain free and take my time buying the next house, and they take 20% from deposits above £85k, I would pay £100k for emergency tax.

But if the emergency tax happens after I buy another house, I would pay zero.

They are only grabbing cash because it's expedient, not because it's fair.

And this was one of the points missed by all those people saying that savings returns below inflation in this country was worse than the original proposed 6% levy on deposits < 100kEUR

talexuser

VT82 wrote: »

savings returns below inflation in this country was worse than the original proposed 6% levy on deposits < 100kEUR

This is very true, however something of a special case which would apply to a minority. A huge devaluation, decade of lost growth, inflation higher than savings rates and loss of public services hits everyone except those with enough not to care.

Reaper

Glen_Clark wrote: »

Gordon Brown bailed out Icelandic Bank Investors then presented the Icelandic people with the bill!!!
As if the people are responsible for the banks!!! Not surprisingly the EU Court has rejected this.
Yet again Britain is the odd one out in Europe, and not in a good way.:mad:

No, Gordon Brown bailed out Icelandic Bank savers - there is a huge difference. Savers are not generally considered to have accepted risk, unlike bond and shareholders. Hence the fuss over Cyprus raiding savings.

As for presenting the Icelandic government with the bill it was not that unreasonable as their government had said in the event of a bank failure they would guarantee the deposits, only to renege on the guarantee when the crunch came.

Ideally only bank shareholders should have lost money in Cyprus but unfortunately that would not have been enough. Personally I think the 100,000 Euro division is the best compromise possible. It's a shame they even considered taking money below that level as it damaged trust in the rest of the EU banks.

talexuser

Reaper wrote: »

It's a shame they even considered taking money below that level as it damaged trust in the rest of the EU banks.

You can say that again in spades. Most idiotic idea imaginable to produce a run on the banks and undermine confidence in the rest of the EU.

It seems it was a Cyprus govm't idea, the quality of the original 6.75% proposal seems entirely in line with their competence in running the country and regulating their banks.

gadgetmind

It took a long time for them to get there but the final solution is sensible.

They are wiping out holders of the bank shares and the senior/subordinated bond holders. That bond holders might have escaped intact, while those taking on less (theoretically zero!) risk as depositors would have been hit, was making a mockery of capital hierarchy.

It's also right that those with <€100k get all their money back. Those with >€100k may mither at losing a fair chunk of their change BUT they knew this was the risk when they deposited (and then left!) their money in risky banks and decided that said risk was better than ... well, let's not speculate.

sabretoothtigger

the quality of the original 6.75% proposal seems entirely in line with their competence in running the country and regulating their banks.

The money will be worth 6% less in a year or so. Its swings and roundabouts, they are just stringing out the failure. That in turn seems to extending negative GDP