Saturday March 23 , 2013 updates.....
Here we go again - always the last minute drama......
http://www.zerohedge.com/news/2013-03-23/cyprus-deal-or-no-deal-anonymous-rumor-vs-euro-commission
http://www.zerohedge.com/news/2013-03-23/brief-history-money-cyprus-gasoline-runs-are-about-be-unleashed
( gasoline as well as food about to be cutoff... note items from The Cyprus Mail below )
http://www.businessinsider.com/cyprus-protesters-burn-eu-flag-2013-3
( Cypriots showing their love for the EU.... )
Sunday drama set up...... Did the Cyprus President tipoff friends - how are the rich russians and other uninsured depositors NOT tipped feeling right about now ? Don't be shocked if they find the President dead in his bath like Boris B !
http://www.dailymail.co.uk/news/article-2297383/Cyprus-bailout-President-Nikos-Anastasiades-warned-friends-money-abroad.html
and......
Recap from Open Europe.....
http://openeuropeblog.blogspot.com/2013/03/cyprus-update-halfway-to-deal-but.html
Delays - Cyprus passing everything but the one thing that matters.....
http://www.zerohedge.com/news/2013-03-23/cyprus-deposit-levy-vote-delayed-will-down-wire-70-deposit-tax-contemplated
The view from Russia / Russia strategy .....
http://english.pravda.ru/business/finance/18-03-2013/124092-cyprus_banks-0/
The view from Cyprus and Greece......
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489534
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489553
http://www.cyprus-mail.com/cash/cash-demands-impacting-supermarket-shelves/20130323
http://www.cyprus-mail.com/cash/plenty-fuel-just-not-enough-cash/20130323
Late afternoon / evening updates - March 22 , 2013.....
http://www.zerohedge.com/news/2013-03-22/cyprus-officially-passes-capital-controls-law
Here we go again - always the last minute drama......
http://www.zerohedge.com/news/2013-03-23/cyprus-deal-or-no-deal-anonymous-rumor-vs-euro-commission
Cyprus Deal... Or No Deal: "Anonymous" Rumor vs Euro Commission
Submitted by Tyler Durden on 03/23/2013 14:57 -0400
The conflicting headlines continue to spew forth from the union of European nations.Reuters CYBC is reporting that Cyprus has agreed a 'deal' with EU/IMF lenders a 20% levy on deposits over EUR100,000 for Bank of Cyprus and a 4% levy on deposits of the same amount at other lenders (and the Cypriots have dropped plans to nationalize pension funds) citing a senior Cypriot official (whodemanded anonymity). At the same time, EU Commissioner Olli Rehn emailed a statement saying that a 'deal' has yet to come forth:
- *REHN SAYS COMMISSION WORKING HARD TO FIND CYPRUS SOLUTION
- *REHN SAYS ONLY HARD CHOICES LEFT FOR CYPRUS
- *REHN SAYS `ESSENTIAL' CYPRUS SOLUTION REACHED ON SUNDAY NIGHT
So who does one believe? And with no market open to test this strawman, what will the decision-makers have to guide their choices? One thing is for sure:
- *REHN SAYS 'NO LONGER ANY OPTIMAL SOLUTIONS AVAILABLE'
- *REHN SAYS ONLY HARD CHOICES LEFT FOR CYPRUS
Via Bloomberg,
“we recognise the progress now being made by the Cypriot government towards a solution which can pave the way for an agreement on a financial assistance program”“intensive work and contacts will continue in the coming hours”“it is essential that an agreement is reached by the Eurogroup on Sunday evening in Brussels on a financial assistance program for Cyprus”“this agreement then needs to be swiftly implemented by Cyprus and its euro-zone partners”“events of recent days have led to a situation where there are no longer any optimal solutions available”“there are only hard choices left”
http://www.zerohedge.com/news/2013-03-23/brief-history-money-cyprus-gasoline-runs-are-about-be-unleashed
( gasoline as well as food about to be cutoff... note items from The Cyprus Mail below )
"A Brief History Of Money In Cyprus" As Gasoline "Runs" Are About To Be Unleashed
Submitted by Tyler Durden on 03/23/2013 14:23 -0400
With money, or the lack thereof, a popular topic of discussion in Cyprus currently, we go straight to the source, the Central Bank of Cyprus, where in prose that can only be described as the definition of unintentionally prophetic irony, we read the following:
The historical development of money in Cyprus has followed the sometimes stormy and turbulent course of the island’s political history. The various conquerors that ruled Cyprus throughout its history introduced their own monetary unit to the island. Hence, among other monetary units, the stater, the obol, Roman and Byzantine coins, the gross, the dinar, the cartzi, the para, the piastre and the pound have been used as the island’s currency.
And now the Euro, although perhaps for not much longer.
One thing is certain: the Cypriot "conquerors" are not going down without a fight. First: the gasoline is about to be taken away from the people who dared to make Angela Merxes angry. Let's see how everyone likes walking for a change. From CyprusMail:
SOME petrol stations may have to close down as they do not have enough cash to pay for fuel shipments, the head of the stations’ owners said yesterday.“We may have to temporarily close some petrol stations because they have run out of cash. This creates great concerns to those in this profession,” said the head of the petrol station owners' association, Stefanos Stefanou.“Petrol stations pay for their fuel shipment only with cash and cash is running out,” Stefanou added.“There are some petrol stations that are still accepting credit cards today, but tomorrow no petrol station will do so,” he said, asking consumers to take cash with them to carry out transactions.Small shopkeepers’ union, POVEK, issued an announcement yesterday saying that because fuel companies only supplied petrol stations on cash payments, customers also needed to pay with cash at their end.“Unfortunately there is no other solution for petrol station owners,” POVEK said.
And just to assure there is not only a bank run (when/if the banks reopen) but a gas station run too, we get the following carefully coded line:
“There is no reason for people to rush to petrol stations to fill their tanks,” POVEK said asking consumers to “show understanding so we can all get through this hard time together”.
Naturally, there is nothing that will make a near-hysterical, cashless population scramble to the nearest gas station than being told"there is no reason to rush to fill their tanks."
Gasoline, of course, is just the beginning. Because if that fails to be the required incentive, the malevolent Cypriot "conquerors" will "turn off" the heat, electricity, food, and finally water, until the Cypriot slaves come begging the Troika to take their deposits just to put everything back as it was, no matter if it only lasts for a few more weeks or months before everything comes tumbling down.
http://www.businessinsider.com/cyprus-protesters-burn-eu-flag-2013-3
( Cypriots showing their love for the EU.... )
Lionel Worrell
Lionel Worrell
Lionel Worrell
Sunday drama set up...... Did the Cyprus President tipoff friends - how are the rich russians and other uninsured depositors NOT tipped feeling right about now ? Don't be shocked if they find the President dead in his bath like Boris B !
http://www.dailymail.co.uk/news/article-2297383/Cyprus-bailout-President-Nikos-Anastasiades-warned-friends-money-abroad.html
Cypriot president Nikos Anastasiades 'warned' close friends of the financial crisis about to engulf his country so they could move their money abroad, it was claimed on Friday.
The respected Cypriot newspaper Filelftheros made the allegation which was picked up eagerly by German media.
Germans are angry at the way their country has been linked to the Nazis and Hitler by Cypriots angry at the defunct rescue deal which called for a levy on all savings.
The Cyprus newspaper did not say how much money was moved abroad but quoted sources saying the president 'knew about the possible closure of the banks' and tipped off close friends who were able to move vast sums abroad.
Italian media said the 4.5 billion euros left the island in the week before the crisis.
Meanwhile sources close to the 'troika' - the IMF, ECB and EU Commission responsible for trying to create a viable rescue deal before Monday - said that attempts to put together a 'plan B' rescue package had failed.
'The coming hours will determine the country's future,' a government spokesman in Nicosia said.
Nearly a full week after the European Union agreed to a €10 billion rescue for the island country of one million people the Cypriot parliament still hasn't approved any new deal.
and......
| ||||||
http://openeuropeblog.blogspot.com/2013/03/cyprus-update-halfway-to-deal-but.html
Saturday, March 23, 2013
Cyprus update – halfway to a deal, but the biggest obstacle remains
It’s looking as if there will be a deal in Cyprus, although there are some big obstacles to be crossed to get there and it is likely to go down to the wire.
Last night the Cypriot parliament voted to approve a few bills which will make a significant bank restructuring possible and allow the government to install capital controls if it sees necessary, here are the key points of what was approved (and what was not):
- Plan to wind down Laiki bank – good assets and insured deposits below €100,000 will be shifted into a good bank which will be merged with the Bank of Cyprus. Bad assets along with uninsured depositors above €100,000 will be put into a bad bank – these depositors could lose as much as 40% of their money.
- Ability to enforce capital controls – these are wide ranging from limiting non cash transfers to turning standard current account deposits into time fixed ones, and pretty much anything else the government deems as necessary for ‘public order and safety’.
- The creation of a solidarity fund – this will not play a large role in the bailout deal, since it was already rejected by the EU/IMF/ECB Troika as an alternative to the deposit levy.
- No deal on the bank deposit levy – Eurozone finance ministers will meet on Sunday in Brussels with the Cypriot parliament only likely to vote on a deal after it has been cleared at this meeting.
- Bank of Cyprus has survived being ‘resolved’ for now.
- The Greek bank Piraeus will take control of the Greek parts of Laiki and Bank of Cyprus.
These measures are expected to raise just over €2bn (maybe more, we’re waiting on firmed details on the solidarity fund). That still leaves €3.5bn+ to be raised to meet the €5.8bn target set by the Troika – although reports yesterday suggested this may have been raised by €0.9bn due to worsening forecasts for Cyprus. Below we outline our key takeaways from the deal.
The largest obstacle to a deal remains: Clearly, this will once again come down to the deposit levy. With a smaller amount needing to be raised, it is likely to fall only on €100,000+ deposits. As we noted yesterday a levy of between 12% - 15% looks likely, although given the bank bailout plan it could hit some big Laiki depositors especially hard.Kathimerini reports that the levy could be pushed higher and focused on a smaller group of depositors. Ultimately, though, with few alternatives left now a levy on largest depositors seems the least destructive option (but still far from ideal).
This will go down to the wire: The ECB has set a Monday deadline for a bailout deal or it will cut of liquidity to Cypriot banks. The banks are due to open on Tuesday but this could be extended if no deal is found. As long as the banks stay shut (and with use of the capital controls, see below) they may be able to buy a few days to reach a deal, allowing the ECB to reverse its decision. Still, it will be a messy few days with the Cypriot parliament unlikely to vote on the deal until the it is approved by the Eurozone and assured of passing. If the deposit levy is only on large deposits, it should gain support from DIKO (the junior coalition partner), while reports suggest some opposition members could abstain or be absent from the vote to allow it to pass.
Still, this has been left very late and the decision to approve the above measures first seems to be putting the cart before the horse. This is not too surprising though (since clearly these were easier options to push through) and reminds us of other parts of the crisis – such as the decision to approve the ESM before the EFSF was revised to be fit for purpose.
The capital controls are severe: The government has significant leeway to limit the flows of capital. People have rightly been asking questions of whether this, de facto, moves Cyprus out of the single currency. Ultimately, money is no longer fungible between Cyprus and the rest of the Eurozone and, at this point in time, it’s hard to argue that a euro in Cyprus is worth the same as a euro elsewhere. The real problem though may not be imposing the controls but removing them, as WSJ Heard on the Street points out. It is hard to see how the Cypriot economy will be able to function properly with these strict controls on and at some point questions will surely begin to be asked if it would not be better off with a devalued currency outside the euro.
Why is Bank of Cyprus not being ‘resolved’? Reports suggest the Cypriot government has fought hard to stop the bank having the same fate as Laiki. This may be because it is the largest bank and a large employer in Cyprus, but it is could also be because it remains very close to the government and is the home for some of the largest Russian depositors. In any case, avoiding the tough decision to fully restructure the banking sector is likely to make things more difficult in the future.
Greek banks are getting a very good deal: The branches of Cypriot banks in Greece have around €22bn in assets and account for 8% of all deposits in Greece and 10% of loans. Clearly they are sizeable and hiving them off helps reduce the size of the Cypriot banking sector relative to GDP and reduces the cost of the bailout. It also protects the rest of Greece from contagion. That said, Piraeus is picking up a very good deal, not least because Cypriot exposure to the Greek crisis was a key driver of the current problems Cyprus faces. The purchase was done at a symbolic €1 but the cost of recap is €1.5bn. Funding will come from the Hellenic Financial Stability Fund (the Greek bank recap fund) and the Cypriot bailout programme – €950m from the former and €550m from the latter. So these banks, investors and depositors avoid any losses despite many being entangled in the Greek crisis. The fact that Piraeus bank shares were rocketing yesterday is a clear enough sign of who did better out of this deal.
The deal has come full circle and has been very poorly managed: as we noted yesterday, we are basically back to a mix of the deal proposed by the IMF (bank restructuring) and the Eurozone (deposit levy) last Friday. The impact the events of this week will have on Cyprus should not be underestimated – there will be a huge outflow of capital (or will be whenever the controls are removed) and significant political upheaval. This has been poorly handled by both sides – the Eurozone failed to listen to the Cypriot government and was complacent about the impact of Cyprus on the wider Eurozone economy. The Cypriot government has fought to hang onto an impossible business model, focused on big finance funded by foreign deposits, and has looked to play a risky geopolitical game. Unfortunately, the ones that lose from all this are the 800,000 people who live in Cyprus.
Delays - Cyprus passing everything but the one thing that matters.....
http://www.zerohedge.com/news/2013-03-23/cyprus-deposit-levy-vote-delayed-will-down-wire-70-deposit-tax-contemplated
Cyprus Deposit Levy Vote Delayed, Will Go "Down To The Wire" As Up To 70% Deposit Tax Contemplated For Some
Submitted by Tyler Durden on 03/23/2013 08:58 -0400
While GETCO's algos were poised to set off a buying tsunami yesterday the millisecond a flashing red headline hit Bloomberg with even the hint or suggestion that Cyprus is fixed, we said to sit back and relax because Cyprus "will get no resolution today, or tomorrow, and may at best be resolved on Sunday night following yet another coordinated global bailout, (although our money is on a last, last minute resolution some time on Monday when Cyprus is closed but the European markets are widely open)."
As it turns out, we were right, following reports by major newswires that the vote on the deposit levy will only take place (if at all) on Sunday night, after the Eurozone finance ministers' meeting on Sunday.
As it also turns out, and as noted previously, the votes taken yesterday were the easy ones - obviously Cyprus will now need capital controls in perpetuity to slow down the terminal unwind of its banking system which is now, for all intents and purposes, over and will only exist, if at all, entirely though ECB liquidity injections, but the difficult decision - to complete U-Turn on the Tuesday vote just saying no to deposit tax levy - has been delayed.
The reason for the delay? Deciding how to best bring the news to Russian, and other wealthy depositors, that not only will they not have access to their funds for a long, long time, the ultimate haircut on what they thought was safe, easily accessible cash as recently as a week ago, may be a stunning 70% !
From Xinhua:
The Cypriot parliament has postponed a debate on legislation imposing a levy on bank deposits until after a Eurogroup meeting in Brussels on Sunday, parliament sources said on Saturday.The vote on the bill had been scheduled for Saturday, ahead of a finance ministers meeting to consider a revised bailout for Cyprus, following endorsement of nine bailout related bills at a day-long session of parliament on Friday.The sources could not say if and when a deposits levy bill will be debated.Troika technocrats representing the European Commission, the European Central Bank and the International Monetary Fund were at the ministry of finance early on Saturday discussing final details of the bailout.Cyprus president Nicos Anastasiades was scheduled to fly to Brussels later on Saturday accompanied by leaders of parliamentary parties to plead his position on the bailout but plans may change depending on the outcome of discussions at the ministry of finance.However his travel to Brussels has been throwing into uncertainty following the postponement of Saturday’s session of parliament.
Cyprus's bid to avert financial collapse will go down to the wire after the island said it would hold a crucial sitting of parliament only after finance ministers of the 17-nation euro zone meet on Sunday.Cyprus faces a Monday deadline to clinch a 10 billion euro ($13 billion) bailout from the European Union or the European Central Bank says it will cut off emergency funding to the country's stricken banks, spelling certain collapse and potentially pushing the island out of Europe's single currency.
The way the deal is currently structured, all deposits that have EUR 100,000 and less in deposits, which in Cyprus amounts to 361,000 of a total 371,000, will not see a deposit tax, after last week's attempt to impose a 6.75% on all "insured" accounts. However, the same can not be said for the remaining 10,000 belonging supposedly to uber-wealthy Russians, but certainly to people from all over the world, and even Cyprus.
As a result, according to the rapidly shifting plan, depositors with the biggest local bank, Bank of Cyprus, may see losses up to 25%. Per Reuters:
Cyprus is considering a levy of about 25 percent on bank deposits over 100,000 euros ($130,000) in the island's largest local lender, Bank of Cyprus, Finance Minister Michael Sarris said on SaturdaySarris told reporters that "significant progress" had been made in talks with officials from the European Union, European Central Bank and International Monetary Fund - the so-called 'troika' - and that the discussions may conclude on Saturday evening.
Cyprus' second largest bank, Cyprus Popular Bank, aka Laiki bank, where it appears the bulk of Russian cash is stored, will fare far, far worse with deposit haircuts up to a stunning 70% on the table, and that is after capital controls ease enough to allow for the deposit withdrawals !
Cyprus Popular Bank depositors with more than 100,000 euros will face losses, said Averof Neofytou, deputy president of Anastasiades’s ruling Disy party.“They will wait for many years before they see what percentage they will get back from their savings -- 30 percent, 40 percent, 50 percent, 60 percent, it will be seen,” Neofytou said during the debate in parliament.He didn’t say what could happen to larger depositors of other banks.
Nothing good, that's for sure.
But at least the bulk of the population will be spared. The problem is what Russia will do, when the ball is in its court following a vote to impair its citizens which may or may not come, as all political leaders in Russia have made it very clear this is an outright political provocation by Europe targeting purely Russian wealth.
What is also sure, is that any bulk investments in Europe, be they held by Russian, Chinese, or any other oligarchs, will now scramble to get out, knowing quite well their cash is not only no longer welcome in the Eurozone, but most likely will be used to fund bailouts of assorted insolvent European nations. Such as all of them. This could be a very big problem because according to JPMorgan, the share of large or uninsured deposits is about half of total deposits in Euroarea banking system including the peripheral countries.
Should a stealthy "uninsured" depositor run in Europe take place following this weekend, and up to half the funding of European banks go poof - that which until recently was generously provided by the same uberwealthy who are now the target of persecution seemingly everywhere - not all the ELA, LTRO, SMP, OMT, and any other acronym free ECB money in the world will be able to hold the Eurozone together.
In the meantime, those hoping for a Saturday resolution to the Cypriot expropriation of Russian wealth are urged to step back from the computer and go for a walk - it will take a while, and will likely be after the imminent onslaught of fire and brimstone from Russia which now does everything it can - including outright threats at this point - to make it clear that should Europe indeed go ahead and impair its wealthiest depositors by up to 70%, that the European winter 2013/2014 season, will be very long, and very cold.
Cyprus will try to convince the Troika to go with its Plan E .....
http://www.businessinsider.com/cyprus-leaders-take-new-plan-to-brussels-2013-3
Here's The Last-Ditch Plan Cyprus Is Going To Pitch To The EU This Weekend
The president of Cyprus is on his way to Brussels this morning in a bid to persuade Eurozone finance chiefs to accept a last-minute deal to avoid financial meltdown in the island.
The president of Cyprus is on his way to Brussels this morning in a bid to persuade Eurozone finance chiefs to accept a last-minute deal to avoid financial meltdown in the island.
Nicos Anastasiades was due in the Belgian capital on Saturday after a sitting of Cypriot parliament last night approved a series of bills aimed at securing the country a European Union bail-out.
The measures include a bill to restructure ailing Cypriot banks, and restrictions on financial transactions to stop a cash-flight from the country in the wake of last week's panic. There will also be a revenue-raising tax of less than 1 percent on all bank deposits - a move seen as fairer than the levy of 6.75 per cent originally proposed on deposits between 20-100,000 euros, which was rejected by the Cypriot parliament last Tuesday.
More measures were due to be debated by the Cypriot parliament on Saturday, aimed overall at raising the 5.8 billion euros that the country needs in order to qualify for 10 billion euro rescue package. This morning it was announced that the parliament is not expected to convene again until after the Eurogroup meeting on Sunday.
The moves came after the European Central Bank warned Cyprus that it would pull the plug on emergency funding to the country's banking sector by Tuesday if it did not come up with an alternative plan to the original levy proposals. That would have sparked the likely collapse of the country's banks, and an imminent exit from the Eurozone.
It remains to be seen, however, whether Eurozone finance chiefs will deem Mr Anastasiades's proposals up to scratch.
The Dutch head of the euro zone finance ministers' group, Jeroen Dijsselbloem, said the group wanted to keep Cyprus in the currency union.
But when asked, he did not rule out an exit.
"All kinds of scenarios are possible," he said. "The scenarios we're focusing on are to come to a joint solution in which Cyprus is saved but in which the banking sector continues in a smaller but healthier form."
Cypriot MPs, meanwhile, said that the German Chancellor, Angela Merkel, had told them that Cyprus would now have to drastically reduce the size of its banking sector, effectively ending its lucrative years as an international financial services centre.
On Friday night, the parliament adopted a restructuring bill that would pave the way for the government to split its failing banks into "good" and "bad" sections. The measure is likely to target the Bank of Cyprus and the Cyprus Popular Bank, also known as Laiki.
The tax of less than one per cent on all bank deposits was described as "the least worst option" by Averof Neophytou, deputy head of the governing DISY party.
"We owe an apology to the Cypriot people because we all share in the responsibility of bringing this place to this state," he said.
It also got grudging acceptance from ordinary Cypriots, most of whom are now desperate for financial security after a week which many feared they could lose their savings altogether.
"If we have Europe's support so our banks won't collapse, I wouldn't have a problem with a deposit tax," said pensioner Demetrakis Papanicolaou, 64.
Negotiations are still continuing though, over what levy might be imposed on wealthier savers with more than 100,000 euros.
The Bank of Cyprus said it backed the idea of confiscating some percentage of all bank deposits over 100,000 euros because of a simple lack of alternatives.
It warned Cypriots that "a potential collapse of the banking sector could lead to the total loss of all deposits above 100,000 euros and the immediate sale of all collateral accompanying non-performing loans."
The view from Russia / Russia strategy .....
http://english.pravda.ru/business/finance/18-03-2013/124092-cyprus_banks-0/
Economy of Cyprus is going to be killed
The view from Cyprus and Greece......
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489534
Cyprus bailout bid goes down to the wire
Eurozone finance ministers schedule Sunday meeting Cyprus faces a Monday deadline to clinch a 10 billion euro ($13 billion) bailout from the European Union or the European Central Bank says it will cut off emergency funding to the country's stricken banks, spelling certain collapse and potentially pushing the island out of Europe's single currency. Lawmakers are expected to debate a possible levy on big depositors in Cypriot banks to help secure the 5.8 billion euros demanded by the European Union before it gives the nod to the bailout. But with euro zone finance ministers due to meet on Sunday afternoon, a senior lawmaker in Nicosia told Reuters the island's tiny legislature would wait until after the Brussels meeting to hold its debate. "We will meet after the Eurogroup meeting," the lawmaker, speaking on condition of anonymity, told Reuters. "I don't know when." A government official, who also declined to be named, said Cypriot officials were to hold talks with representatives from the so-called 'troika' of lenders - the EU, ECB and International Monetary Fund - on Saturday morning. The official said President Nicos Anastasiades, barely a month in office and wrestling with Cyprus's worst crisis since an invasion by Turkish forces in 1974 split the country in two, may head to Brussels on Saturday depending on the outcome of the troika talks, though formal meetings are not expected until Sunday. Racing to placate its European partners, Cypriot lawmakers voted in a late-night session on Friday to nationalize state pensions and split failing lenders into good and bad banks. They also gave the government powers to impose capital controls on banks, anticipating a flood of money from the island when banks are due to reopen on Tuesday after more than a week of lockdown. Signalling a dramatic U-turn, officials said they were near agreement to tax deposits of over 100,000 euros in at least one Cypriot bank, having angrily rejected a similar measure on Tuesday branding it "bank robbery." The turnaround came after Russia rebuffed Cypriot entreaties to help its banks, where Russian citizens and other foreigners have billions of euros at stake. Cypriots were enraged by plans to hit small holdings of ordinary savers as well as large accounts. Many of the biggest depositors are foreigners, including rich Russians, and European politicians are loathe to spend taxpayers' money on a bailout if the depositors take no losses. Cypriot leaders, however, fear the damage the levy would do to the country's offshore banking industry. The tottering banks hold 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros - enormous sums for an island of 1.1 million people which could never sustain such a big financial system on its own. Much of the banks' capital was wiped out by investments in Greece, the epicenter of the euro zone debt crisis. Party officials told Reuters that discussions were now centered on a 20 percent-plus levy on depositors holding over 100,000 euros, possibly only at the island's biggest lender, Bank of Cyprus. The plan to nationalize semi-state pension funds has, however, met with resistance, particularly from Germany which made clear that tapping pensions could by even more painful for ordinary Cypriots than a deposit levy. Taking a first step toward financial consolidation, Cyprus arranged on Friday for the takeover of big Greek units of its two biggest banks by a Greek competitor. Lawmakers then gave the government the power to potentially split the good and bad assets of Bank of Cyprus and No. 2 lender Cyprus Popular Bank, also known as Laiki, and to protect deposits that enjoy a state guarantee of up to 100,000 euros. "With the process of consolidation, the depositors over 100,000 euros will wait for several years to see how much of their deposits they will collect," said Averof Neophytou, deputy leader of the ruling Democratic Rally party. "At the same time, this political decision to support this harsh law safeguards 100 percent of the deposits of 361,000 depositors in Laiki Bank," he added, referring to depositors with up to 100,000 euros. The pace of the unfolding drama has stunned Cypriots, who have besieged bank cash machines since the levy was first mooted a week ago. "Our so-called friends and partners sold us out," said Marios Panayides, 65, a protester at the parliament. "They have completely abandoned us on the edge of an abyss." Retailers, facing cash-on-delivery demands from suppliers, warned stocks were running low. "At the moment, supplies will last another two or three days," said Adamos Hadijadamou, head of Cyprus's Association of Supermarkets. "We'll have a problem if this is not resolved by next week." [Reuters] |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489553
Cypriots, troika talk as Anastasiades mulls Brussels trip
Talks with the troika, which included Finance Minister Michalis Sarris, reportedly focused on a new piece of legislation being drawn up by Cypriot lawmakers foreseeing a «haircut» of up to 25 percent on Cypriot bank deposits in excess of 100,000 euros. In comments to reporters, Sarris said that progress had been made in the talks where the Cypriot side had presented a «comprehensive proposal.» Some «additional matters» remained to be tackled, he added. Negotiations with the troika were expected to resume at 4 p.m., Sarris said. «Our chief aim is to secure the stability of the banking system,» he said, adding that «banks must open on Tuesday.» Sarris added that he expected «something» to be submitted to Parliament for a vote on Saturday afternoon or in the early evening. According to a Cypriot deputy quoted by Reuters, however, the Parliament in Nicosia would not reconvene until after Sunday's Eurogroup summit. According to the outcome of the talks with the troika, Anastasiades was to decide whether or not to travel to Brussels ahead of Sunday's Eurogroup summit where eurozone finance ministers were to try again to agree on a rescue plan for Cyprus. |
http://www.cyprus-mail.com/cash/cash-demands-impacting-supermarket-shelves/20130323
Cash demands impacting supermarket shelves
http://www.cyprus-mail.com/cash/plenty-fuel-just-not-enough-cash/20130323
Plenty of fuel, just not enough cash
Late afternoon / evening updates - March 22 , 2013.....
http://www.zerohedge.com/news/2013-03-22/cyprus-officially-passes-capital-controls-law
Cyprus Officially Passes Capital Controls Into Law
Submitted by Tyler Durden on 03/22/2013 16:59 -0400
While it is unknown if the Cypriot parliament will agree to, and enact into law, the Troika-demanded deposit haircuts, after the shocking vote of mutiny against Merkel earlier this week that saw not one politician vote for the Europe suggested deposit tax levy (and even the ruling party abstained), a vote which will once more take place tomorrow, moments ago Cyprus became the first Eurozone country to officially implement governmental capital controls into legislation. At this point it had no choice: whatever happens with the deposit haircut, or with everything else, it is now inevitable that the local Cypriots will do all they can to pull as much money from domestic banking system as possible following the complete loss of faith and trust in banks, which is why the government had no choice but to intervene with its own "controls." Sadly, this marks a milestone in the development of the Eurozone - it's all downhill, and accelerating, from here.
There are various other proposals which are currently being voted on, all of which are secondary to the Capital Controls one (the restructuring of the broke banks is perhaps the next most important one), until tomorrow's vote on deposit haircuts.
and......
http://www.zerohedge.com/news/2013-03-22/furious-merkel-cyprus%E2%80%99s-decision-test-europe-unacceptable
Furious Merkel: "Cyprus’ Decision To Test Europe Is Unacceptable"
Submitted by Tyler Durden on 03/22/2013 09:34 -0400
Europe's paymaster - that would be Germany for those who have not paid attention to events over the past four years - is not used to being snubbed. It certainly is not used to being snubbed by what every empty chatterbox and their kitchen sink will tell you is a "small and irrelevant" country (all the more so in the aftermath of last summer's embarrassing defeat in its head on confrontation with the ECB, in which the Bundesbank showed that sometimes the best offense is a gracious retreat). It most certainly is not used to not being invited to discussions involving the future of its precious mercantilist European union, especially when said union may no longer exist as we know it in 48 short hours. And Germany is angry.
From Bloomberg:
As Russia spurned the island nation’s bid for a loan, Merkel told a closed-door meeting of legislators in Berlin today that she’s annoyed the Cypriot government hasn’t been in touch with the so-called troika of international creditors for days, according to a party official who spoke on condition of anonymity because the briefing was private.Cyprus’s decision to test Europe is unacceptable, she told them.“We’re not ready to accept solutions that are full of wind,”Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union, said after the meeting. “I don’t think it’s appropriate to play poker in this matter, especially when you think that there’s a risk that two banks will become insolvent next Monday.”
In other words, how dare the pesky Cypriots think a "union" is comprised of equal "units", instead of being a despotic tyrrany in which the adjusted version of the golden rule (perhaps explaining why the Buba is pulling all its French and a lot of its NY Fed gold) applies.
Germany will have none of that nonsense.
So while "experts" wait with bated breath for the results of today's Cypriot debate and vote, the reality is it is completely irrelevant, and any of the proposed terms and "resolution" ideas are irrelevant. Why? Because without Germany's blessing (which also means the idea should have originated with Germany in the first place), there is no solution, especially not one that benefits the abovementioned paymaster.
Which means either there is a deposit tax on the wealthy, which was the whole point of this carefully structured, politically punitive exercise, or there is no deal.
Because in Europe, like everywhere else, it isquid (even if it will soon be quit)-pro-quo.
and.....
http://www.zerohedge.com/news/2013-03-22/troika-hikes-cyprus-bailout-demands-says-conditions-worsened
Troika Hikes Cyprus Bailout Demands, Says "Conditions Worsened"
Submitted by Tyler Durden on 03/22/2013 12:18 -0400
Just when you thought you knew the rules, the Troika has changed them... (via MNI)
- TROIKA SAID CONDITIONS WORSENED, WANTS BILL TO REFLECT
- TROIKA HIKED CYPRUS CONTRIBUTION TO E6.7 BN VS E5.8 BN:
SOURCE
Moar Bigger Haircuts for the rich please - and following Schaeuble's veiled threat (leave - we can handle it)...
- *SCHAEUBLE: MARKET SEES EURO-ZONE BETTER PREPARED FOR TURBULENCE
and.....
http://www.zerohedge.com/news/2013-03-22/cyprus-shifts-plan-dd-douple-dip-large-depositors
Cyprus Shifts To Plan 'DD' (Douple-Dip The Large Depositors)
Submitted by Tyler Durden on 03/22/2013 10:04 -0400
The view from Cyprus.....
http://www.cyprus-mail.com/ceo/laiki-ceo-bank-move-will-be-disaster-economy/20130322
and.......
It seems that the Cypriot government is going full circle on its plans to save its nation and its people. As UK Think Tank Open Europe notes, "it now seems we have come all the way back round to the deposit levy as a solution in Cyprus. Overnight, the EU/IMF/ECB Troika rejected the plans for a Cypriot solidarity fund, particularly one based on pension assets and gas reserve revenues (which German Chancellor Angela Merkel specifically spoke out against)." The new - Plan 'D' - (Plan A - Haircuts; Plan B - Beg Russia for Bailout; Plan C - Solidarity Fund) appears to be moar haircuts and double-dip on the large depositors (seemingly what Brussels wants anyway). Plan 'D' - a restructuring and bigger deposit levy (a 12.2% tax on deposits above €500,000 or a 9.46% deposit on deposits above €100,000 would yield the necessary €3.5bn) - "may amount to trying to burn the larger depositors twice," as the plan to shift bad assets to a bad bank (along with the large uninsured depositors) and wound down (meaning 20-40% losses) and still face the initial large-deposit-tax - leaving theRussians large depositors with 50%-plus losses.
Full circle in CyprusThinking about the plan in more detail, it occurred to us that this may amount to trying to burn the larger depositors twice. As we noted in today's press summary, the plan essentially is to move all the bad assets to a bad bank, along with the large uninsured depositors (€100,000+). These assets would then be wound down or sold off at a large discount with the depositors footing the bill (and taking losses of 20% - 40%). This, along with the merging of Bank of Cyprus and the good bank, is how the recapitalisation costs will be reduced by €2.3bn.So, the large depositors will take significant losses here and yet may still face a large deposit tax as well? That seems to be pushing the boundaries to us, although it is not impossible. Cyprus would not recover as destination for foreign investment for some time. One way to structure this could be for the tax only to be applied to depositors above €500,000 (as we suggest below) and the bad bank to apply to all uninsured deposits. Obviously, the bad bank scheme also only applies to Laiki bank, but as the second largest Cypriot bank it is still likely to account for a large amount of big deposits.Still this could see larger depositors taking up to 50% hits in some cases. We can't imagine Moscow would take that one lying down, especially given comments earlier in the week...****************** Original Post *********************It now seems we have come all the way back round to the deposit levy as a solution in Cyprus. Overnight, the EU/IMF/ECB Troika rejected the plans for a Cypriot solidarity fund, particularly one based on pension assets and gas reserve revenues (which German Chancellor Angela Merkel specifically spoke out against).The bank restructuring plan does seem to be holding water for now, so this has at least reduced the money Cyprus needs to raise by €2.3bn. Unfortunately, though, that still leaves €3.5bn to be found. As we noted a week ago, there are few options for doing it – and it slightly worries us that Cyprus and the eurozone are only just realising this.Inevitably, that has led us back to a deposit levy. Fortunately, with the amount of money needed reduced, a new version can focus on larger depositors – which is reportedly what was originally proposed by the Troika last week. Barclays has a useful table on the breakdown of deposits (via@FGoria):Going from these figures, a 12.2% tax on deposits above €500,000 would yield the €3.5bn necessary. A 9.46% tax would also be sufficient if applied to all depositors over €100,000.Either of these options would probably be acceptable to the Cypriot parliament. Sources suggest that the Democratic Party (DIKO, Cypriot President Anastasiades's junior coalition partner) has indicated its support for such proposals, which would bring the government up to 28 votes – so potentially needing only one more.There are plenty of pitfalls left, but we may get a vote this evening. That said, noises from the Troika earlier suggested they could take the weekend to review the bank restructuring deal.As has been the case for the whole of this week, uncertainty seems to be the order of the day. One thing we can take away is that a deal may be inching closer…
AND - why a debt restructuring for Cyprus can't work (@OpenEurope)
And why this Plan 'DD' may still be unwelcome in Brussels... (Via FT)
That may make sense in the medium term, but in itself does not create new money. And it is time-consuming to separate good assets from bad. There is also a risk of knock-on impacts on Greece. Many of the Cypriot banks’ bad assets are in Greece. So we may soon find ourselves looking for [more Plans... This delay] will require more support from the EU, and probably the IMF too. That is unwelcome, and will be hard to swallow in Berlin, but the alternative is financial autarchy for the island and withdrawal from the eurozone, which will expropriate bank depositors in a different way.
The view from Cyprus.....
http://www.cyprus-mail.com/ceo/laiki-ceo-bank-move-will-be-disaster-economy/20130322
Laiki CEO: bank move will be a disaster for the economy
and.......
http://www.cyprus-mail.com/cyprus/cyprus-crisis-update-friday-march-22nd/20130322
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