Cyprus updates - shock turns to anger... Draghi blames Cyprus for market turmoil regarding the Cyprus bailout .........bank union employees protest .... former finance Minister Sarris decries bailout terms........Bank of Cyprus Executives delete data on their computers - good luck with that investigation !

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Two third of Germans believe Merkel has handled eurozone crisis “properly and decisively”; 59% of Germans no longer believe their savings are secure following Cypriot bailout

05 Apr 2013

A new ARD-Deutschlandtrend poll has found that 66% of Germans believe that Chancellor Angela Merkel “has handled the eurozone crisis properly and decisively”, although 75% believe that the worst of the crisis is still to come. Overall, Merkel retains her position as Germany’s most popular politician with 68% approval, while the SPD’s Chancellor candidate Peer Steinbrück’s stands at 32%, his lowest since 2005. Overall the CDU/CSU leads on 41% followed by the SPD on 27%, the Greens on 14% and the FDP on 4%. 

Meanwhile, a new Forsa poll for Handelsblatt has found that following the Cypriot bailout agreement, 59% of Germans no longer believe that their savings are secure despite assurances from Chancellor Angela Merkel, with doubts particularly prevalent among 18 to 29 year olds.
ARD Spiegel Handelsblatt Welt  

http://ransquawk.com/headlines/cyprus-finance-ministry-says-there-is-no-truth-to-reports-of-additional-depositor-losses-05-04-2013

Cyprus Finance Ministry says there is no truth to reports of additional depositor losses

Print10:00 - Economic commentary - Source: Newswires

Friday, April 05, 2013

Cyprus bailout: What are individual EU member states on the hook for?

Now remember, contributions via the European Stability Mechanism (ESM) are loan guarantees, not upfront cash. But here's the break-down of how much each EU country is on the hook for in the Cyprus bailout:



Update 05/04/2013 12.10: 
By popular request, we've been asked to put together a quick explainer/refresher of how this money will be provided. ESM loans do not require direct cash from countries but are based off loan guarantees which the eurozone countries give to the ESM. The ESM then issues debt on the market to raise the actual cash to provide the bailout loans. So, not extra cash contribution on the back of this bailout. That said, the ESM does require paid-in capital (€80bn), the payouts of which should have been factored into eurozone government budgets and certainly has been included in the bailed out countries. Also due to a eurostat ruling, each eurozone member's share of ESM bailouts will not count towards its national debt. As for the IMF, the funds usually come from the IMF's general reserve fund which countries will have already contributed their subscription (see here for more details). Again, in a sense, no new cash.

http://www.zerohedge.com/news/2013-04-04/cyprus-shock-turns-anger

In Cyprus, Shock Turns To Anger

Submitted by Tyler Durden on 04/04/2013 22:13 -0400

• Greece
 
• International Monetary Fund
 
• Reuters

For a few days, the rest of the world looked on awaiting the riots and social unrest in Cyprus that we have become accustomed to from their fellow unter-sufferers Greece and Spain; but it never came. However, as Reuters reports, the public shock (and numbness) over the tough terms of the so-called bailout is now turning to anger as million of Euros remain locked inside the country's banks. The people are "disappointed and angry," that the politicians are out of touch, and, "the big guys, who had the information, managed to take their money abroad." No one has answers for them, "I wrote to the central bank and they came back saying that it was not their competence, so whose competence is it?" as frustration boils over, "absolutely nothing adds up." But perhaps the saddest truth is that the Cypriots are resigned to years of hardship, "I am going to find myself on the street with no future, only debts. But we will fight to the end. We have nothing left to lose." It seems when a people has nothing to lose that anything is possible...

Via Reuters,

Public shock in Cyprus about the tough terms of an international bailout is turning into anger as millions of euros remain locked in the country's banks.

...

They are now demanding answers after allegations earlier this week that a company connected to the family of President Nicos Anastasiades shifted money out of one of the distressed lenders just before the banking system was effectively locked down on March 15.

Anger and impatience is rising as the results of an official inquiry into what caused the crisis, and exactly who knew what and when, is unlikely to be ready for weeks.

Banks reopened last week but Cypriots can withdraw only 300 euros ($390) a day under a range of controls imposed to prevent panicked residents from emptying their accounts or moving all their savings abroad. Anxiety is being deepened by confusion over how the hastily-imposed rules should operate.

Hundreds of bank workers protested outside parliament on Thursday, worried that they could lose much of their pension savings under the terms of the bailout deal. This stipulates that some depositors have to bear part of the rescue's cost if their accounts hold more than 100,000 euros ($128,500).

"I am disappointed and angry,"said Iacovos Louca, 53, who works at Popular Bank, which is being wound down under the 10 billion deal with the EU and International Monetary Fund. "The politicians are out of touch with our problems and the big guys, who had the information, managed to take their money abroad."

...

Lack of clear answers on where their money may end up is fuelling public frustration.

Andrew Georgiou, a 55-year-old British consultant who moved to Cyprus a year ago with the earnings from the sale of his home in London, says all four accounts he holds with Popular - even a sterling account containing just 22 pence - are blocked.

...

"I wrote to the central bank and they came back saying that it was not their competence, so whose competence is it?," said Georgiou."Nobody is explaining where anyone should go with a problem."

...

With an extensive remit ranging from the business sense of Cypriot banks hoarding a mass of Greek government bonds while others were selling them and the prudence of government fiscal policies, the judges will need a small army of consultants.

Cypriots are, in the meantime, resigned to years of hardship. Iraklis Paraskeva, 53, has three children to support, now studying in Greece. "I am going to find myself in the street with no future, only debts. But we will fight to the end. We have nothing left to lose."

http://www.cyprus-mail.com/cyprus/draghi-cyprus-blame-turmoil/20130405

Draghi: Cyprus to blame for turmoil

Published on April 5, 2013

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ECB President Mario Draghi said Cyprus' bailout was “no template”

THE EUROPEAN Central Bank yesterday put the blame for initial market turmoil over Cyprus' bailout squarely on the government, and pledged that taxing depositors would not become normal procedure.

ECB President Mario Draghi said Cyprus' bailout was “no template”, a statement designed to ease market fears that bank deposits would in future be fair game for international lenders seeking to help struggling eurozone countries.

But he was also scathing about the island’s initial plan to impose a levy on insured as well as uninsured bank depositors, even though the move was rubberstamped by the EU in the early hours of March 16. Draghi said the finance ministers and the International Monetary Fund had wanted Cyprus to help pay for its €10 billion with a levy on wealthy depositors only.

Cyprus, however, had initially also sought to charge those with €100,000 or less even though they had a bank deposit guarantee. “That was not smart, to say the least, and was quickly corrected (by eurozone finance ministers),” Draghi said. The move was not reversed by eurozone minsters however, it was rejected by the Cyprus parliament. 

Draghi said depositors with guarantees should be sacrosanct, but that it was best not to touch any depositors if possible. “You have a pecking order, ideally insured depositors should be the very last category to be touched. The (European) Commission draft directive (on banking) foresees exactly this.

“There isn't actually a specific distinction between categories of bondholders and uninsured depositors in the draft directive. But basically the point is that you, if you can, don't touch uninsured depositors,” Draghi said.

He also said it would be of no help to Cyprus if it left the eurozone, as some have floated. “What was wrong with Cyprus’ economy doesn't stop being wrong if they are outside the euro,” he said.

Draghi also sought to soothe concerns that charging depositors - called a “bail in” - would now be imposed on other troubled countries.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, caused a stir in March when he told Reuters that the Cyprus bailout, including depositor levies, could be replicated in future.

Draghi insisted this was not the case. “Cyprus is no template,” he said. “I am absolutely sure that the chairman of the Eurogroup has been misunderstood.” 

Dijsselbloem however clearly states that Cyprus would be used as a template but later backtracked when markets became spooked. 

Draghi also rejected yesterday the notion that the ECB bankers wield inordinate power over elected officials, as for example in the case the ECB threatened to cut off Emergency Liquidity Assistance (ELA) to Laiki and Popular Bank unless a bailout programme was agreed.

“We acted exactly within our mandate,” the ECB chief said. “We would have been acting politically if we had not done this. ELA could be extended only to solvent and viable banks. In the absence of a programme, these banks would not have been solvent and viable, and at that time the governing council assessed there was no programme in place [for Cyprus]. On all other occasions, there was a programme in place.”

“Cyprus events show that we are ready to act within our mandate. When the governing council objected to ELA, it did that within its mandate. It did not replace what could have been fiscal action.” 

Responding to another question, Draghi went on to say that ELA was the responsibility of the national central banks, not of the ECB – perhaps in a bid to shift blame away from the ECB for having okayed billions in emergency funding to Laiki while the bank was on the brink of collapse.

ELA funding, however, does need approval from the ECB, which is the ultimate financier. Moreover, in July last year – long before a preliminary bailout deal was clinched – Laiki was neck-deep in ELA, to the tune of some €9bn, and continued receiving these funds thereafter.

In May 2012, the state underwrote €1.8 billion to float the stricken bank. But in July of the same year, Cyprus’ sovereign debt was rated junk, meaning it could not be held as collateral for underwriting the bank, and it’s understood that at that point Laiki was therefore technically insolvent.

In June Nicosia formally requested assistance from the EU, and it’s likely that with this in mind the ECB agreed to continue providing emergency funds to Laiki. The ECB did threaten to cut off ELA in November, at which point the previous administration was forced to agree a draft memorandum for a rescue package.

http://www.cyprus-mail.com/eac/our-view-bank-employees-union-still-calling-shots/20130405

Our View: Bank employees union still calling the shots

Published on April 5, 2013

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BANK EMPLOYEES quit work at noon yesterday so they could take part in a demonstration, organised by their union ETYK which demands that bank provident funds were fully protected and bank jobs secured. The unions have not lost their arrogance, despite the collapse of the economy. Unions of the Electricity Authority of Cyprus have demanded that their provident fund deposits in Laiki, worth €27 million and those in the Bank of Cyprus (€15 million) were saved by the state.

As we had warned last week, the government was making a big mistake in saving some deposits in Laiki – universities, schools and the Laiki provident fund – because it set a precedent and hundreds of equally ‘deserving’ account holders would, justifiably, demand special treatment. Why was it acceptable to save the provident fund of Laiki employees from Laiki and not the EAC’s? And did the Larnaca Bishopric not have a right to demand an exemption of the deposit of a fund for orphans?

Once a bank is resolved, there is no justice or fairness for depositors, but the state made a big mistake in exempting some accounts. Why should Laiki employees’ provident funds be saved, when everyone else who had deposits in Laiki will lose their money? Of course, after this victory ETYK has upped its demands, now seeking that their members’ provident fund at the Bank of Cyprus is not subject to the haircut that all other deposits would suffer. 

It was granted one exemption by the government, now it is demanding another and we would not be surprised if the government did not oblige again, imposing bigger losses on the other Bank of Cyprus depositors to satisfy ETYK, so its members would lose nothing of the obscenely high retirement gratuity (in the region of €500,000) they receive and 90 per cent of which is contributed by the bank. Even if they received half, they should be grateful as the rest would go back to the bank. Of course, no politician would have the guts to stand up and say this; on the contrary, they are all demanding the provident funds are saved, regardless of what this means.

And once the provident funds are safeguarded ETYK will push for the other demand it was making at yesterday’s demonstration to be satisfied – no job losses. The Bank of Cyprus which has been forced to take on all Laiki’s staff could be pressured by the politicians to keep everyone on the payroll. The two biggest banks may have collapsed but the bank employees union is still calling the shots.

http://www.cyprus-mail.com/cyprus/sarris-bailout-terms-seismic-assault-economy/20130405

Sarris: bailout terms ‘seismic assault’ on economy

By Michele KambasPublished on April 5, 2013

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Former Finance Minister Michalis Sarris believes Cyprus was treated 'unfairly' by its lenders

CYPRUS should brace itself for an extended period of difficulty in the near term after sealing a bailout deal forcing it to forgo much of its banking sector, the former finance minister said.

Michalis Sarris, who stepped down as finance minister just five weeks into the job on Tuesday, said in an interview that Cyprus had made mistakes, but said lenders and European Union partners had treated Cyprus unfairly.

"Clearly... mistakes were made, there was excessive growth in bank credit, in government spending. But I don't think it needed to come to this. "I think this could have been corrected without this really seismic assault on the Cyprus economy," he said.

Sarris' comments came a day after he wrapped up onerous bailout negotiations with the European Union and the International Monetary Fund. He stepped down stating his job was done, and that his position was untenable since a probe into the island's economic demise was likely to include his term too as head of one of a major Cypriot lender before he became minister.

In return for €10 billion in aid, authorities had to wind down the island's second-largest bank, Popular and force heavy losses on wealthier depositors in Bank of Cyprus, the island's biggest bank.

Both banks, which held considerable quantities in Greek government bonds, suffered huge losses on a write-down on Greek debt agreed by the European Union in late 2011. That decision, Sarris said, was "very unwise".

Under terms of the bailout deal the island's budget deficit is expected to reach 2.4 per cent of gross domestic product this year, with the primary deficit growing to 4.25 per cent in 2014 .

Those deficit targets in nominal terms and as a percentage of GDP imply that international lenders expect the Cypriot economy to contract almost 8 per cent in 2013, shrink by a further 3 per cent in 2014 and return to around 1 per cent growth in 2015 and 2016.

Bailout talks were overshadowed by accusations the island's banking sector, at about eight times GDP, was opaque and facilitating money laundering. "They basically really accused us that we were sitting back and printing money, having a lot of foreign firms coming through Cyprus, offering them services and having a good time. I think that was unfair," Sarris said.

Signing the bailout deal was critical, since it removed a "protracted period of uncertainty which was killing the economy". But, Sarris said, "the prospects for the economy in the next few months are really very very unfavourable".

"I think the restrictive conditions are tending to offset any restoration of confidence that could have propelled consumption and investment spending that are key to recovery. So we are looking at an extended period of difficulty."  (R)

http://www.cyprus-mail.com/alvarez-and-marsal/mass-deletion-data-former-boc-execs-computers/20130405

‘Mass deletion of data’ on former BoC execs’ computers

By George PsyllidesPublished on April 5, 2013

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DELETION of data allegedly took place on computers belonging to senior Bank of Cyprus (BoC) executives, according to the leaked findings of a probe into the circumstances that forced the island’s biggest lenders to seek state assistance.

Alvarez and Marsal, the firm tasked with investigating why Bank of Cyprus and Laiki sought state assistance, said the information provided by BoC was incomplete and data deleting software were found on the computers of two senior executives.

“Our computer forensic technologists have found that the computers of two employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC,” A&M said. “Mass deletion of data appears to have been undertaken on the Patsalides computer on October 18, 2012.”

A&M’s findings were handed over to parliament on Wednesday.

The firm said some deletion had taken place after a data preservation notice was issued to BoC by the Central Bank of Cyprus (CBC) on August 21, 2012.

Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer.

This, according to the firm, could suggest that the computer was not used by Eliades or the hard drive was formatted or wiped by BoC IT after the former CEO left the bank or it was wiped using data removal software such as CCleaner installed on the computer.

A&M said there were more gaps in the data collection.

“We had significant gaps in the e-mail data received from BoC for the period 2007 to 2010, a key period for our scope of investigation,” the firm said.

The reason was the lack of an e-mail archiving process before late in 2010 or early 2011, the time when e-mail systems were upgraded.

No e-mail backups were performed before the upgrade, the report said.

A&M said its team was not authorised to issue subpoenas or compel anyone to attend an interview or compel the production documents and data if they did not work for an entity supervised by the CBC.

However, any conduct identified as suspicious will be surrendered to the attorney-general, A&M said, citing the CBC.

A&M looked into how BoC accumulated €2.4 billion worth of Greek government bonds (GGBs), later suffering huge losses because of that.

It also looked into BoC’s expansion to Romania and Russia.

The investigation of Laiki however, does not appear to be as detailed or in-depth.

A&M appeared – at least from the leaked documents --  to have focused only on Laiki’s merger with Greek lender Marfin Egnatia Bank (MEB), and only from the side of the CBC.

There was also no reference to the lender’s GGB holdings, most of which – €2.0 billion – had been held by MEB before the merger.

It was not immediately known why the probe did not appear to have touched upon any other aspects of the Laiki debacle, especially since according to a statement by CBC Governor Panicos Demetriades – attached to the A&M report – “Next matters to be addressed include the Cyprus Popular Bank acquisition of GGBs and international expansion, along with oversight by the CBC and status supervision.”