Raid on bank accounts in Cyprus

(358 Posts)
MrsJREwing Sun 17-Mar-13 03:46:09

Nearly 10% of savings will be taxed from private individuals savings, to save the banks.

Xenia Wed 27-Mar-13 09:33:27

Everyone wants to pass the buck. Any subprime borrower who borrowed more than they could afford is at fault. Any bank which loaned silly percentages is at fault. Any nation which spent more money than it had coming in is at fault. Let us have taking of responsibility rather than constant buck passing. Any greedy Briton who wanted 6% interest on savings in Cyprus rather than 1% in the UK took a risk just as they did when they went for the too good to be true Icelandic bank rates in the UK.

Will be interesting to see if £3bn was taken out of Cypriot banks when they were supposedly closed.

Mimishimi Tue 26-Mar-13 23:46:53

I agree with MinitheMinx. All these countries were heavily pressured by private banks to issue public debt as a means of financing government programs. Bankers made huge bonuses out of this. To repay these debts whose interest payments have spiralled out of control, they are now being pressured to steal from their own citizens. Which will again yield huge bonuses for those who implement it.. ;) And then they wonder why average Europeans have given up (below dismal birthrates for decades) and they need to import labour , it's just mind-boggling.

They are thieves, now it's just in your face.

tiggytape Tue 26-Mar-13 23:07:29

G4S (the British security firm involved in the Olympics) has been hired to guard the Cypriot banks when they re open on Thursday. But their Managing Director confidently predicts it won't be a big job:

"People have had time to digest the agreement so maybe there won't be that scenario whereby people run to the banks to withdraw"

Well that's O.K then!

MoreBeta Tue 26-Mar-13 16:02:19

The Chairman of Bank of Cyprus just resigned and rumours swirling that bank may also be liquidated.

The Cyprus central bank has asked the EU/ECB for an additional Euro 3 bn which it is thought might be the additional amount that was removed last week while banks were closed.

Young people rioting/protesting on the streets of Cyprus. This looks very ugly. No sign of banks opening yet and with potentially the two biggest Cypriot bank being closed for good - who knows when they might.

MiniTheMinx Tue 26-Mar-13 16:01:18

Thanks Domjolly, I didn't see newsnight (too busy working) I'll see if I can watch it later.

Just had a look at the Reuters link. Many very wealthy people have probably been taking their money out. So what will be left? Looks like those most effected will probably be Cypriot businesses, many won't survive this and the economy is expected to shrink by 15-20%. What a mess.

Interesting interview here about how banks create money and that private debt is actually a bigger problem than public debt.

www.youtube.com/watch?v=dQ74wWIxe4E&list=UUrmm_7RDZJeQzq2-wvmjueg Central bank and government bail outs, reinflating debt bubbles to stimulate the economy.

Domjolly Tue 26-Mar-13 15:49:59

MiniTheMinx i saw it on newsnight last night

When the ex Russian minster was pressed about the issue he said that it was theft outragous and that the EU would give the russians there money back

When the interviewer said how he said we have german and french companys in russia we can excat pressure this soundsvery bad to me i think the eu are walking a very dark path and the duch mister has already said this could becoe and i wuote a template for other countires

MoreBeta Tue 26-Mar-13 11:55:26

Domjolly - yes the London Branches of Bank of Cyprus and Laiki Bank have remained open for the last two weeks as was the subsidiary of The Bank of Cyprus in Moscow. They were allowing withdrawals in any amount apparently.

Full report was on Reuters yesterday.

I guess there will now be very very few deposits over Euro 100k left in these banks. The losses on those remaining depositors over Euro 100k will be around 50% in my view if not higher and most of those will be local Cypriot businesses and modestly wealthy Cypriots.

MiniTheMinx Mon 25-Mar-13 23:41:54

Good grief. Where did you read that?
"russia is talking about punishing german and French business"

Domjolly Mon 25-Mar-13 23:02:24

For all we know there might be 12 euro left

Domjolly Mon 25-Mar-13 23:01:50

Just heard that the banks wont open for the number of two days, also heard that the branches of the cyprus banks have been open in the rest of the eu so they have no real idea how much money has been moved out confused

And russia is talking about punishing german and French business this is not going to end well

MoreBeta Mon 25-Mar-13 19:14:22

Central banks are printing money to buy the bonds being issued by nation states. Federal Reserve owns $1.785 trillion of US Govt debt. Similalrly, the Bank of England owns a lot of UK Govt debt and ECB owns a lot of Euro Area Govt debts.

The central bansk are facilitating Govts running up debts rather than imposing real austerity. Cyprus has reached the point though that even the ECB does not want to buy any more of its debt and neither does anyone else.

MiniTheMinx Mon 25-Mar-13 16:01:16

In fact if you think about it, this cycle of creating fictitious money means that the debt is equally as fictitious when the debt is held by the bank who created the money. Central banks create money and in this way they are impoverishing nation states. Is that the real reason nations face bankruptcy? and not just because they refuse to implement progressive taxation?

ttosca Mon 25-Mar-13 13:24:03

> We all know or at least should know that our banks don't have anywhere near the amount of money in their vaults to repay all our deposits if we all wanted them. But we all trust that we'd be able to withdraw our cash should we want to. It's akin to blind faith.

In fact, the banks are legally entitled to 'print money' out of thin air (not backed by anything).

Money is created by creating debt. Banks lend out money they don't have to people who then have to pay back this fictitious money plus interest.

The whole thing is madness, really.

niceguy2 Mon 25-Mar-13 11:07:17

This Cyprus episode shows how fragile the security of things we never think about in our lives can be torn away so quickly. The banks can close over a weekend and not reopen, the gas and electric can be threatened by a bit of cold weather.

I agree. Money nowadays is not backed by gold like it once was. Nowadays money is merely backed by confidence. And what is happening in Cyprus shows what happens when that confidence evaporates.

We all know or at least should know that our banks don't have anywhere near the amount of money in their vaults to repay all our deposits if we all wanted them. But we all trust that we'd be able to withdraw our cash should we want to. It's akin to blind faith.

tiggytape Mon 25-Mar-13 10:18:08

When a government can close banks and raid personal bank accounts, you can't blame people for thinking anything's possible after that!

PigletJohn Mon 25-Mar-13 09:54:52

I heard a rumour that Elvis is still alive and works in a chip shop.

DolomitesDonkey Mon 25-Mar-13 09:41:17

"I also read rumours that Euro 1 - 2 billion of cash disappeared out of Cyprus banks last week while they were closed and it seems some depositors were allowed to remove money from Cyprus while others were trapped in by capital controls that are still in place and unlikely to be lifted for many years."

Now being a middle-class Brit I tend to sign and accept that some things simply are and that sometimes the system is too big to fight. But things like that are in fact enough to make me raise my pitchfork. Wtaf. sad

MoreBeta Mon 25-Mar-13 08:45:42

Still at least there is good news!

Three tanker loads of Liquified Natural Gas are due to dock in the UK from Qatar so at least our gas and electric won't run out this week and another one is on its way from the Carribean just in case.

This Cyprus episode shows how fragile the security of things we never think about in our lives can be torn away so quickly. The banks can close over a weekend and not reopen, the gas and electric can be threatened by a bit of cold weather.

tiggytape Mon 25-Mar-13 08:30:03

I should say will want to remove cash.
The bank controls that stop people emptying their accounts are predicted to last for months.

tiggytape Mon 25-Mar-13 08:24:31

I also read rumours that Euro 1 - 2 billion of cash disappeared out of Cyprus banks last week while they were closed and it seems some depositors were allowed to remove money from Cyprus while others were trapped in by capital controls that are still in place and unlikely to be lifted for many years.

Yes lots of rumours about an ill defined 'special payments' clause that allowed some wealthy people to empty accounts and shift money out of Cyprus despite the banks being technically closed last week.

I cant see why anyone would leave more than Eoro 100k in ANY Euro area bank now. There will be a massive withdrawal of funds once banks reopen in Cyprus and only time wil tell if that spreads into peripheral countries like Spain and Ireland and Portugal.

Nobody in their right mind would leave larger deposits in now. In fact they are predicting that much smaller savers will also remove cash. Afterall if the wealthy have already been hit, who might they come after in case of further defaults and deals?

MoreBeta Mon 25-Mar-13 08:01:23

So a deal was eventually done in the middle of the night last night to allow Euro 10 billion of rescue funds to be released to Cyprus.

Laiki Bank has been shut down, depositors under Euro 100k have been saved. Bondholders and uninsured deposit holders over Euro £100k may lose up to 100% of their money but the total loss will not be known until the 'bad bank' assets of Laiki have ben sold off. The remainder of the 'good bank' part of Laiki will be rolled into Bank of Cyprus. Cyprus banks will reopen as soon as possible. Much worse losses have been imposed on large uninsured depositors than originally expected.

All of the above is as it should be in a bank collapse with losses being imposed where they should be and large investors 'bailed in'.

BUT..... a lot of details still to work out and a lot of difficulties glossed over.

The Cyprus economy is likely going to shrink 20% and cause yet further defaults on loans as people lose jobs and businesses fold.

I also read rumours that Euro 1 - 2 billion of cash disappeared out of Cyprus banks last week while they were closed and it seems some depositors were allowed to remove money from Cyprus while others were trapped in by capital controls that are still in place and unlikely to be lifted for many years.

This story is not over by a long way and I cant see why anyone would leave more than Eoro 100k in ANY Euro area bank now. There will be a massive withdrawal of funds once banks reopen in Cyprus and only time wil tell if that spreads into peripheral countries like Spain and Ireland and Portugal.

Still stock markets are rallying this morning as everyone breathes a sigh of relief.

Xenia Mon 25-Mar-13 07:55:38

So they make those with large deposits lose 40%? Thus the rich will leave Cyprus and those who cannot help the poor who are poor themselves will stay.

We aren't I think supposed to have restrictions on free movement of capital in the EU. South Africa and many other countries abroad have capital movement restrictions and the UK used to but this will certainly be interesting.

I suppose the bottom line is if something looks too good to be true it is. Savers in Cyprus got 6% for say 5 tears when in the UK you were lucky to get 1 or 2% before tax. As UK base rate is 0.5% and inflation 3% in the UK your savings have already probably lost 10% in value so may be we have had our capital confiscation on savers already without people realising.

tiggytape Sun 24-Mar-13 22:23:04

Domjolly - pretty much what I've read from experts and journalists in Cyprus says the same. The limit may be set high in terms of who is affected but once the precedence is set that says a government can force banks to shut in order to plunder savings, they'll never be trusted again. Today it might be the wealthy suffering a 'haircut' but who on earth is going to stick around long enough to find out when / if / who it happens to next?

That’s what they mean by controls – they mean that come Tuesday, they’ll stop people taking their money out by force to prevent panic and a collapse of the banks. Which is all very well but capital controls are very controversial in a supposedly free trade arrangement – they’ll be now way to move money and goods across borders freely. And can you do that forever – as you say the moment they stop everyone will empty their accounts surely?

That’s what I couldn’t get my head around – it just seems like a spectacularly stupid plan. I didn’t know about the bond arrangements that MoreBeta explained but is there no other alternative?

Domjolly Sun 24-Mar-13 22:12:28

I just cant see what right mined person would ever put money in a cyprus bank again

Also there will be a run on the banks they can keep them closed till chirstmas the first day they open there will be cues round the block in my view if they were gonna do this they should have voted took the money then announed it

There trying to avoid a run on the banks not doing a very good job

It seems to be a weried game of stare outs who can hold there nerve if germany dont let cyprus make ther bed the ruling party will loose the
Elections of cyprus do this money grab there will be a run on the banks as soon as allowed apevery penny will be withdrawn from the country and a black market in cash will develop its like going bak to medival times were you get paid by coin ffs

They should of just declared bankruptcy pulled out of the eu and started a fresh because whats happing now is not much better

tiggytape Sun 24-Mar-13 21:42:57

And why do they have to sit up all night on a Sunday to resolve things?
Perhaps to demonstrate their dedication to getting a good deal or to give any agreement an air of last minute reprieve? I just saw the photo of the pizzas going in and wondered.

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