ATMs drained as bailout tax triggers run on bank deposits [Cyprus]

[Alan C.]

ATMs drained as bailout tax triggers run on bank deposits

In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.

The move - a first in the three-year-old European financial crisis - raised questions over whether bank runs could be set off elsewhere.

Jeroen Dijsselbloem, president of the group of euro-area ministers, on Saturday declined to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered. Although banks placed withdrawal limits of €400 on ATMs, most of them had run out of cash by early evening. People around the country reacted with disbelief and anger.

"This is a clear-cut robbery,'' said Andreas Moyseos, a former electrician who is a pensioner in Nicosia, the capital. Iliana Andreadakis, a book critic, added: ''This issue doesn't only affect the people's deposits, but also the prospect of the Cyprus economy. The EU has diminished its credibility."

. . .

Under an emergency deal reached early on Saturday in Brussels, a one-time tax of 9.9 per cent is to be levied on Cypriot bank deposits of more than €100,000 effective on Tuesday, hitting wealthy depositors - mostly Russians who have put vast sums into Cyprus's banks in recent years. But even deposits under that amount would be taxed at 6.75 per cent, meaning that Cyprus's creditors will be confiscating money directly from pensioners, workers and regular depositors to pay off the bailout tab.

Cyprus's newly elected President Nicos Anastasiades said taxing depositors would allow Cyprus to avoid implementing harsher austerity measures, including pension cuts and tax increases, of the type that has wreaked havoc in neighbouring Greece. That thinking appealed to some Cypriots, including Stala Georgoudi, 56. ''A one-time thing would be better than worse measures,'' she said.

But Sharon Bowles, a British member of the European parliament who is the head of the body's economic and monetary affairs committee, said the accord amounted to a ''grabbing of ordinary depositors' money'' billed as a tax.

The surprise policy by the International Monetary Fund, the European Central Bank and the European Commission is the first to take money from ordinary savers.

I previously posted links to stories about bank runs and capital controls.

[Brandon Buck _BB_]

"~taxing depositors would allow Cyprus to avoid implementing harsher austerity measures, including pension cuts and tax increases,~"

 

Right. Because people don't mind paying new taxes, just as long as the old ones aren't increased. Makes perfect sense.

[Magnus]

Don't call it bank robbery ...  it's a one-time tax on bank deposits!

[davehag5]

US Markets seem to be respondingto Cyprus banking problem here on Monday 3/18. A country's government taking acertain amount of existing bank accounts sets a precedent that will certainlyaffect the future of their banking system.  While Cyprus apparently is a haven for depositors from othercountries (similar to Cayman Islands & Bermuda), they are an EU country andif they seize this money it will set a precedent for other western countries toconsider as a source of revenue. The fact that some voices are calling this action “theft” may be a goodsign in convincing more people to consider the lack of morality of governmentactions of this type. Oh well. This may be the start of something.

 

 

[davehag5]

 

 

US Markets seem to be responding
to Cyprus banking problem here on Monday 3/18. A country's government taking a
certain amount of existing bank accounts sets a precedent that will certainly
affect the future of their banking system.  While Cyprus apparently is a haven for depositors from other
countries (similar to Cayman Islands & Bermuda), they are an EU country and
if they seize this money it will set a precedent for other western countries to
consider as a source of revenue. 
The fact that some voices are calling this action “theft” may be a good
sign in convincing more people to consider the lack of morality of government
actions of this type. Oh well. This may be the start of something

 

Doesn't that look better? Now getting rid of the first one.....

DH

[Alan C.]

bank holiday

[Alan C.]

Cypriot president 'warned his friends  to move money abroad' before financial crisis hit

Italian media said the 4.5 billion euros left the island in the week before the crisis.

. . .

Cyprus Popular Bank announced limit on ATM withdrawals of 260 euros per customer. Banks, which have been shut all week to prevent mass withdrawals, are to stay closed until Tuesday.

[Alan C.]

Cyprus eyes 25 percent levy on big savers at stricken Bank of Cyprus

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 Saturday.

[Alan C.]

EU finance ministers approve Cyprus bailout deal, funded by bank assets seizure

Imagine waking up to find out that as much as 40 percent of the money you thought was safely deposited in the bank was seized, without your permission, to bail out a near-bankrupt government.

That's just what thousands of large depositors in Cyprus woke up to Monday morning after European Union officials accepted a last-minute deal offered by the island's lawmakers to secure a $13 billion bailout to avert imminent financial meltdown.

[Alan C.]

Savings accounts in Spain, Italy and other European countries will be raided if needed...

[Alan C.]

Cyprus readies capital controls ahead of banks' reopening to prevent run

Cyprus will impose limits on money transfers and dispatch extra security guards to prepare for Thursday's reopening of the banks, which have been shut for almost two weeks to avoid a run during the country's financial drama.

A banking official said Wednesday that new controls will include restrictions on large-scale transfers from the country's two largest and most troubled lenders, Bank of Cyprus and Laiki. Both are being restructured and big depositors face losses of as much as 40 percent.

. . .

Banks were closed on March 16 as politicians scrambled to come up with a plan to raise 5.8 billion euros ($7.5 billion) that would qualify the country for 10 billion euros ($12.9 billion) in bailout loans from fellow eurozone partners and the International Monetary Fund.

. . .

Cypriot officials said the deal would mean the country would shift its focus away from being an international center of financial services. That is expected to cost jobs, adding to the unemployment rate which now stands at around 14 percent.

[Livemike]

 

http://ozziesaffa.blogspot.com.au/2013/03/have-russians-already-quietly-withdrawn.html

"We all know that Russian oligarchs had around $31 BILLION (maybe more) invested in Cyrus banks, which was set to be force-donated to the EU. When the EU deal outlining the seizure of all deposits over €100 000 in two of the main Cyprus banks was announced, everyone expected Russia to go apesh!te.

Never happened.

Why? Well it appears that while the Cyprus government and the EU banksta's were plotting to get their grimy hands on the oligarchs money, the oligarchs were quietly transferring their money out of the banks via other countries. It appears that the EU shonksters were so focused on closing the Cyprus banks to stop any raids that they forgot people could transfer money from outside the country.

The stealth withdrawals by Russians of course means that the two megabanks are now utterly drained of capital, and that it will probably mean that ALL deposits will be wiped out, not just those over €100 000. However, no one is saying anything about the Russian withdrawals to avoid a huge run on the banks, now that the Cyprus government has re-opened the banks."

[Alan C.]

Depositors with over $100K could forfeit as much as 60%

Mega-rich withdrew money in Cyprus before looting

Cyprus president warned friends to move money before crisis