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Shock in Cyprus as savers face bailout levy

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Pager

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Now its a happened, could other nations in crisis decide to steal there citizens savings as well, looks an easy fix, take from those who have done the right thing and put aside some savings, and tell them they now have shares in a bankrupt bank :mad:

http://www.bbc.co.uk/news/world-europe-21814325

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.

Savers could be seen queuing at cash machines amid resentment at the charge.

The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.
 
Pager said:
Now its a happened, could other nations in crisis decide to steal there citizens savings as well, looks an easy fix, take from those who have done the right thing and put aside some savings, in Australia i think in the not too distant future Superanuation will become the target of cash grabs by government.

http://www.bbc.co.uk/news/world-europe-21814325

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.

Savers could be seen queuing at cash machines amid resentment at the charge.

The deal reached with euro partners and the IMF marks a radical departure from previous international aid packages.
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This is nothing compared to the possible headline in Australia post budget 2013.

" Labor ALP Tax superannuation funds 10% "

gg
 
I can't wait to hear Nigel Farage's response in the EU parliament.

One does not have to be a genius to realise what depositors will do if they fear their funds are not safe.
 
I'm off to Cyprus with a ship load of safes
And a concrete truck.

Holes in the ground will become very popular.
 
They've taken the nuclear option on such a tiny economy and in the process have created the real possibility of bank runs in other countries. Seems a bit myopic to me.

It seems like they're going after foreigners (especially Russian ones) with this tax, and Cypriots are just collateral damage.
 
The real problem is not just the run on banks, it is the lack of understanding by those in charge to make such decisions.

Then again, perhaps the Germans really are trying to crash the Euro to enhance their economy.
 
brty said:
The real problem is not just the run on banks, it is the lack of understanding by those in charge to make such decisions.

Then again, perhaps the Germans really are trying to crash the Euro to enhance their economy.
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The Germans obviously didn't like the optics of bailing out a banking system that has heaps of Russian mob money in it without serious sanctions.
 
This is one of the dumbest moves i have seen in a long time. Surely it wont pass through the Cypriot parliament?

World govs continue to provide no incentive to save and then wonder why their pension/social security etc debt keeps piling up :banghead:
 
prawn_86 said:
This is one of the dumbest moves i have seen in a long time. Surely it wont pass through the Cypriot parliament?

World govs continue to provide no incentive to save and then wonder why their pension/social security etc debt keeps piling up :banghead:
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I don't think they Cypriot Arians have any cash in their own banks.
It's all Russian Laundry.
I thinks it's hysterical.
Hope it brings a bit of action.
 
notting said:
I don't think they Cypriot Arians have any cash in their own banks.
It's all Russian Laundry.
I thinks it's hysterical.
Hope it brings a bit of action.
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Yeah. And Ze Germans know it too. Frau Merkel apparently is reluctant for Fritz Q Taxpayer to subsidise a few Soviet gangsters. Considering how those Russians got rich, I'd say it's Karma.
 
(CY) Cypriots lining up at ATMs to withdraw cash from banks ahead of expected deposit tax next week - NYT - Source TradeTheNews.com
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This should provide a little volatility...

CanOz
 
Sounds like a good idea to me, the super conservative and the wealthy will be hit the hardest and that's how it should be, poor people living month to month don't have much in the bank so wont suffer much...a one off 10% tax, the pain will be short and it will be over quickly.

The wealthy would of benefited the most when the economy was riding high, so only right they pay the most.
 
So_Cynical said:
The wealthy would of benefited the most when the economy was riding high, so only right they pay the most.
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They also would have paid the most in tax. The "poor" likely paid no tax. Rinsing the rich never works because they and their capital is far more mobile than the poor and middle class, and they and their capital are the ones who are paying the bills. Luminaries like Argentina and Zimbabwe go down the path of asset confiscation.

Aside from that, there would be plenty of retirees with a couple of hundred thousand euros who will have just lost 10% of their life savings.
 
Here's a little background...

I do remember from working over in Europe that Cyprus was considered a sunny place for shady people.
In the seven years since she arrived in Cyprus as a penniless, unskilled immigrant from the former Soviet Union, Galia has carved out a lucrative niche in the island’s sprawling financial services sector.

Galia, who does not want her full name to be used, is the director of a Russian-owned company and, with the help of a local bank official, she helps a Russian government official bank money in Cyprus. The transfers arrive at irregular intervals, each amounting to about $1m, says the 35- year-old Nicosia resident, now a Cypriot citizen.

Yet Galia, and thousands of others employed in the sometimes dirty business of transferring money from Russia to the Mediterrean island with a low corporate tax rate and lax financial regulation, could soon find herself out of business.

Cyprus faces intensifying pressure to tighten regulation of its financial services sector as a condition for a bailout worth up to €17bn being negotiated with the EU and International Monetary Fund.

Finance ministers will meet in Brussels today to discuss aid for Cyprus with the aim of thrashing out the terms of a rescue by the end of March. Even if they reach a deal, it could still be blocked by Germany’s parliament where suspicion of Cyprus over money laundering is strong.

Under particular scrutiny are €25bn of deposits in Cypriot banks controlled by Cyprus-based Russian companies, almost one-third of total Cypriot banking deposits. The scale of Russian-owned deposits, along with huge two-way flows of “hot money” between Russia and Cyprus, have triggered suspicions of money laundering and tax evasion, prompting the IMF to push for a “haircut” on depositors.

The IMF and Germany want to force losses on bank depositors to help reduce the size of the bailout and make the island’s debt sustainable.

...

Cyprus attracted $119.7bn of Russian “investment” in 2011 while itself transferring $129.9bn to Russia the same year, equivalent to more than five times the island’s annual output, according to Global Financial Integrity, a US-based money laundering watchdog. Raymond Baker, GFI’s director, said the amounts reflected “round-tripping” of illicit funds exported from Russia to companies based in Cyprus. The funds then flowed back as legitimate investment.
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http://www.ft.com/intl/cms/s/0/8eee4e24-8b0f-11e2-8fcf-00144feabdc0.html#axzz2NnW0O4Kd

It certainly provides pretty good justification for doing what they did. I don't think this would have occurred in any of the PIIGS. But bank runs can't really be ruled out.
 
McLovin said:
They also would have paid the most in tax. The "poor" likely paid no tax. Rinsing the rich never works because they and their capital is far more mobile than the poor and middle class, and they and their capital are the ones who are paying the bills. Luminaries like Argentina and Zimbabwe go down the path of asset confiscation.

Aside from that, there would be plenty of retirees with a couple of hundred thousand euros who will have just lost 10% of their life savings.
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Yep it is the middle class that will be hit hardest. Or even those poor with a couple thousand int he back will still be slugged nearly 7%.

I dont see how you can think it is a good idea SC. What if someone had been saving for a medical expense (something like you are i beleive) and suddenly the gov takes 7% of that off you?
 
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