Australian (ASX) Stock Market Forum

Shock in Cyprus as savers face bailout levy

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Banks in Cyprus to reopen on Thursday, sort of,

tinhat said:
In a televised address, President Nicos Anastasiades announced that transactions will be limited temporarily as banks reopen – to avoid bank runs.
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And some back peddling ??

In the US, stocks fell when Eurogroup President Jeroen Dijsselbloem said that the Cyprus rescue would act as a model for the eurozone.

He later clarified that Cyprus was a unique case.
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http://www.euronews.com/2013/03/25/bank-re-opening-delayed-in-cyprus/
 
Julia said:
Maybe not so carried away at all. Despite our well regulated banks here, I'm starting to have some concerns about too much in cash. Probably quite irrational, but I doubt I'd be the only one.
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I know what you mean. From your previous comments, I believe your in a similar situation to my parents, I have been trying to get my parents to "diversify" for about a year now. I hope this situation kicks them into gear.

skc said:
During the GFC I opened about 7 different online saving accounts and spread my cash between them, until the government guarantee was issued.

Australia is different in the sense that there are no external parties (like the Troika) who can force us to demand depositor's money. Not saying that the Australian banking system won't collapse - but if it does it won't be in the same fashion as Cyprus. May be it'd be more like Iceland - I don't know if the depositors there lost any notional value in their bank account - but the currency was smashed so their PPP was much reduced.
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You're probably right. Aussie banks do have exposure to overseas markets through loans and foreign assets and subsidiaries. If they do collapse it will likely be due to :

1) Foreign institutions or investors calling in loans/deposits.
2) Collapse of the housing market.

sinner said:
Martin Wolf from FT


This is a simple fact that has always been true, and moreso after the end of Glass-Steagall.

This is a stock forum where we always suggest due diligence, but when it comes to our "savings" how many here really exercise it?

Do you know the tier 1 capital ratio of the banks you loan money to in the form of deposits? CBA, which is rated AAA on local and foreign currency by Fitch, has a 10% Tier 1 capital ratio, i.e. 90c off par.

Do you view cash and bank deposits as the same thing?
http://fofoa.blogspot.com.au/2012/04/peak-exorbitant-privilege.html


Should you even utilise the "medium of exchange"/"unit of account" as a "store of value"?
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Great points. Need to read more of fofoa (and buy some bullion too lol). Great stuff. Especially the last point.
 
FlyingFox said:
I know what you mean. From your previous comments, I believe your in a similar situation to my parents, I have been trying to get my parents to "diversify" for about a year now. I hope this situation kicks them into gear.
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As it happens, a three year term deposit matured today and will be put into the market, along with another $100K or so that is sitting at call.
The selection of companies, however, is causing me some thought, along with the potential of god knows what globally.
 
They are planning police protection for all bank branches in Cyprus tomorrow. :confused: Are they worried :confused:
 
Julia said:
As it happens, a three year term deposit matured today and will be put into the market, along with another $100K or so that is sitting at call.
The selection of companies, however, is causing me some thought, along with the potential of god knows what globally.
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Unfortunately I don't think my parents are the equity type. Dad got burnt a little post 9/11 with a small managed fund account he had. Too risk-averse and intent on capital preservation. Runs in the family lol.
 
Julia said:
As it happens, a three year term deposit matured today and will be put into the market, along with another $100K or so that is sitting at call.
The selection of companies, however, is causing me some thought, along with the potential of god knows what globally.
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tumblr_mdcvxsbVjt1rxt6ik.gif.
 

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Julia said:
As it happens, a three year term deposit matured today and will be put into the market, along with another $100K or so that is sitting at call.
The selection of companies, however, is causing me some thought, along with the potential of god knows what globally.
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The only thing I trust at present is Telstra, the market is a gamble no matter what you do, but TLS seems to be protected somehow.
 
I don't know what they are whinging about...... if you put money in a bank account earning interest then you
are exposed to some sort of risk.
 
Julia said:
As it happens, a three year term deposit matured today and will be put into the market, along with another $100K or so that is sitting at call.
The selection of companies, however, is causing me some thought, along with the potential of god knows what globally.
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If you genuinely fear for bank deposits in Australia, equities is not the place to be. They, along with the $AUD will likely tank before bank deposits are at risk.

The jump-up-and-down-on-the-panic-button option is typically gold.
 
drsmith said:
If you genuinely fear for bank deposits in Australia, equities is not the place to be. They, along with the $AUD will likely tank before bank deposits are at risk.

The jump-up-and-down-on-the-panic-button option is typically gold.
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+ 1
 
Buckfont said:
Cyprus may be a long way away, however across the ditch in NZ, similar plans may be afoot.
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Yes, I came across that article a couple of days ago and it no doubt fed the fear.
FlyingFox said:
Gotta love the Kiwi's.

Curious, who bails out the insurance companies that are insuring depositors?
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Are there actually insurance companies taking on this risk? My understanding was that the guarantee on bank deposits up to $250K in Australia is offered by the Australian government.
I can't imagine any insurance company being up for it, but perhaps I'm wrong?
 
Well here's a question: let's say you had inside info that in a few months, Australian banks would be 'Cyprus-ed'. Where would you move your cash?
 
Tyler Durden said:
Well here's a question: let's say you had inside info that in a few months, Australian banks would be 'Cyprus-ed'. Where would you move your cash?
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Because we have a floating currency, the more likely scenario is that the AUD get trashed first (Also if it comes to hair-cutting deposits, it will get trashed again).

In this scenario and only if the rest of the world isn't going to hell in a hand basket then probably a mixture of foreign currency, bullion, blue chip foreign equities and possibly local property (maybe some bargains around?).

Alas if everything is going downhill then bullion looks like the only option ?? Plus maybe local property.
 
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