European leaders reached an agreement with Cyprus early on Monday morning that closes down the island's second-biggest bank and inflicts huge losses on wealthy savers.
Russians would lose billions of euros under draconian terms that are aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency. "Herman Van Rompuy has brokered an agreement between the troika and Cyprus," said an EU source, referring to the president of the European council and Cyprus's trio of creditors: the European commission, the European Central Bank and the International Monetary Fund. A meeting of eurozone finance ministers that started six hours late reached an agreement in the early hours of Monday morning to finalise the fine print of the deal. Savers with deposits of less than €100,000 (£85,000) would be spared but it was thought there would be heavy losses inflicted on the deposits of the wealthy.
Laiki, or Cyprus Popular Bank, is to be closed, with its good assets transferred to Bank of Cyprus, the country's biggest bank, where savers would suffer big losses in return for equity shares. Those with more than €100,000 in Laiki would also be hit hard.
Negotiations got under way amid a hardening of the stance by the IMF and Germany, which insisted that depositors must take the hit for bailing out the eurozone's latest crisis economy.
There were signs of panic in Cyprus as a €100 limit was imposed on ATM withdrawals, with more stringent capital controls to follow if the deal is finalised....This does not require ratification by the Cypriot parliament. So the will of the
EU is imposed by force and thousands of depositors in Cypriot banks will have
their money stolen all in the cause of the mighty Euro.
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President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund sealed the deal in the early hours of Monday and it was swiftly endorsed by eurozone finance ministers.
During the negotiations, Mr Anastasiades is reported to have threatened to pull his country out of the euro.
Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, of the Netherlands, said: "We've put an end to the uncertainty that affected Cyprus and the euro area over the last few days."
Even the best-protected senior bondholders investing in Laiki Bank would see their holdings "wiped out", Mr Dijsselbloem said.
Christine Lagarde, head of the International Monetary Fund, said the deal provided "a comprehensive and credible plan to deal with the current economic challenges in the country".
The deal will not need the approval of the Cyprus parliament as the losses on large depositors will be achieved via a restructuring of Laiki and Bank of Cyprus and not a tax.
Last week a plan for a levy on all savings was rejected by the Cyprus parliament as "bank robbery" and provoked angry response from pensioners to Russian President Vladimir Putin.
The new deal, reached after a week of turmoil that threatened to plunge the eurozone back into crisis, was a "much better" outcome, Mr Dijsselbloem said.
The politicians claim the confiscation of savings in Cyprus is a "one-off" which will not be repeated in other countries. But the British press don't seem to have noticed that in about 2 weeks the Spanish government will be stealing about €3bn from Spanish savings www.snouts-in-the-trough.com/a... In Spain the theft will not just be from those with €100,000 or more, but from all the €1.5trn deposited in Spanish banks. You have been warned.
The politicians claim the confiscation of savings in Cyprus is a "one-off" which will not be repeated in other countries. But the British press don't seem to have noticed that in about 2 weeks the Spanish government will be stealing about €3bn from Spanish savings www.snouts-in-the-trough.com/a... In Spain the theft will not just be from those with €100,000 or more, but from all the €1.5trn deposited in Spanish banks. You have been warned.
wow what is the world coming to, the US and euro used to be proud of their clean and transparent systems, a good place to do business and would sneer at state robbery of assets and persecution of companies as third world banana republic tactics, oh well BP and the euro crisis have propelled both into the banana republic class, no more moral high ground!
Popular Bank of Cyprus, also known as Laiki and the nation's second largest bank, will be shut as part of the deal, with the raid on uninsured Laiki depositors expected to raise €4.2bn.
The Bank of Cyprus, the island's largest lender, survives but it will suffer a major "haircut" – a forced loss on the value of an investment.
Deposits above €100,000 in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapitalise Bank of Cyprus through a deposit for equity conversion.
Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution.
All deposits in Laiki Bank below €100,000 will be shifted to the Bank of Cyprus to create a "good bank". The rest will be placed in a "bad bank".
whoooo....the retard?...."Herman Van Rompuy has brokered an agreement between the troika and Cyprus," said an EU source, referring to the president of the European council and Cyprus's trio of creditors: the European commission, the European Central Bank and the International Monetary Fund.
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