Cyprus Levy on Bank Accounts

[uffington sb]

It would seem, that according to the BBC, only troops (the army) are going to be compensated.
I have emailed them to point out the difference of just TROOPS or SERVICE PERSONNEL, I suggest you do the same.
How any times have these muppets done this?



BBC News - Cyprus bank levy: UK to compensate troops and government workers

[Al R]

Lord Masher

That answer is easy.. in 2018, the new European 'bail in' regime takes effect! Big Brother will be getting even more hamfisted.

http://www.genevaassociation.org/PDF...d&Le_Lesle.pdf

The great difference between US and EU is that in US depositors are senior to bondholders. I mentioned the corporate bond holders and not anyone liable for Corporation tax because those are the people who take informed risk; not the retired plumber or nurse from Limassol.

Corporate bondholders cannot claim to be shocked if they lose money and they have been clobbered in Ireland and particularly last month, with SNS Reaal in Holland. Some investors there had investments taken off them outright - because they no longer had ownership, they couldn't claim protection via credit-default swaps.

SNS Reaal Investors Won

Bizarrely almost, demand for a new class of subordinated debt is strong; capital bonds (co-co's) are new debt instruments that either convert to equity or get written down/off when the issuer falls low on capital. Barclays, UBS and (I think) The Royal Bank of Scotland are issuing them. You might argue that as red ink disappears slowly off balance sheets, they make sense.

But the fact that cash rich Asians are predominantly buying them, you have to wonder about the due diligence, and therefore, the logic and sense.

[Herod]

I know we've all heard it before, but yet another reason for staying out of the Eurozone. Our mob may be bad, but at least they are elected (and can be removed) and any changes to tax etc have to be presented in the Budget and passed by Parliament in the Finance Act. Seems to me this deal was agreed by largely unelected bureaucrats (EU and IMF). Who now would hold funds in Italy, Greece, Spain or Portugasl, where the same thing could happen?

[peter we]

That sounds like a recipe that is likely to lead to civil disobedience, i.e. rioting, looting and a general breakdown in law and order.

No doubt the politicians will say they didn't see it coming - the law of unintended consequences!!

So people are going to riot because of a 6.5% cut? It took a 75% cut in Argentina before it made a real difference. These accounts pay 5.5-11% interest. Cyprus bank - Deposits and savings. The best interest rate - 12.5 %

And basically depend on the Germans offering protection for their very existence.

When the banks re open and restrictions lifted, do you honestly think
people will leave their money in the bank that someone has just
taken 10% of ?

I doubt it. I wouldn't and would never trust the banking system again
or the EU for deciding it can go ahead.

Let them put their money where its safe i.e German banks, I'm sure that is the intent. Most of the big depositors are Russians - they can riot in Russia (who is contributing 2.5billion to the bailout, BTW).

I've little sympathy for people who gamble on dodgy banking systems to make a higher return, if they get stung - tough. Everybody was forewarned by the Icelandic situation.

[Al R]

Peter, in principle you make a couple of good points, but Iceland was different; the g'ment was bust and refused to pay creditors.

I don't think that depositors are gambling or being greedy if they simply want somewhere 'safe' to put their money.. just sensible. Cypriot banks have been in a race for the past couple of years to generate Tier One capital (liquid money) in order to meet EU banking regs. Even the investors aren't being greedy; the relationship is calculated, mutually dependent and mutually beneficial.

The Popular Bank was almost nationalised last year because it was falling behind and ran the risk of going into default. Are people being greedy or are they not being stupid? If a bank funds are guaranteed, why would you put them with a bank that is paying less? Especially important in an uncertain economy like Nicosia's.

Savers haven't 'lost' their money, they simply exchanged part of their savings for shares - a moot point, I accept.

[Biggus]

peter we,

Err no!!! People are going to riot because they haven't got any food!!

If you read the post prior to my comment, you will see that the ATMs are apparently empty, the banks won't open until Thursday, and the shops are only taking cash...!!

If you haven't got enough cash to buy sufficient food to last until Thursday....

That is why there could be riots!!

[peter we]

but Iceland was different; the g'ment was bust and refused to pay creditors.

Actually the Icelandic Government did not refuse to pay its creditors (there is a whole load of BS you hear about Iceland that isn't true), they refused to bail out non Icelandic depositors because they didn't have a depositor protection scheme with money in it.

Cypriot banks have been in a race for the past couple of years to generate Tier One capital (liquid money) in order to meet EU banking regs

Then they are as stupid as the Icelandic banks because depositors funds are not Tier 1 or any other part of the banks capital they are liabilities - not assets.

That is why there could be riots!!

It takes 48hours without food before riots start. I think most people have enough food at home to last a good few days before starvation sets in.

[AlpineSkier]

@Peter we

The Germans have paid 10Billion for this bailout and depositors 5billion

No. That's E 10 Bn from the IMF and the ECB, so I guess Germany will be in for about E 2 - 3 Bn.

[Al R]

Peter,

Like I said, Iceland refused to pay creditors. Perhaps if it refused to pay only those creditors who wore red socks on Tuesdays that would be sufficient reason to justify it to you?

Tier 1 capital is retained core capital which is made up from stock and disclosed reserves.

[Biggus]

Reference the possibility of rioting, time will tell, it can just start as a protest which escalates, but I think the veneer of civilization can prove to be pretty thin if people don't think there will be food on the table much longer....

[peter we]

Iceland refused to pay creditors. Perhaps if it refused to pay only those creditors who wore red socks on Tuesdays that would be sufficient reason to justify it to you?

No, Iceland refused to accept that bank deposits in Iceland were its responsibility. So they were not creditors to start with.

The EEA/EU agreed. The 20k euro (100k now) protection only applies up to the amounts stored in the country's protection scheme.

If a country doesn't want or cannot pay for the 'guarantee' there is no legal requirement for it to do so. Most countries have about 1% coverage of their bank deposits.

This is the case since 2008.

Remarkably the EU has protected amounts over 100k, they should get zilch. In fact why is the EU doing this, far too generous.

[500 above]

So people are going to riot because of a 6.5% cut? It took a 75% cut in Argentina before it made a real difference. These accounts pay 5.5-11% interest. Cyprus bank - Deposits and savings. The best interest rate - 12.5 %

People have rioted for less. Just look at any Cypriot football match! These guys have had enough. Peter, Cyprus has the most expensive electricity in Europe, highest priced milk, highest priced bread, a VAT increase in January, fuel has gone up 20% in two months, 14.7% unemployment (registered) and people can't put food on the table... See this article from January.

Urgent appeal to help Paphos needy - Cyprus Mail

Oh, and the Ukranian based savings link you provided certainly isn't indicative of any Cyprus interest rate I've ever seen. Infact, the website looks home made. Certainly not a 6.5% cut, I assure you. You would be lucky to get 3-4% on a fixed savings account in Cyprus through the mainstream banks, and nothing on a current account. Of course, you probably know that a local defence tax is already deducted annually from the total account balance on top of pretty high bank charges.

Watch this space.

[Capetonian]

I am surprised that nobody has mentioned that France has practised legalised appropriation of assets, L'impôt de solidarité sur la fortune, for years : Wealth tax in France: Our comprehensive guide to French wealth taxation - The Connexion

[AlpineSkier]

But Cape, what's the difference between this and any other tax ? It wouldn't make any difference to me ideologically if they taxed cabbages or tea: the total take ( from me and for the country ) seem to be the only relevant issues. I see of course that this (out-of-date ) article mentions the political slant to the tax, but all taxes tend to have signifcantly greater effects on particular groups such as drivers, families, drinkers, smokers etc .

[Capetonian]

I think what fiundamentally differentiates this tax from others is that whilst generally tax is levied on entry (ie when you get the money) and on exit (when you spend it and when you die), the French tax you for having been sufficiently provident to accumulate assets to carry you through old age as you are taxed, on an ongoing basis, on your 'wealth'. It stinks of envy and socialism.

[ColdWarWimp]

Food Riots

No need for food riots. As of 8PM (local) last night supermarkets & garages were still accepting payments by bank card.

The main problems are due to no cash being available at the ATMs. I could not draw cash even on my UK bank card from any of the ATMs in my village, they have not been replenished since Thursday.

My firewood supplier has always been cash only operator, so I guess I should be thinking of modifying my log burner to run on petrol!

CWW

[ian16th]

500

I've just managed to use one.

Not to make a deposit, I assume

[teeteringhead]

Suspicious bar steward that I am, I can't help but notice that the Government has agreed to reimburse "those serving their Country". Question is, does that include dependants?

However unfair, it is clearly equitable if Mrs Baldrick, w/o Pte Baldrick, who works in a cafe downtown, "on the economy", should be in the same position as her co-worker Mrs Blighter, w/o ex SSgt Blighter who retired after his 22 to run a bar in Limassol.

But what if Mesdames Baldrick and Blighter work in the NAAFI within an SBA, as the SBAs are in many ways legally NOT in Cyprus - there's a clue in the name after all!

And then what of Mrs Upwardly-Rupert, the svelte wife of Major U-R of the Fractional Cavalry? She doesn't work (natch) but may well have some of her trust fund "available" to her in a local account.

As ever, knee-jerk reactions by pollies often suffer from unintended consequences, and make for unfair results.

[A2QFI]

Cyprus Parliament voting at 1600 UK time, PM needs 29 votes and 24 MPs will vote against so it will be close. Apparently Merkel did not want to be seen as supporting the money laundering schemes of Russian oligarchs so the terms for a bail-out were a bit harsh, allegedly.

[500 above]

Looks like the vote will be held on Tuesday now.

NEW Vote on deposit levy changed to Tuesday as Germany says open to changing Cyprus deal - Cyprus Mail