These days in Cyprus

[dZeus]

Perhaps. Another explanation is that Cyprus is small enough to drop so as to give a signal to other weak members that they do need to get their act together. I'm leaning towards that hypothesis.

and risk huge capital flight from Portugal, and maybe Spain and Italy too? No way they'll allow that to happen.

My question is: why don't they wipe out the equity and bond holders in these failed banks before making depositors below € 100000 pay?

[UtwigMU]

This to me is a sign to open bank account in Austria ASAP because we're next. Worst case I can reach it by bicycle in one or two days.

[Brian Ellis]

I wouldn't be too worried.

the recent dealings appear to me Germany's way of telling Cyprus that they need to take a big hit on their Russian side-business (offshore banking) in order to get money from the EU. Cyprus of course wants to check if they can get a better deal from Russia.

In the end, Cyprus is the one that gets to chose which deal is better (remain in EU and get hurt with the Russian business, or be closer friends with Russia). Either way, it's a manifestation of the EU being unhappy with Cyprus being a bit too cosy with Russian interests. In the end all the politicians involved are too scared to risk setting off a domino effect of an international banking panic.

Yes, CY made a BIG mistake cosying up to Russia and inviting large deposits. I understand that many Russkis have deposit accounts exceeding millions. OK, the interest rates are good but I'm sure they could do better putting their money elsewhere. I'm sure that many of these a/cs have benefited from accumulated interest more than any haircut imposed.

[Brian Ellis]

This to me is a sign to open bank account in Austria ASAP because we're next. Worst case I can reach it by bicycle in one or two days.

Hope your chain is well-oiled!

[Umfriend]

@Dzeus: Given the measures taken and aid given to Portugal, Italy and Spain I do not think the risk of capital flight is perceived as high even if CY falls. I assume equity is wiped-out already and I would indeed think that bondholders get to carry a burden as well but I am not sure.
@Utwig. You do that, really.

[dZeus]

@Utwig,

make sure you chose an Austrian bank with no Slovenian exposure.

[Umfriend]

And PayPal may be a good choice as well, not sure.

[UtwigMU]

And PayPal may be a good choice as well, not sure.

Paypal is worthless as it's impossible to get cash out if you don't have a Visa card. You need to buy something on ebay and sell it for cash.

Otherwise in newly formed leftist government minister for environment and spatial planning resigned after only 3 days because media dug out his country house was built without proper permits. I'm not making this up

[Umfriend]

Uh, I have Paypal linked to my backaccount. I use it only for payments about once a year or less but I am pretty sure that I can deposit on and withdraw credit from it.

[Brian Ellis]

It looks like a deal has been reached, subject to the MoU being signed by 3rd week April. Essentially all deposits >EUR100,000 will be frozen indefinitely and subject to an unspecified haircut, possibly up to 40%. Laiki Bank is finished; deposits <100,000 will be transferred to Bank of Cyprus (I have 130.45 in it!!!!). The 'own funds bail-in' will be reached with the haircut and the troika will bail-out 10bn. Several thousand jobs in Laiki will be lost.

It will be many months before we know all the ramifications.

[Dr Mordrid]

Big haircut?

Comrad Putin will not be pleased.

[Brian Ellis]

Big haircut?

Comrad Putin will not be pleased.

Good!!!

His influence over the previous government has been part of the cause of the problems. The Russian loan of 2.5bn in 2011 @ 4.5% was an enormous economic and political mistake that angered the EU.

[UtwigMU]

Good!!!

His influence over the previous government has been part of the cause of the problems. The Russian loan of 2.5bn in 2011 @ 4.5% was an enormous economic and political mistake that angered the EU.

Our bonds yield is at 5.37 and Spain's at 4.85 this is a good rate.

[Umfriend]

Yup, unless you can show others/comparables were borrowing at less than 4.5%, that was a good deal and I think (from that perspective) it was.

Got another Q though: did the CY banks indeed pay interest? AFAICS, when you're keeping black market money you are providing a valuable service that many would take at no interest compensation. That's what I thought made may Swiss (and some other) banks loads of money.

[UtwigMU]

Yup, unless you can show others/comparables were borrowing at less than 4.5%, that was a good deal and I think (from that perspective) it was.

Got another Q though: did the CY banks indeed pay interest? AFAICS, when you're keeping black market money you are providing a valuable service that many would take at no interest compensation. That's what I thought made may Swiss (and some other) banks loads of money.

AFAIK they did. Serbian mafia and the like don't see their money as black and they expect interest on it.