Cyprus decides to steal everything it can from depositors, is this like 1931 and the Credit Anstaldt bankruptcy?
By: Peter Cooper
Sunday, 31 March 2013
Depositors in the beleaguered Bank of Cyprus are now facing losses of 60 per cent on deposits over 100,000 euros as the Cyprus Government seems to have woken up to the fact that this is its last chance to steal money off these mainly foreign depositors. It’s an absolute travesty and a red letter day for European Union banks.
Bank of Cyprus customers will have 37.5 per cent of their deposits above 100,000 euros converted into what are practically worthless shares, said the Nicosia-based central bank in an e-mailed statement seen by Bloomberg. A further 22.5 per cent of these deposits will be ‘temporarily withheld’ to ensure the lender meets the terms of its recapitalization.
Even smaller depositors are currently blocked from withdrawing more than 300 euro per day via ATM from their accounts under unprecdented capital controls. The European Union is supposed to safeguard the free movement of people, trade and capital as its raison d’etre.
These capital controls also mean that the remaining 40 per cent of Bank of Cyprus deposits above 100,000 euros that are not subject to the bail-in will also be ‘temporarily frozen to ensure the lender’s liquidity’, said the central bank, though it promised that this money, ‘which won’t be used to recapitalize the lender’, will receive interest at 10 per cent above current levels and be released ‘within a short time-frame’.
To any honest observer it is pretty obvious what has happened. The Cyprus Government is looking after its own people now, and realizing that the game is up as an offshore banking centre it is holding on to these deposits under any ruse for as long as possible.
How can this be happening inside the EU? Where are the competent EU authorities? How can they be participating in a bail-in that behaves like this? What message does this send to anybody with funds in an EU bank in one of its many heavily indebted member states?
Stealing from deposits