Cyprus 37.5% Depositor Haircut Upgraded To 47.5% Brazilian Wax
by Tyler Durden
Once upon a time (in April) the Troika slammed large Cypriot depositors with a “bail-in” template that included not only a forced assignment of equity in broke Cypriot banks, but far more importantly a haircut that amounted to 37.5% of deposits over €100,000. Since then a few things have happened in Cyprus neither of them good, i.e., a record collapse in bank deposits despite capital controls and a record crash in the local real estate market. The confluence of both these events meant that as bank liabilities shrank (deposits), asset fair values (home mortgages) collapsed even faster. Which, as we warned in March, would entail bigger and more aggressive deposit haircuts. Today, we learn that while the inevitable next bailout of Cyprus is still on the table, the deposit “haircut” just upgraded to an aggravated Brazilian wax, as the 37.5% gentle trim initially proposed was revised to 47.5%.