Re: New EC Thread

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Cyprus agrees €10bn bail-out deal with eurozone


Cyprus has agreed a last-ditch deal for a €10bn bail-out that will safeguard
small savers, inflict heavy losses on uninsured depositors, including wealthy
Russians, and keep the country in the eurozone.








Deposits above €100,000 in Bank
of Cyprus and Laiki bank will be frozen and used to resolve Laiki's debts and
recapitalise Bank of Cyprus. Photo:
REUTERS





By Martin Strydom and agencies

6:15AM GMT 25 Mar 2013

86 Comments




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 its 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.


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".




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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.



^{Christine Lagarde, Jeroen Dijsselbloem and Olli Rehn at the press
conference. Photo: Getty.}

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 final bail-out will also involve a Cypriot government austerity
programme, privatisations and tax changes at a time of deepening recession given
job losses at banks and companies losing out on deposits.

European Union euro Commissioner Olli Rehn said new economic forecasts for
Cyprus would need drawn up quickly to take account of the deal.

Mr Rehn said the Cypriot government would decide when to lift capital
controls, which saw daily withdrawal limits at cash machines reduced to as
little as €100 a day on Sunday.

The European Central Bank had threatened to halt life-support funding for
Cyprus on Monday if there was no deal, but Mr Dijsselbloem said he expected that
support now to continue.

This latest deal means Cyprus becomes the fifth eurozone country to win
international aid for its banks, after Greece, Ireland, Portugal and Spain.

News of the Cyprus deal boosted the Asian markets Monday. The euro also
enjoyed a bounce, as investors bought on the back of a deal they hope will draw
a line under the crisis, which sent shares tumbling last week.
==========================
This is daylight robbery for Bank customers with over E100,000 in the bank and will have a long term effect for anyone considering investment in Cyprus.

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Cyprus Savior Should Be Turkey Not Russia, Standard Bank Says


By Benjamin Harvey - Mar 21, 2013 10:55 AM GMT


The financial crisis in Cyprus is an historic opportunity for Turkey to win peace and bolster its European Union accession bid by offering a bailout, Standard Bank Group’s chief emerging-market economist said.
Turkey, which occupies northern Cyprus, should offer aid in return for an agreement to the terms of the 2004 Annan peace plan for unification of the island, Tim Ash wrote in a report today. The plan, named after former United Nations Secretary-General Kofi Annan, would create a federation of two states and was approved by Turkish Cypriots in a referendum in 2004. It was scrapped after rejection by Greek Cypriots.
The European Union and Russia are “both seeking to extract a pound of flesh for any bailout,” and Cypriots may be better off going to Turkey, Ash wrote. A deal would allow Turkey to“save a very big chunk of the substantial aid -- and significant military spending -- flows it pumps into northern Cyprus each year, and the north would instead find itself open to EU structural fund flows,” Ash said.
Cyprus has been divided since Turkey invaded the northern third of the island in 1974 to stop an attempted coup seeking to unify the island with Greece. Cyprus joined the EU in 2004, represented by the internationally recognized Greek Cypriot government in the south. The dispute has been a stumbling block in Turkey’s EU talks.
Turkish aid would “send a clear message to some of its foes in core continental Europe that Turkey has indeed matured and is worthy of a place at the heart of Europe,” Ash said.
The bailout cost at 7 billion euros ($9 billion) would be“relatively small change” for Turkey, equivalent to a little over 1 percent of GDP, and would be repaid by a “peace dividend,” progress on EU accession and potential energy dividends from Mediterranean exploration, Ash said.
Cypriot Finance Minister Michael Sarris, who is in Moscow today negotiating aid, should be told “he is in the wrong capital,” Ash said.

[Panda]

General comments from Cypriots, Bankers , Businesses etc is very negative. One reporter says this is unchartered Territory and when the Banks open tomorrow no one knows whether there will be a run on them.
1. Merkel is said to be pleased at the result , but she did look very tired when being interviewd.
2. The Cyprus Banks are to be split up into good and bad Banks and Laika banks will be split up
3. Althought the ECB has agreed to lend E8.5 Billion , much depends on what the Russians decide to do about keeping their money in Cyprus, the 30% tax is bound to act as a deterrent.
4. A spokesman for the Produis? Party in Cyprus says many Companies will feel the pinch and no one can foretell the outcome.
5. Deposits below E10,000 will be moved to Bank of Cyprus

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http://news.sky.com/story/1069277/cyprus-bailout-deal-wins-eurozone-approval

It is said that the two Biggest Banks , Popular Bank and Bank of Cyprus will be tested when the banks open on Tuesday on whether there is a rush for Customers to close or reduce their Balances. .

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European Union: Politics turns back to the Athens agora

25 March 2013La Repubblica Rome

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Oliver
The institutional and European democratic crises are pushing leaders towards tricky choices in terms of governability. Would it not perhaps be better to move toward new forms of participation that better match citizens' needs?

Barbara Spinelli“No experiments! Keine Experimente!” said Chancellor Konrad Adenauer to the German people. That was in 1957. After the defeat of Adolf Hitler, a solid democracy was born and yet there was something narrow-minded and inappropriate in this warning that was addressed to a defeated population, which had succumed to the most horrendous of experiments only years before. In the depths of the German mind, this fear of experimenting has not gone away.
But today the situation is totally different in both Italy and in Europe. The crisis has unmasked nation states as being powerless and democracy is in tatters everywhere. Politicians and citizens are out of touch with each other, with the former shut away in their lairs and the latter desperate to be heard. Unless we see ourselves as having been beaten, now is precisely the time for experiments in democracy. It is time to ditch the conventional ways of doing things that politicians and journalists continue to hang on to out of laziness and convenience. Manuel Castells wrote in La Vanguardia on March 2: “Innovate or die”.
The custodians of the old order can't see the link between the various crises: the economic, European, climatic and democratic problems. The citizens’ complaints are not sinking in, even if the signals are clear. Representative democracy is like a Titanic that is on the way down.
There is a desert between those who govern and those who are governed with a mirage of representation camped in the middle. The trade unions are weak, the parties worn out and the press is serving those in power more than readers.
But in this vacuum there are citizens who want to rouse from their slumber, test out other paths and restart democracy. Today, Italy is at a precipice, teetering but not toppled. The new beginning called for by Castells will not generate a government. The first changes will take time to come through. Meanwhile, those attached to their old habits will lament the ungovernability of the country. And from the 1970s they have been busy being afraid and not seeing the cracks that are splitting apart the stability that they say they crave.
Ungovernability is not new

In Europe, we've seen a spectacular case of ungovernability. It's the case of Belgium. For 541 days, between June 2010 and November 2011, the country had no government. Quickly it became clear that it was not just a squabble between Flanders and Wallonia. The very structure of representative democracy was crippled. The Belgian experience is instructive because of its negative effects but also the passion of those who transformed it.
In the 18 months of stasis, the caretaker government ruled, with a straight face, with its obsolete majority. It approved a belt-tightening budget in 2011 and held a six-month European presidency in 2010. It even took part in the Libyan war. In Italy it would be like extending Monti's stay: a unsatisfactory result for those who won at the ballot box by promising to “innovate or die”. The nation states are collapsing. Europe is not yet a federation of solidarity and the status quo is safe and sound. The lack of government creates an unheard of power, freer vis-a-vis the sovereign people: it's a bit like the automatic pilot that, according to Draghi, protects stability from the “excess” of citizen demands.
But the Belgian experience has also produced major novelties. Aware that democracy was at play, citizens made their move. They began to experiment with the structures of the ancient Greek agora, and the Popular Action that goes back to "actiones populares" of Roman law: Citizens can push for their interests, not their personal ones but those of the community. And as they are the holders of sovereignty in democracy, they will be the ones to invent measures focussed on the common good. There is no other way to defeat real anti-politics: the predominance of the markets and austerity that impoverishes without reducing debts and divides Europe.
We are the state, says Beppe Grillo's Five Star Movement in Italy. And the idea of the movement emerged from the Belgian lack of government. It is called G1000 and emerged during this period of ungovernability thanks to four people; an archaeologist, a sustainable economy expert, a political scientist and an actress). The first summit of the 1000 was held on November 11, 2011, in Brussels. The founding manifesto makes a list of the flaws in representative democracy and suggests remedies.

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British expats in Cyprus face eurozone raids on their savings


Three quarters of a million Britons living in Europe could see their savings
raided to help save the European Union's single currency following the Cyprus
debt crisis.







































By Bruno Waterfield, in
Brussels

9:43PM GMT 25 Mar 2013


135 Comments




A senior eurozone figure on Monday suggested the plan to save Cyprus could
serve as a template for rescuing other troubled EU states.


Under the terms of the Cyprus bailout, any savers with more than £85,000
deposited in either of the island’s two main banks - Laiki and the Bank of
Cyprus - will lose between 40 and 100 per cent of their money.


In return for levying this ‘haircut' on deposits, Cyprus will receive the
international funds necessary to keep its troubled banks afloat.


Jeroen Dijsselbloem, the Dutch chairman of the eurozone, suggested that this
structure could become the model to be applied across Europe, where banks in
Spain, Portugal and Italy are also in trouble.


“If there is a risk in a bank, our first question should be ‘Okay, what are
you in the bank going to do about that? What can you do to recapitalise
yourself?’,” he said.



Related Articles

• 
  Cyprus agrees €10bn bail-out deal with
  eurozone
  25 Mar 2013
  
• 
  Unprecedented cash rations in Cyprus as
  last-ditch talks held
  16 Mar 2013
  
• 
  Cyprus deal sets 'worrying' precedent
  
  25 Mar 2013
  
• 
  Eurozone offers Cyprus the exit
  24 Mar 2013
  
• 
  Cyprus facing ruin regardless of deal
  
  24 Mar 2013
  
• 
  'There is no future here in Cyprus'
  25 Mar 2013
  

“If the bank can’t do it, then we’ll talk to the shareholders and the
bondholders, we’ll ask them to contribute in recapitalising the bank, and if
necessary the uninsured deposit holders.

“If we want to have a healthy, sound financial sector, the only way is to
say, ‘Look, there where you take on the risks, you must deal with them, and if
you can’t deal with them, then you shouldn’t have taken them on.”

More than 750,000 British expatriates have money in EU bank accounts,
including in countries hit by the eurozone crisis such as Spain, Portugal, Italy
and Greece.

Rhiannon Davies, the editor of the Shelter Offshore website for
expatriate investors and savers said the latest announcement was “very worrying”
after Cyprus, previously seen as safe, had “sent a shiver down everyone’s
spine”.

“It is absolutely shocking and disgusting. This will really make people
reconsider their position. Nothing and nowhere is safe,” she said.

Dmitry Medvedev, Russia’s Prime Minister, gave a taste of Moscow’s
displeasure over the Cyprus rescue plan yesterday when he said: “the stealing of
what has already been stolen continues”.

The island’s banks - except for Laiki and the Bank of Cyprus - will reopen on
Tuesday.

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The comments are interesting, this one is the most popular .




Realismista

41 minutes ago




So, what happens when the £10bn raised in this "Bail Out" (??) has gone, the
country's GDP has dropped through the floor, the bank accounts are empty and
Cyprus needs to raise the next £10bn????

Do they then seize people's assets and put them up for sale at auction?

The eurozone has entered a new and dangerous phase called "complete bloody
madness"...

• 
  Recommended
  by 14 people
  
• Recommend
  

[Panda]

Cyprus Crisis: Banks Shut Until Thursday


The crisis in Cyprus is far from over as it seeks to
prevent a run on bank deposits despite most savers being spared bailout
pain.


8:57am UK,
Tuesday 26 March 2013

The Greek-Cypriot President gave a TV address to reassure
his people

• 
  
• 
  
• 
  
  
  
  
  
  The closure of Cypriot banks has been extended until Thursday,
  despite the bailout deal with Brussels to avert the nation going bankrupt.
  
  Depositors had been told that banks, with the exception of the two biggest
  lenders Bank of Cyprus and Laiki, would re-open on Tuesday.
  
  But a decision was taken by the Cypriot central bank overnight to keep all
  branches closed while officials completed the restructuring of the biggest banks
  and introduced wider capital controls to prevent a possible run on deposits.
  
  The 10bn euro (£8.5bn) bailout for Cyprus was secured when politicians agreed
  to seize cash from bank depositors with more than 100,000 euros in their
  accounts.
  
  It amounted to a 30% hit on the money held by people banking with Bank of
  Cyprus and Laiki.
  
  The country's president assured his people the rescue package he struck with
  the EU and International Monetary Fund was in their best interests, despite the
  prospect of years of financial pain ahead.
  Unemployment and poverty levels are expected
  to soar in Cyprus
  Nicos Anastasiades agreed to close down Laiki as part of the demanded reforms
  of the Cypriot financial sector - brought to the brink of collapse by its
  investments in neighbouring Greece.
  
  The capital controls, preventing people moving funds out of the country,
  would be temporary, he promised.
  
  Cash machine withdrawals remain restricted while the branch shut-down is said
  to be hammering businesses, which have been without access to their funds for
  more than a week.
  
  European leaders said a chaotic national bankruptcy that might have forced
  Cyprus from the euro and upset Europe's economy had been averted by the rescue -
  though investors in other European banks were alarmed by the precedent of losses
  for depositors in Cyprus.
  
  The raid on uninsured Laiki depositors is expected to raise 4.2bn euros of
  the 5.8bn the EU and IMF had told Cyprus to raise as a contribution to the
  bailout, according to Dutch finance minister Jeroen Dijsselbloem.
  
  The politician, who heads the so-called Eurogroup of finance ministers, also
  spoke of the need for lenders to banks to accept the potential risks of their
  failure.
  
  The comment - seen as support for potentially using the Cypriot bailout model
  elsewhere in the eurozone - had a knock-on effect by raising the cost of
  insuring holdings of bonds issued by other banks, notably in Italy and Spain.
  Global equity markets and the euro also retreated.
  
  While Russia was angered that Russian depositors of Cypriot banks would
  suffer huge losses, President Vladimir Putin has ordered officials to
  restructure a loan Moscow granted to Cyprus in 2011.
  
• Related Stories
  

[Badboy]

THE WORD MIGHT GO OUT TO OTHER BANK HOLDERS IN OTHER EEC COUNTRIES,SPEND YOUR MONEY BEFORE THE EC GETS HOLD OF IT.
PERHAP THE RICH SHOULD ASK THEMSELVES,WHERE DID IT ALL GO WRONG.

[Panda]

THE WORD MIGHT GO OUT TO OTHER BANK HOLDERS IN OTHER EEC COUNTRIES,SPEND YOUR MONEY BEFORE THE EC GETS HOLD OF IT.
PERHAP THE RICH SHOULD ASK THEMSELVES,WHERE DID IT ALL GO WRONG.

The Banks Badboy, the Bl***y Banks. The rich are O.K. 30% Tax is not going to affect the Oligarks, it's the Cyprian Businessmen who will suffer the most, Don't worry, as we speak the tax Dodgers are finding another Country to put their money in. The Troika have played a dangerous game and are probably already making plans for when Cyprus exits the EU. Now what is going to happen about the 4 or 5 Countries due to join, all poor. !!!

[Panda]

Cyprus: Money-laundering audit casts shadow over bailout

26 March 2013
Presseurop EUobserver.com



Amid the dramatic twists and turns of the Cyprus rescue funds crisis, the matter of the EU-sponsored probe to determine whether Cypriot banks launder money for Russian criminals has dropped off the radar, writes EUobserver.
The 11-day investigation, which began on March 20, is being carried out by Moneyval, part of the Strasbourg-based Council of Europe dedicated to investigating money-laundering, and a second undisclosed private international audit firm appointed by the Cyprus Central Bank. However, the news website fears that the issue of money-laundering may prove a stumbling block for the rescue plan, saying –

The German government pushed for the probe in the first place because the Social-Democrat opposition threatened to veto a Cypriot rescue on money laundering grounds. [...] It is likely to come back with a vengeance when the Dutch, Finnish and German parliaments vote in April on whether the EU should lend Cyprus the €10 billion it needs.

Furthermore, the website questions what the audits can achieve in such a tight timescale, pointing out they have to assess Cyprus’s more than 40 banks holding some €13t

• 
  
• 
  

[Panda]

What a mess the EU is in , will all Countries be vetted for money laundering when they want a Bail-out ? The Troika is not interested in bailing out Cyprus, they are more interested in weeding out Laundered money! How many major Banks around the World are guilty of money laundering.? I think Merkel has engineered this to appease the Germans because of the election in September, but how will other Countries react . not necessarily those maybe needing bail=outs in the near future, but those Countries who believe this 30% tax is wrong .

The Banks will not open until Thursday now and the Parliament face increasing criticism and protest Marches .

[Badboy]

HERE'S A THOUGHT,MAYBE BUSINESSES IN CYPRUS WILL ONLY BE ABLE TO DO TRANSACTIONS VIA PAYPAL OR SOMETHING SIMILIAR.

[Panda]

HERE'S A THOUGHT,MAYBE BUSINESSES IN CYPRUS WILL ONLY BE ABLE TO DO TRANSACTIONS VIA PAYPAL OR SOMETHING SIMILIAR.

I doubt it Badboy, many people wouldn't have computers and they can't get into the Banks , only draw a set sum from the ATM Machines.

[Panda]

1. 
   

All British expats face eurozone raids on their savings


Three quarters of a million Britons living in Europe could see their savings
raided to help save the European Union's single currency following the Cyprus
debt crisis.
































By Bruno Waterfield, in
Brussels

9:43PM GMT 25 Mar 2013


700 Comments




A senior eurozone figure on Monday suggested the plan to save Cyprus could
serve as a template for rescuing other troubled EU states.


Under the terms of the Cyprus bailout, any savers with more than £85,000
deposited in either of the island’s two main banks - Laiki and the Bank of
Cyprus - will lose between 40 and 100 per cent of their money.


In return for levying this ‘haircut' on deposits, Cyprus will receive the
international funds necessary to keep its troubled banks afloat.


Jeroen Dijsselbloem, the Dutch chairman of the eurozone, suggested to the
FT and Reuters that this structure could
become the model to be applied across Europe, where banks in Spain, Portugal and
Italy are also in trouble.


“If there is a risk in a bank, our first question should be ‘Okay, what are
you in the bank going to do about that? What can you do to recapitalise
yourself?’,” he said.



Related Articles

• 
  Cyprus agrees €10bn bail-out deal with
  eurozone
  25 Mar 2013
  
• 
  Unprecedented cash rations in Cyprus as
  last-ditch talks held
  16 Mar 2013
  
• 
  Cyprus deal sets 'worrying' precedent
  
  25 Mar 2013
  
• 
  Eurozone offers Cyprus the exit
  24 Mar 2013
  
• 
  Cyprus facing ruin regardless of deal
  
  24 Mar 2013
  
• 
  'There is no future here in Cyprus'
  25 Mar 2013
  

“If the bank can’t do it, then we’ll talk to the shareholders and the
bondholders, we’ll ask them to contribute in recapitalising the bank, and if
necessary the uninsured deposit holders.

“If we want to have a healthy, sound financial sector, the only way is to
say, ‘Look, there where you take on the risks, you must deal with them, and if
you can’t deal with them, then you shouldn’t have taken them on.”

More than 750,000 British expatriates have money in EU bank accounts,
including in countries hit by the eurozone crisis such as Spain, Portugal, Italy
and Greece.

Rhiannon Davies, the editor of the Shelter
Offshore website for expatriate investors and savers said the
latest announcement was “very worrying” after Cyprus, previously seen as safe,
had “sent a shiver down everyone’s spine”.

“It is absolutely shocking and disgusting. This will really make people
reconsider their position. Nothing and nowhere is safe,” she said.

Dmitry Medvedev, Russia’s Prime Minister, gave a taste of Moscow’s
displeasure over the Cyprus rescue plan when he said: “the stealing of what has
already been stolen continues”.

The island’s banks - except for Laiki and the Bank of Cyprus - will reopen on
Tuesday.

[Panda]

Cyprus: British Expats Facing Cash 'Nightmare'


British expats tell Sky News they wish they had never moved
to Cyprus as they face losing their life savings in the bailout plan.


2:26am UK,
Wednesday 27 March 2013



Video: 'We Wish We Never Moved To
Cyprus'
Enlarge

• 
  
• 
  
• 
  

By Tom Parmenter, in Limassol

Some British expats in Cyprus are facing a "financial nightmare"
after the country's unprecedented EU bailout.

After nearly four decades of hard work in the UK Terry and Hazel Rose thought
moving to Pyrgos in southern Cyprus would give them the perfect retirement.

They brought everything with them from Maidenhead in Berkshire and hold many
assets including bank deposits over the 100,000 euros (£85,000) threshold.

They are likely to be subject to a levy between 30% and 40%.

Terry, who spent most of his career working for the British Army, told Sky
News: "It's disgusting, it is my money, fair enough if you want to tax money
people have earned in Cyprus but this is mine."

"It is a nightmare and yes I'm very angry."

With every bank still closed they have emailed their bank manager but have
heard nothing back so simply don't know if a big chunk of their life savings
will vanish.

Hazel added: "We love Cyprus, don't get me wrong, but this is the final
straw. Sometimes I wish we'd never moved out here."

Their house is now in negative equity and moving back to the UK just isn't
financially viable.

At the 'Taste of Britain' cafe and deli in Limassol almost all expat
customers are concerned about what may lie ahead.
Banks are due to open again on
Thursday
Owner Ann Bruce who moved here from Lancashire nine years ago told Sky News:
"A lot of people come in here with very sad stories.

"It is frightening that the banks, an official organisation, that for years
we have trusted, now you can't trust them any more."

The bulk of the 60,000 British expats live in the resorts that stretch along
the coastline of Cyprus but so too do many wealthy Russians.

Amongst the Brits there are deep suspicions that some Russians were tipped
off about the crisis and moved large amounts of money out of Cyprus.

It is hard for people to prove but British business owners told Sky News they
have consistently heard anecdotal evidence that Russians were withdrawing
massive amounts of money in the days before the crisis began.

British expats though can only concentrate on their own affairs.

Chris Parry, originally from Lincolnshire, now works as a financial advisor
for 3D Global around Limassol and has been busy organising forums where expats
can turn up and ask questions about what the financial crisis may mean for
them.

He told Sky News: "In the great words of Dad's Army we're saying 'Don't
panic' but most of my clients are naturally very worried.

"Most people who move out here are pensioners and the money they bring out
here that's it, they can't add to it."

Banks in Cyprus are now due to open on Thursday and extra security staff are
being drafted in to help control the crowds of people that are likely to turn up
demanding money and information.

================================================
Demonstrations yesterday by Bank Staff furious that they will lose their jobs and with the current unemployment in Cyprus asking where they will find another Job. It is intended that the two major Banks will re-open on Thursay but The Banks fear a run on the banks and cannot find enough protection to avoid a stampede of depositors waiting to take their money out. The Cypriot Government might well be wondering if it would be better to leave the Euro .

[Panda]

March 2013 Last updated at 18:30]




Cyprus making 'superhuman' effort to reopen banks by
Thursday





The BBC's Paul Mason: "Every figure in this document has the
word 'euro' and two x's"

Continue
reading the main story

Eurozone
crisis

• Cyprus deal explained
  
• Possible scenarios
  
• Eurozone rift
  
• German gamble
  

The head of the Cypriot central bank
has said that "superhuman" efforts are being made to open the country's banks on
Thursday.

Banks in the country have been shut for more than a week as a controversial
bailout was negotiated, which will see depositors take losses.

"We have to restore the public's trust in banks," Panicos Demetriades said.


Meanwhile, the BBC has learned that Cyprus is planning to impose a weekly
limit on cash withdrawals.

The country's draft capital controls include export limits on euros and a ban
on cashing cheques, said Newsnight economics editor Paul Mason.

In addition, fixed-term deposits will have to be held until maturity.

"A superhuman effort is being made for the banks to open on Thursday," Mr
Demetriades said. He also confirmed that "temporary" capital controls will be
imposed on the island, but he would not spell out the restrictions and how long
they would last.

Banks have not been open since 15 March. Their reopening had been expected
after Cyprus agreed a deal with the International Monetary Fund (IMF) and the
European Union (EU) that releases 10bn euros in support.




The Cypriot authorities had previously said all that but the biggest two
banks would open on Tuesday, but they have remained shut while the finer details
of capital controls are handled by the Cypriot central bank.
'Not decided'
Earlier, Cyprus's finance minister earlier confirmed that depositors with
more than 100,000 euros could see 40% of their funds converted into bank
shares.

But Michalis Sarris also said that Cypriot depositors with less than 100,000
euros in their accounts "will not be hit".

"The exact percentage is not... yet decided but it is going to be
significant," he told the BBC.

Bank of Cyprus chairman Andreas Artemis handed in his resignation but local
reports suggested that the troubled bank's board had rejected his resignation.


Later, Mr Sarris told reporters: "The exit of Cyprus from the eurozone, which
could mean the exit from the EU, would be disastrous, politically and
economically. We do not even want to contemplate it."

In other Cyprus-related developments:

• The Department for Work and Pensions has said British pensions will not be
  paid into Cypriot bank accounts for the foreseeable future and has advised
  expats to open UK accounts
  
• Piraeus, Greece's third-biggest lender, said it has signed an agreement to
  acquire all of the deposits, loans and branches owned by the Greek subsidiaries
  of three Cypriot banks - Bank of Cyprus, Laiki, and the Hellenic Bank - for 524m
  euros (£445m)
  
• The head of the eurozone group of finance ministers, Jeroen Dijsselbloem,
  said there were no apparent signs of increased withdrawals of savings from
  peripheral to core countries in the region as a result of the Cyprus
  crisis.
  
• Chancellor George Osborne has said the Treasury is working on a "British
  solution" for the 13,000 UK customers of Cyprus Popular Bank, part of Laiki
  Bank, who could lose a proportion of their savings above the 100,000 euros
  (£85,000) cut-off limit.
  

Capital controls

The final size of the loss faced by investors will depend on how the
government decides to protect pensions, Mr Sarris said.

He confirmed that all Cypriot banks will remain closed until Thursday and
that capital controls will be placed on the size and the amount of money people
will be allowed to withdraw once the banks have reopened.

These restrictions would "probably be a bit stricter" on the country's two
largest banks, Bank of Cyprus and Laiki, and would remain in place until the
banking system "stabilises", he said.

The exact details of this "two-tier system" would be hammered out with the
banks later on Tuesday, he said.

Mr Sarris is expecting "some bleeding, some outflow" of funds once the banks
reopen, but believes that once EU bailout funds begin flowing "in a matter of
weeks", confidence will return.

Although the economy would be badly hit by the economic crisis, Mr Sarris
admitted, he maintained that it could benefit from "an energy boom", referring
to the exploratory Aphrodite gas fields off the southern coast of the
island.

"Yes, there will be a problem but we will overcome it in a relatively short
period of time", he said. He also said his government had renegotiated more
favourable loans terms with Russia.

Continue reading the main story
Bailout deal

• To qualify for 10bn-euro bailout, Cyprus must raise 5.8bn euros
  
• Its biggest bank - Bank of Cyprus - to be restructured
  
• Second biggest bank - Laiki - to be wound up and split into a "good" bank
  and "bad" bank
  
• Accounts holding under 100,000 euros will be protected in both banks
  
• Deposits over 100,000 in Bank of Cyprus are frozen for now
  
• Level still to be set at which funds on big deposits will be taxed
  

• Cyprus's devastating rescue
  
• Few winners in Cyprus deal
  
• Q&A: Cyprus deal
  
• Cyprus banks reassure UK
  customers
  

It was conditional on Cyprus itself raising 5.8bn euros,
most of which looks likely to come from depositors with more than 100,000 euros
(£85,000) in Bank of Cyprus and Laiki or Popular Bank.
'Unique case'
Members of the European Central Bank (ECB) have been emphasising their view
that Cyprus is an isolated case within the eurozone, and that the proposed
rescue plan would not be applicable to other eurozone countries.

Speaking to reporters at a conference in Prague, Ewald Nowotny, member of the
ECB's governing council, said: "Cyprus is a special case. It is no model for
other instances" - a view earlier expressed by Benoit Coeure, ECB executive
board member.

On Monday, Jeroen Dijsselbloem, head of the eurozone's finance ministers, had
spooked the markets when he suggested Cyprus's bailout could serve as template
for crises elsewhere - comments he later retracted.

Many analysts had been concerned that the Cyprus crisis would spread to the
wider eurozone had the country been forced to give up the single currency.

There were fears that the country's possible exit from the euro would trigger
a loss of confidence across the single currency bloc, and prompt investors to
withdraw from other troubled economies, such as Greece.

[Panda]

EU proposes £9.5 billion budget increase


The EU has proposed a budget increase of £9.5 billion this year – more than
the controversial Cyprus bail-out – that would cost British taxpayers £1.2
billion and leave David Cameron no option to veto.








Members of the European
Parliament Photo:
AFP







By Bruno Waterfield,
Brussels

1:13PM GMT 27 Mar 2013


696 Comments




If passed directly on to taxpayers by the Treasury the increase would cost
the average British family an extra £77 in EU contributions in 2013 and
the final decision will be taken by a majority of countries, leaving Britain
without a national veto.


Janusz Lewandowski, the EU's budget commissioner, accused those European
leaders demanding Brussels austerity, a camp led by the Prime Minister, for
acting like "ostriches" and burying their heads in the sand as bills for
European funded projects piled up.


"This is creating a snowballing effect of unpaid claims transferred onto the
following year," he said. "The ostrich policy can only work for so long:
postponing payment of a bill will not make it go away. Not one cent of the extra
amount we request today is for the EU institutions, it will merely allow the EU
to pay its share of projects that member states agreed to start in the past."



The Government has described the increase as "unacceptable" but could be
defeated in a vote at a council of ministers later in the Spring because the
European Parliament has made payment of the increase the condition of supporting
a reduction in spending between 2014 and 2020.


"In a week when the eurozone has been raiding bank accounts in Cyprus, it
doesn't look good for the commission to try and raid taxpayers for a sum bigger
than the €10 billion (£8.5bn) Cypriot bail-out," said an EU official.

[Panda]

The Government in Cyprus has limited withdrawals to E300 per day and only E3,000 can be sent abroad. There are 60,000 ex Pats living in Cyprus and they are very worried about what will happen . It is rumoured that Russia was given inside information on what would happen and have been taking a lot of money out of Cyprus which is why the Government has had to restrict withdrawals.

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Europeans — too different to get along

22 August 2012Dagens Nyheter Stockholm

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Beppe Giacobbe
Above and beyond the diverging economic performance of EU countries, cultural differences between the people of Europe constitute the main obstacle to the creation of a homogeneous European society. Given the extent of these divisions, it is not surprising that the European project has run into difficulty.

Richard SwartzMany leaders have tried to unite Europe – Attila, Charlemagne, Napoleon, and Hitler among others – and all of them have come a cropper in the process. Of course, force of arms has not figured large in the European Union’s ongoing drive to achieve this goal, which is now characterised by goodwill, common laws and institutions, and other means that are more appropriate for a continent where pacifism has been the order of the day since the demise of Hitler. And the euro is without a doubt the most daring of the EU initiatives in favour of a united Europe.
The origins of the modern project are political, even if from its inception the emphasis has been on the economy. The European Coal and Steel Community was devised to prevent future conflicts by ensuring that industries that were necessary to war would no longer be developed within the framework of the nation state. National economies were to participate in a large single market that transcended borders, which was to be the starting point for their progressive convergence.
The project was not only based on the notion of the pre-eminence of the economy but also on the idea that economic rationality would facilitate the emergence of common views in other domains, which would lead to the creation of an entity resembling a United States of Europe.
The world’s most complex region

There is no denying that the economy played a decisive role in protecting Europe from the possibility of war, and, in this sense, post-1945 European cooperation has been a remarkable success. However, economic cooperation is no longer sufficient for the entity we need to build today; the euro crisis has demonstrated that such cooperation has its limits, particularly when we take into account the reality of cultural and historical differences on a continent that is the world’s most complex region.
More than 300 million people are expected to form a union in a relatively small area where we do not need to travel very far before we are unable to understand what the locals are saying, where we encounter populations who dine on unfamiliar foods and beverages and sing other songs and revere other heroes, where behaviour is regulated by a variety of relationships to time and a diversity of dreams and demons.
These underlying differences are hardly ever, or only rarely, mentioned. They are masked by discourse which assumes that Europeans should be natural allies in their approach to the rest of the world, when the fact of the matter is that Swedes are likely to share more common ground with Canadians and New Zealanders than they do with Greeks and Ukrainians. It is also probable that cultural differences – and not political and economic ones – have been the main cause of the many violent conflicts that have marked the history of Europe, chief among them the two most terrible wars that humanity has ever known, which to all extents and purposes were European civil wars.
Nonetheless, all of this appears to be forgotten or suppressed to the point where the workaday European discourse – the flag, Beethoven, and Eurovision etc – has hardly anything to do with the our current European reality: rather it is pure propaganda for a project that wilfully ignores cultural and psychological differences that are much more pronounced than our material and financial ones.
The Europe we would rather ignore

Only with the onset of the European crisis did we open our eyes to the divergence between this discourse and the reality it purports to describe. Much to our amazement, the crisis suddenly brought to light people who have never paid income tax, who take the view that others should pay their debts in their stead, and who accuse those who offer them a helping hand of despotism. We were completely unaware of such Europeans and we would rather believe they do not exist. However, the reality is that they do, and they have been there for quite a while.
A lot can change in a year. Who, apart from a few specialists, could have told you 12 months ago what clientelism meant?
I have a Croatian friend who became a minister at the beginning of this year. She is not a high-profile member of the cabinet, but nonetheless she is a government minister. When I asked her how many permanent civil servants were employed by her ministry, she told me there were 500, which seemed like a lot for a country like Croatia.
And when I asked how many colleagues she actually needed to develop the policy she intends to implement, I was dumbstruck by her response: only 30. "And are you planning to lay off the 470 others?" I wondered. The minister looked at me with an empathetic and mocking air she reserves for gullible creatures like myself – though I should point out that I am not blond – who hail from the lands to the north of the Alps. No. She had no desire to put her life at risk.
She added that she also has a son who goes to school on foot, and accidents do happen. When my friend has completed her term in office, close to 500 civil servants will continue to turn up at offices to do jobs that do not exist. And the cheques that they cash at the end of the month will remain the only aspect of their employment that exists in the real world.
This is the reality of our Europe. And make no mistake, the North is as strange as the South, and the East is as odd as the West, and vice versa. It is simply a matter of point of view.
Europe is like an extremely fragile honeycomb, composed of cultural, historical and mental idiosyncrasies in which no two Europeans are really alike. And yet we persist in viewing this Europe, not as a honeycomb, but as a pot of honey that is ready to eat.
====================================
A very insightful article and Croatia is just about to join the EU!!

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The 5
Russian Oligarchs affected by the Cyprus haircut.



If Cyprus subjugates to EU pressures and accepts the
haircut on deposits, a lot of people will pay the price. However, 5 Russian
oligarchs will pay the price more than anyone else.

Firstly, Alexander Abramoff having a steel business
and a property going up to 4,6 billion dollars will pay a big price. Alexander
has transferred a large amount of money in Cyprus after having a lot of steel
industries. He also acquired the Cypriot citizenship. Last year he attempted to
build the most expressive villa in New Zealand.

Secondly, Dmitri Rybolovlev having a fertilizer industry
and a property up to 9,1 billion will also pay the price. He has a professional
football team in Monaco and he is very popular in the real estate market of New
York. In 2011 he bought his daughter a penthouse in Central Park for 88 million
dollars. He is a shareholder in the biggest bank of Cyprus.

Thirdly, Alexei Mordashov is a major investor in the
steel industry. His property comes up to 12,8 billion dollars. Many of his
business interests are held in Cyprus. He is a big supporter of cultural
institutions and athletics.

Next is Vladimir Potanin. He is famous in the nickel
mining industry and he has a property going up to 14,3 billion dollars. Many of
his central offices are in Cyprus. He is famous for his contribution to the art
world and to the museum world in Russia, France and the USA. When the incident
with the Cypriot banks came to surface he commented that Cyprus messed up.

Last but not least, Vladimir Lisin. He is
in the transportation business with a property coming up to 14,1 billion
dollars. He is using Cyprus as an investment vehicle to strengthen his business
empire. Last year he stated that he is willing to donate to every Russian
athlete winning a gold metal 1 million dollars.

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Cyprus bail-out: live


Cypriots face a suspension of credit card payments for overseas goods and a
ban on cashing cheques under draft capital controls designed to avert a run on
the banks.









Image 1 of 7
A sign is attached to a petrol
pump that explains to clients that they can only pay by cash, in the capital
Nicosia on March 27, 2013. Photo: AFP/Getty
Images



Image 1 of 7
Dutch Finance Minister and
President of the Eurogroup Council Jeroen Dijsselbloem gestures during a joint
press conference after a Eurogroup Council meeting at EU headquarters in
Brussels on March 25, 2013. Photo:
AFP



Image 1 of 7
Cypriot college students shout
slogans during a protest in Nicosia against a bailout for the financially
crippled island on March 26, 2013. Photo:
Getty



Image 1 of 7
Russian Prime Minister Dmitry
Medvedev (L) chairs a meeting with his deputies at the Gorki state residence
outside Moscow, March 25, 2013. Moscow reacted with anger on Monday to a
European Union bailout of Cyprus that will result in heavy losses for foreign
depositors at the Mediterranean island's banks, many of which are
Russian. Photo: Reuters



Image 1 of 7
Students hold placards the ones
on the right reads in Greek "we don't sell out " during a parade for Greek
independence day celebrations at the southern port city of Limassol,
Cyprus,Monday, March 25, 2013. Cyprus secured what its politicians described as
a 'painful' solution to avert imminent bankruptcy, agreeing early Monday to
slash its oversize banking sector and make large account holders take losses to
help pay to secure a last-minute €10bn bailout. Photo: AP



Image 1 of 7
People queue to withdraw their
savings at a Cypus Popular Bank in Athens Photo:
AFP



Image 1 of 7
A closed sign hangs in the
window of a Bank of Cyprus Plc branch in Nicosia, Cyprus, on Wednesday, March
20, 2013 Photo: Simon
Dawson/Bloomberg












By Denise Roland, Szu Ping
Chan and Andrew Trotman

9:06PM GMT 27 Mar 2013

938 Comments



runUpdate = true;



90000
2013-03-27 21:06:45.0
http://www.telegraph.co.uk/finance/debt-crisis-live/9956271/Cyprus-bailout-live.html?service=artBody
This page will automatically update every 90 secondsOn Off


• Draconian capital control measures unveiled
•
Cypriot parliament probes capital flight on eve of
bail-out
• Transactions within Cyprus to be 'unaffected'
under controls
• Cyprus central bank fires Bank of Cyprus
chief
• Cyprus in 'superhuman effort' to re-open banks on
Thursday
• Cypriots braced for harsh banking
curbs


Latest


21.06 Moody's sees a rising risk of Cyprus
exiting the euro.


20.52 Greece's Syriza leader Alexis Tsipras
has called for Cypriots to have a say on their future
in a referendum, a proposal that drew the coalition government’s immediate
condemnation.


“The Cypriot people and the people of Europe should have the final choice in
deciding their futures,” he said.


20.30 The Institute of International Finance predicts two
years of -10pc GDP for Cyprus.

19.58 Ambrose Evans-Pritchard belives the
crisis in Cyprus shows that EMU is dangerous and must end:

If Cyprus tries to claw back competitiveness with an
“internal devaluation”, it will drive unemployment to Greek levels (27pc) and
cause the economy to contract so fast that the debt ratio explodes... The Cyprus
debacle has taught us yet again that EMU has gone off the rails, is a danger to
stability, and should be dismantled before it destroys Europe’s post-War
order.

19.15 Euros from the ECB arrrive at Cyprus'
central bank:



19.10 Here is the government document outlining the capital
controls in full. The only notable correction from the measures outlined at
15.51 is that the limiton cash that can be
taken out of the country per trip abroad is €1,000, not €3,000 as previously
reported:









Cyprus Capital Controls


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18.52 Cypriot finance minister Michalis
Sarris has said capital controls are needed because of the "lack of
substantial liquidity and significant risk of deposits outflow, with a possible
outcome the collapse of the credit institutions". This could cause "chain
effects that could lead to systemic instability of the financial system and have
destabilising consequences on the economy as a whole".



18.34 This is what it's coming to:

Twitter: Angela Boskovitch - Solidarity concert in #Cyprus Apr 1 asks concertgoers to attend w/ donations of food, medicines & other basics for those in need #Eurocrisis

The concert, titled ‘CyprusAID – People for People’ will be
held from 4pm until midnight in Nicosia. Around 50 Greek and
Cypriot performers will sing without pay. In a statement, the
organisers said:

During the last couple of days we have experienced a cold
shower, lived through intense emotions and rapid reversals. The only thing we
knew for sure was the uncertainty we were facing. This common thread of
frustration brought together a group of actors and friends who decided to form
an event, reacting against everything that is coming our way. This was drawn
from a need. A need to be united, a need for solidarity, a need for a strong,
common, and apolitical voice to be heard by the outside world. We want to share
a positive message for the future that together we can do better.

18.18 Cyprus central bank official Yiangos Dimitriou
has confirmed that the cashing of cheques will be banned as part of the
introduction of capital controls (see 15.51). Dimitriou
also told state TV channel CYBC that bank withdrawals will be
limited to €300 a day, and that the effectiveness of the controls will be
evaluated on a daily basis.

18.03 However, the mood on the ground is far from
optimistic. As Nick Squires reports, while the banks will open
tomorrow, many in Cyprus remain very cynical:

People I have spoken to think that
the capital controls that need to be worked out are so complicated that more
time will be needed.

"I won't be rushing to my bank because I don't believe they will open,"
said Carmen, 34, a Romanian businesswoman who has lived in Nicosia for two
years.

“It is criminal, what they have done. Never have I heard of a country
robbing its citizens’ bank accounts like this. What if you have been saving for
years to buy a house for your daughter? Suddenly half your money is gone. No
more house."

17.55 So, it's official, Cyprus's banks
will open after all. A central bank spokesman told Reuters that the banks
will reopen at noon (10am UK time) on Thursday for six hours.

Still no concrete details on those capital controls, however.

17.47 Here are a couple of images from today's protests:




<sub>Demonstrators hold banners as they protest outside the European Union
House in the Cypriot capital Nicosia on Tuesday (Photo: AFP).



Cypriot demonstrators shout slogans as they hold national flags during
the protest (Photo: AFP).</sub>

17.36 Freelance journalist Janine Louloudi
brings us these updates from Cyprus:

[Badboy]

SLOVENIA,MALTA AND LUXEMBOURG MIGHT BE NEXT TO REQUIRE A BAILOUT BECAUSE OF THEIR BANKING SECTORS,IN THE LATTER LOTS OF TAX DODGING FIRMS LIKE AMAZON ETC

[Badboy]

IT APPEARS THAT BANK DEPOSITORS IN CYPRUS MIGHT LOSE 60% OF THEIR DEPOSITS.

[Panda]

Tax havens: More than €200bn in lost revenue for EU

5 April 2013
Presseurop Ekonom



“Without going after tax havens, the countries of the EU could take in an additional €200bn to €250bn in revenue [every year],” points out Ekonom. “Tax havens are not the only option for multinationals that are determined to avoid paying tax.”
The Czech weekly reports on the widespread use of transfer prices for the services of associated companies, which are very often foreign subsidiaries of the same corporation. This allows multinationals to ensure that “their profits are declared in low-tax countries while their losses are declared in high-tax jurisdictions.” According to Ekonom -

this system is especially advantageous for technology companies, which have intellectual property that is licensed to subsidiaries at very high prices. Using this method, Google was able to cut its tax bill by $2bn (€1.5bn) in 2011.

A survey conducted by Ernst & Young, which is quoted by the weekly, found that two-thirds of the world’s financial transactions happened between related companies. The recourse to transfer prices, however, is not a simple as it might seem. As Ekonom points out, transactions between different entities in the same group must be based on market prices. Infringement of this rule can expose companies to heavy penalties.

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