Here’s the latest in the Cyprus disaster. There will be a bailout to the tune of €10 billion on a few conditions:
- the island’s second biggest bank – Cyprus Popular (aka Laiki Bank), will be closed. This will result in a savings of €4.2 billion off their bailout package.
- All “good” assets and deposits below €100,000 from Laiki will be transferred to the Bank of Cyprus. Any owners of uninsured accounts over that amount: well, good luck – you’ll need it. (Feel free to translate “Good Luck” to Greek, Turkish, or perhaps Russian).
- If you have a deposit with the Bank of Cyprus over €100,000, get ready to lose up to 40% of it. This means you, Russian oligarchs.
More details at Zero Hedge.
The bank holidays that started in Cyprus last week are still in effect. The Bank of Cyprus is set to reopen this week, however there will be capital controls in effect. (source)
Financial Times reports that the Russians are done with Cyprus:
“The Cypriots killed their country in one day,” says Mr Mikhin, the owner of an international shipping business. “The locals should understand: as soon as the money leaves, the people who go to restaurants, buy cars and buy property leave too. The Cypriots’ means of living will disappear.” Mr Mikhin complains that the Cypriots do not appreciate the extent to which Russia has propped up the local economy. “When the Russians leave who is going to stay at the Four Seasons for $500 a night? Angela Merkel?”
More importantly, how long will they be able to keep controls in place to prevent bank runs? People may be learning a hard lesson now: a bank deposit is not riskless. Banks are not vaults.