EU Weighs 40% Haircut On Uninsured Cypriot Deposits In Bad-Bank Plan

Tyler Durden's picture

More details are appearing on the latest and greatest plan in the shambles to solve Cyprus' (and Europe's unsolvable) problem. It appears the European Group is implicitly declaring economic war on the 'wealthy' depositors (we noted here non-domestic depositors dominated recent inflows) as these headlines hit:

  • *EURO AREA SAID TO WEIGH CLOSING CYPRUS POPULAR, BANK OF CYPRUS
  • *EURO AREA SAID TO WEIGH GOOD BANK, BAD BANK FOR CYPRUS BANKS
  • *UNINSURED DEPOSITS COULD GO TO CYPRUS BAD BANK, FACE 40% LOSS

We assume followed rapidly by some eurozone law-breaking capital controls to stop the remaining 60% flooding out instantaneously...

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unknownknowns's picture

If the use the Greek one they only have 24 possibilities!

permafrost's picture

Did Cyprus attend this time?

hooligan2009's picture

not all of them..just one or two bagmen

Debugas's picture

why dont they simply declare bankruptcy and proceed according to the rules - shareholders wipe, bondholders wipe, deposits above 100000 wipe, pay out garanteed deposits within 20 days then sell the property of the banks to cover the losses.

Oh wait i forgot - the CDS would be triggered and some casino brokers (read insurers) would get hit

NoTTD's picture

Plus it would set the terrible precedent of an EU institution facng reality.  Can't have that.

Mark123's picture

What are these things you call "rules"?

 

It sounds fishy to me.

chindit13's picture

Do you know the level of CDSs outstanding in Cyprus? $2 billion gross notional on the government, little to nothing on the banks.

Deposits are the problem.  CDSs, in the case of Cyprus, are not.

morning's picture

The BIS seems to be their new henchman.

hooligan2009's picture

why don't they resite the BIS from Siwtzerland to Cyprus...they can steal whatever money they like from all the world central banks then and make it an island vault for gold demanded as collateral for lending the stolen money back.

HD's picture

Yakov will not be pleased.

NoTTD's picture

In post-Soviet Russia, Yakov pleases bank.

JustObserving's picture

How many bad banks are there in Europe?  Are all of them at risk for a 40% cut after the deposit guarantee for the first 50,000 or 100,000 Euros?

Debugas's picture

in a case of a bankrupcy all deposits above 100000 euros (their part above 100000) get completely wiped out simply because it is impossible to recover losses by selling banks' assets in the market (assets are hugely over-valued on those banks balance-sheets)

hooligan2009's picture

that parenthesised bit is worth saying again and again and again

what makes me laugh is that the MSM think that US banks are in better shape!

must be why C hasn't got above the old money number of $5 bucks a share yet. how its market cap is $138 billion is beyond me when its unprovided loan losses are in excess of 200 billion (1.26 trillion of "long term" - cant shift investments that prrobably need a 15% haircut and, get this, GOODWILL of 26 billion)

fonzannoon's picture

Where is Beppe? He's gotta be loving this.

hooligan2009's picture

i hear there is going to a "presidential" government ..one appointed by el presidente..can't work, won't work

italy has to either kowtow to europe and form a government that excludes the five star movement and continue with Monti's reforms...or fuck europe, let the five star movement fuck up and exit the euro.

persu's picture

How are depositors at Bankia or Monte Peitschi di Siena feeling?

Their money is of course absolutely safe, as Euro Group promised.

Go to bed, sleep well, sweet dreams. There is no bogeyman in tomorrows papers.

Augustus's picture

If they were stupid enough to still have money in those banks, they will likely become BitCoin customers if they become nervous.

Hongcha's picture

From a small spark may burst a mighty flame.

                                                   --- Dante Alighieri

ziggy59's picture

Cypriots should reciprocate but not stop at hair!

hooligan2009's picture

ugh

so a guy with 102,000 gives 40% away and a guy with 99,000 gives away nothing?

percentages dont work in the case of theft

you pro-rata the total amount of the theft pro-rata across indivudals proportion of the total balance and everybody gets to keep 100,000

i think these clowns do not have the most basic clue

McMolotov's picture

"Fair share, blah blah blah."

knukles's picture

Is that you Obamiewan Dontknowbe?

Debugas's picture

i do not know how they will proceed in Cyprus but normally (in case of bankruptcy) if you have 102000 you would get insured 100000 back and lose 2000.

NoTTD's picture

Assuming there is 100k available for all depositors....In a typical "real" bankruptcy the crditors get a % of what is available - and no one esxpect 100%.

hooligan2009's picture

i hope so for everyone's sake

PUD's picture

pure evil the whole thing

NoTTD's picture

And getting eviler by the minute.

kito's picture

forget "good bank/bad bank".............................when its americas turn, the enormity of the problem will force the overlords to divide the u.s. into "good country/bad country"............................

Dr. Engali's picture

Actually Kito I'm thinking four different countries.

kito's picture

very likely doc. does that mean since you are in indiana and im in new jersey, i will need a passport to visit you in a few years?????????

kito's picture

PSHAAAAWWW......answer questions from congressional respresentatives about spending the country's money on obscene amounts of ammo?!?!??  how dare they ask!!!......................

 

meanwhile i cant find ammo anywhere...........everybody is sold out............

Mark123's picture

Don't you just love that concept....only in today's world could anyone believe that splitting a bank into good/bad makes a scrap of difference.  Why not split the country into good and bad parts? 

 

Onward idiots!!!

hooligan2009's picture

bad bank/incredibly bad bank!!!

ronaldawg's picture

They did split the country into good and bad parts:  Greece and Turkey and the partition.

Pure Evil's picture

Just bring NATO democracy and freedom to Cyprus by declaring the banks to be centers of international terrorist financing and commence the carpet bombing.

NoTTD's picture

That's some good evil.

dick cheneys ghost's picture

Me thinks that is the plan........You gotta think 3 or 4 steps ahead of these fuckers

semperfi's picture

Beginning of the End of the Western Banking Syndicate - he who gets out first gets out best - gotta run...

monopoly's picture

I never watch the idiot channel. Are they even talking about this at all?

hooligan2009's picture

they are talking bout the 7/10ths of a percent earnings growth for the first quarter and where the economic growth is going to come from to support a consensus forecast of 8% for the calendar year.

inflation = 2% (i know i know its crap)

real growth = 2% (see above)

cost cutting = 4%

earnings = +8%

 

what could possibly go wrong?

 

zh has a main article on this using goldman sachs data of course...most truthful and quality data available in the market!

ziggy59's picture

Someone is playing Russian Roulette with all 6 chambers filled!

What can go wrong?

Grimbert's picture

So, what currency will they be using next month?

 

Euros?

 

Roubles?

 

Cypriot Pounds?

 

Pounds Sterling?

 

Turkish Liras?

 

Whisky and cigarettes?

knukles's picture

Smegma encrusted dead skin cells from Angie's Lilly white never touched upper inner thighs
Krugman said it'd work out fine

Or Bazooka Joe bubble gum wrappers

As Hillary said. What difference does it matter? Or something

hooligan2009's picture

did i miss it? what happens on 31 January 2014?

Bam_Man's picture

The Bernank takes up residence in his remote estancia in Paraguay?