Europe, Russia Reject Latest Cyprus Bailout Plan Before It Is Even Voted By Parliament

Tyler Durden's picture

Yesterday, when we described the latest Cyprus bailout proposal being (belatedly) debated by the Cyprus parliament and soon to be voted, we wondered how long before the Troika rejects it outright.  After all the "Solidarity Bailout" Plan C (or whatever it is) did not do what Germany more than anything wanted to accomplish - punish Russian depositors as this entire farce has been nothing but a political gambit dictated by Germany from the onset. And so while GETCO's entire army of algos awaits the flashing red headline with a touch of optimism to unleash robotic buying of ES and EURUSD, we fast forward to the inevitable denouement, which is, not surprisingly, bad news for Cyprus, because as the FT reports, confirming our initial skepticism, "European officials rejected Cyprus’ plans for an alternative package to save its banking sector and remain in the euro, starting a fresh round of talks with the island nation’s government on Friday."

Full details:

The latest plan involved winding up Laiki, the island’s second-largest lender, and split it into a “good” and “bad” bank, with larger deposits over €100,000 folded into the latter. Deposits up to €100,000 would be guaranteed and bank jobs were to be safeguarded. 


But several of its elements – such as raising €2bn by nationalising the state pension fund and issuing bonds based on future revenues from offshore gas deposits – continued to be seen as non-starters by Brussels and Berlin.


“There was some discussion of going back to the original plan of a bank levy, but there are objections from the central bank,” said one person with knowledge of the talks.


The dismissal of the plan comes as time is running out for the island nation to agree on a plan to raise €5.8bn and avert financial collapse before the European Central Bank suspends funding on Monday.


There were already long lines at cash machines in Nicosia on Friday morning and one Cypriot official summed up the sense of desperation saying: “We are waiting for a messiah to come and save us, and of course, there is none”.


Indeed, Angela Merkel, German Chancellor, on Friday told lawmakers that the nationalisation of Cyprus’ pension funds was not acceptable.

Elsewhere, pouring gas on the non-bailout fire, was Russia which Bloomberg reported has crushed all hopes it would swoop in as an alternative white knight, and bailout Cyprus. After all why would it: the worse the situation on the ground, already blamed on Merkel and the Troika, the greater its leverage, and the more power it has to acquire any and all Cypriot assets for free if and when Cyprus is "spun off" from Europe. From Bloomberg:

Russia spurned Cyprus’s offers of assets for a bailout as the island nation’s lawmakers debate legislation to avert a financial collapse.


“I think we are not able to get the support that we wanted to get,” Cypriot Finance Minister Michael Sarris said in an interview after checking out of the Lotte Hotel in downtown Moscow. “But we must go back home because things are getting serious.”


Russia has ended talks with Cyprus and will decide on participating in restructuring debt after the so-called troika overseeing euro-area bailouts, makes its decision, Finance Minister Anton Siluanov told reporters today in Moscow. The troika comprises the EU, ECB and International Monetary Fund.

Bottom line: Europe will not agree to any plan that does not promote "debt sustainability", i.e., impairment of Russian oligarch savings, which in turn is a non-started in Cyprus, and would lead to an immediate trade war with European energy supplier Russia.

That is, in a nutshell, the stalemate as we head into the weekend, and a Monday Cyprus bank holiday, during which the ECB has issued the supreme bluff, and said it would cut off all the funding to the small island.

It is certainly shaping up as a fun weekend.

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Cassandra Syndrome's picture

Yet another Eurozone crisis weekender.

GetZeeGold's picture



Just write the damn check already Angela.

supermaxedout's picture

no Bernanke for him its nothing.

Cdad's picture

Yeah...that would go over well in the States.  "US bails out Russian Billionaires"  Go ahead...I dare you, Ben.

Dr. Richard Head's picture

Benny has been bailing out European millionaires for the past few years and the sheep are concerned about some broad and her nipple slip on this regurgitated show or that. A few Russian tzars being bailed out will make no difference.

Let them eat horse meat and poo!

toys for tits's picture

Someone posted this about Russian governments keeping their money in Cyprus.  Don't know how reliable it is.

Russian Prime Minister Dmitry Medvedev complained Thursday that accounts of Russian government agencies in Cyprus had been blocked as Cypriot Finance Minister Michalis Sarris was set to resume talks in Moscow to secure aid.

In comments released early Thursday, Medvedev warned that Russia would take a “firm” stand on Cyprus because the accounts of governmment structures had been blocked on the island.

sunnydays's picture

Once Cyprus is willing to give Russia everything, then Russia will come in and save the day.   But the gas fields are shared by Turkey and so there is no just giving the future production of that to them. 

JOYFUL's picture

Based upon the fact that internet banking has been out of order for 5 days now here, I decided to have it out with them this morning...

I'm pulled over on the side of the road, and going to do some thinking out the hopes that there's some kind of banking analyst\IT type dood out there who can help me put the pieces together of what the puzzle is presenting:

once again...everything is functioning normally inside the bank...the system problem from Tuesday appears to be over. But I now believe this is "Ptotemkin Village 20.0"'s what support told me on the in branch phone(help line not answering outside calls!)

"we're experiencing techncal problems, it may be Sunday or Monday before we can give you back service." Is everyone having this problem?"no, the foreign customers of the bank are."Let me see if I understand you...Turkish citizen customers can log in OK but foreign customers system but different results."Yes, that appears to be the situation, but they are not telling us any more."

Ok. Since I was in branch, I had my chum who works there give a shot at recreating my password for on line was clear that everyone thought that I was nuts at this point = couldn't be the system!...15 minutes of screwing around later, it turned out it wasn't my error...

so I had him get on the phone again with c.s. and we learned the following: some foreign customers can log in, but not most, and some Turk customers are also stranded...very interesting...have a nice day!

Here's where I'd like some feedback...the fact that this situation began and is running parallel to the developing disaster in Cyprus...the fact that this is being micro-managed to induce the max sheeple-ness...on the part of customers and bank people...nothing to see here...or must be just me! The fact that folks like myself who don't keep fiat in banks and only use it for the XAU accounts they offer...are more than likely foreigners with a more advanced sense of what's goin down than the locals...who still do physical (another friend of mine in a bank here was complaining what a tough sell the XAU account is to Turks!) almost exclusively..the fact that the Russians are the new crew in the expat department here...the Brits are running for cover...the fact that my bank is half owned by a very large European zombie bank that(like most) may be way more exposed to this crisis than the containment squad wishes anyone to believe...


the fact that as the above commentator, and myself, have pointed out previously, that the Turks and the Ruskies are the only players on the off shore Cyprus fields that matter now(cept for tel aviv!)and the fact that nothing is going to go down now without Putins' say so. I'm less concerned about this as a personal bank crisis than as a very bad sign of something brewing underwraps. Luv to hear the brain trust speak up on this...what about punters in other places with European bank exposure subsidiaries... like, hey SDT Charlie in Bulgaria etc....what's goin on there doods? Somethings up.

Urban Redneck's picture

The Russians could use another naval base in the Med right now as a hedge... A Russian military base on EU soil (and the slap in the face to NATO and Brussels control of FP) would go down even worse than the US bailout of Cypress, But then again the US sales job would fall to bozo-the -clown who great difficulty speaking intelligently about such matters...

Lebensphilosoph's picture

Hedge? The Russian navy today consists of a bunch of rusting tins cans.

knukles's picture

While the EU member states navies....

Urban Redneck's picture

In the event that the lease on Tartus is "revoked" by new regime or to minimize the current incentive of the EU to oppose Assad's regime thereby putting their plum strategic parking spot for their rusting tin cans at risk.

fudge's picture

Does Titanium rust ?



thisandthat's picture

Rusting tin cans that can fire supersonic torpedoes...

NoDebt's picture

Did you just DARE Uncle Ben to do something stupid? 

Ugh.  Have you learned nothing?

de3de8's picture

The problem is most don't know and the rest don't care.

knukles's picture

Oh the irony of it all

Europe to Russia. Can you help us, we're broke
Russia. Go fuck yourself
Eu. Listen Mr SmArtypants it's your secret billions going to be taxed
R. You touch my Money and you'll freeze in the dark this winter
E. Dare you
R. Get the fuck outa here
E. We'll get mad, damnit
R. LOL. Watch
R2. Watch what?
R. They're gonna get mad
Laughter all around
EU diplomats crying

So this is the way the Cold War ends. No military power, no diplomatic credibility and yer ass gets treated no different than a third world African Ebola farmer
Correction, dumb ass Ebola farmer

Talk about stepping on your own dick

Say, we were talking about credibility and...

GetZeeGold's picture



Sure to trigger one hell of a temper tantrum in Euroland today.

spankfish's picture

There is this... granted from February.

If any Russians evaded tax by bringing money here - and he says he is convinced his clients do not - it is an issue for Russia, he says, rather than for Cyprus or for Germany, whose taxpayers will have to pay for the bulk of any EU bailout.

At any rate, most of the Russians buying properties here are middle-class, he says, with a budget of between 250,000-500,000 euros, rather than wealthy oligarchs.

"So what money-laundering are we talking about? Of 300,000 euros?" the fresh-faced entrepreneur says with a laugh. "If they want to go after the rich Russians - go to London or Germany."

London in particular is a favored destination for Russia's super-rich, seeking homes worth tens of millions of dollars.

new game's picture

for what it is worth, i think boris is welcome and well received by the people.

imo russia has the upper hand, being both welcome and money

what does the eu(germany)offer; more debt and sevitude to a master that has indicated that they will take your property.

we know what the outcome should be, but by monday we will know if the will of the people has any clout any more...

BorisTheBlade's picture

Correct, all those really having real big money didn't keep it in Cyprus: London, Luxembourg, Switzerland, those destinations were preferred ones. Cyprus was a refuge for middle class seeking transparent and stable jurisdiction to park their moneys. Irony is that they got in Cyprus what they were running from back home: expropriation of capital and disregard for the rule of law. EU in that sense shot itself in a foot as Putin proclaimed de-offshorization of Russian economy and seizing funds from Russian middle class would only make his case strong: "See, those bureacrats in Brussels are really not that different from ours, except you cannot influence them at all and not only they will seize your funds, they will also call you a mobster and a dirty Russky money launderer. Keep your money home comrades".

DirkDiggler11's picture

The markets are going to get ugly this afternoon heading into the weekend.

EMERGENCY : Plunge Protection Team to your trading desks !!!
Uncle Ben needs YOU to stop this market crash !!!

Department of Propaganda - Call CNBS and Bloomburgstein, have them run March Madness stories and have Becky Quickie interview the 4 people lined up to buy the new Blackberry.

knukles's picture

Cassandra... It's either that or a weekend of Three Stooges shorts
(Hmmmm. The Stooges are funnier and more intelligent come to think about it...)

Mrs K. Honey, WTF are you watching?
K. The Three Stooges
Mrs K. Don't you have anything better to do, that is so fucking dumb
K. It's educational
Mrs K. What! (Yelled BTW)
K. The EU told me so
Mrs K. Honey, go golfing, please.... Just go...

Buck Johnson's picture

Yep, another crazy weekend.  The funny thing is that Cyprus truly can't do the cuts and not because they feel for their people.  It's because if they allow a tax on the above (or even below) 100,000 euro depositors who most use it as an offshore haven, then they would never be able to get individuals to come back to little Cyprus to ever invest in their country.  They would be a little burg with 1.1 million people with only fishing and possible cheap tourism.

Cursive's picture

I wouldn't describe this round of talks as "fresh."  No, just more of the same vapid bullshit as we circle the drain.

disabledvet's picture

yep. "test run for the total break up of the euro zone." didn't take long for the car bombs to go off over Iraq after this minor kerfuffle. Imagine what the sudden return of the d-mark will mean...

schatzi's picture

"the more power it has to acquire any and all Cypriot assets for free if and when Cyprus is "spun off" from Europe."

What assets? The pension funds? The bankrupt banks? Or the gas fields that expand deep into Turkish territory. The same Turkey that doesn't even officially recognise Cyprus.

smacker's picture


The picture you paint is one of Nato going to war with itself (Turkey & the EU majors are Nato members).

Looks like fun and it might, just might, keep Western political filth occupied.

new game's picture

what they have everybody wants-beaches and bitchezzz

Debugas's picture

Cyprus should declare default and trigger CDSs. That would send the troika a message

Temporalist's picture

They will be "liberated" before that ever happened.  Those nasty terrorist citizens are evil and dangerous.  Just imagine the horror if they had guns.  Just one more example of the peril the world is in when the masses are not controlled enough by smarter people in government.

GetZeeGold's picture



Nuking NYC wouldn't trigger a CDS default.....that crap was never intended to payoff.


There I said deal with it.

SMG's picture

The Oligarchs will trigger the CDS's when they're ready to crash the world economy and bring in the global government.   6 months to 2 years from now is my best guess.  Hope they get stopped.

Silver Garbage Man's picture

I wouldn't want to be "the guy" who pulls that trigger. It could be "dangerous".

MrNude's picture

Cyprus paging Helicopter Ben, please bail us out, Cyprus to Helicopter Ben over and out. 

Temporalist's picture

Ben reminds me of the Little Dutch Boy.  He's plugged his finger in so many dikes (not dykes) that he's surely going to run out of options soon - and I'm sure Cyprus would have already collapsed if not for the $15 trillion hole-plugging bailout of Euro just a couple of years back.  Paper doesn't work for very long at plugging the cracks in the dam.

knukles's picture

Wait.... Ya got Nippleatano, Hillbillary, her lezbo sweetie and who the hell else I dunno...
But like cockroaches, one is never enough

Strapons all around, girls!

Temporalist's picture

I hope WB7 makes a Little Dutch Ben image

GetZeeGold's picture



Bitchez with billions of bullets......and bad attitudes.

knukles's picture

And 12 times a year, things go irrational......

ziggy59's picture

Paging Cyprus... That would help Putin, and we had deals that were offered to him and that he decided not to play by our rules, and its called currency wars for a reason
Ben out!

Sudden Debt's picture

it's just good parenting!

When I tell my kids to clean up their room...
they sometimes start saying:
My kids know all to well that at home... it's not a democracy.
unless my wife says otherwise :)
The king needs to sleep in his bed so....

ziggy59's picture

Yes, as Mel Brooks so greatly stated, "its good to be king!"

Peter Pan's picture

I agree with good parenting and while it is needed in the case of the PIIGS, one wonders why the worst child of the lot (the USA) is not subjected to any good parenting.

The world will continue to stagger for as long as it solutions are erratic, uneven, ill considered and full of politics rather than leadership.


Awakened Sheeple's picture

America is the drunken step-father.

new game's picture

america has turned into a cash strapped, debt laden bully that is about have the rug ripped out from under.

the dollar back oil stranglehold will be the turning point. Instant poverty and fighting for a lifestyle that will instantly be  unsustainable.

the dollar will die with millions americans in dire straights - the shaloms legacy...

disabledvet's picture

how about when you tell them to go to hell though?