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Eurogroup Press Conference - Live Webcast (And Full Eurogroup Statement)
It's 2:30am, do you know where your deposits are? Tune in to see the Eurogroup explain how this is in the best interest of the Cypriot people, how the 'deal' illustrates the solidarity of the European people, and how the worst of the crisis is now behind us.
- *SCHAEUBLE SAYS CYPRIOT DEAL NEEDED BAIL-IN AT BOTH BIG BANKS
- *SCHAEUBLE SAYS MUCH WORK REMAINS TO BE DONE :BOCY CY, CPB CY
- *SCHAEUBLE SAYS TIME LOST ON CYPRUS, SITUATION DIDN'T IMPROVE
- *EU COMMISSION SAYS NO CYPRUS PARLIAMENT VOTE NEEDED: SCHAEUBLE
- *SCHAEUBLE SAYS TROIKA TO CONTACT RUSSIAN GOVT ON DEAL :BOCY CY
Live Webcast here...
Here it is - in all its glory. The full Eurogroup statement explaining how there is no need for the Cypriots to vote on this, how Laiki bank is totally liquidated with equity, debt, and uninsured depositors wiped out, and how they believe in some way that this will not end in a disorderly process...
- *DIJSSELBLOEM SAYS DEPOSITOR LOSSES STILL TO BE DETERMINED
- *REHN SAYS EU TO PERFORM NEW CYPRUS DEBT-SUSTAINABILITY STUDY
- *DIJSSELBLOEM SAYS LAIKI BANK TO BE RESOLVED IMMEDIATELY
25 March 2013
Eurogroup Statement on Cyprus
The Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme. This agreement is supported by all euro area Member States as well as the three institutions. The Eurogroup fully supports the Cypriot people in these difficult circumstances.
The programme will address the exceptional challenges that Cyprus is facing and restore the viability of the financial sector, with the view of restoring sustainable growth and sound public finances over the coming years.
The Eurogroup welcomes the plans for restructuring the financial sector as specified in the annex.
These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100.000 in accordance with EU principles.
The programme will contain a decisive approach to addressing financial sector imbalances. There will be an appropriate downsizing of the financial sector, with the domestic banking sector reaching the EU average by 2018. In addition, the Cypriot authorities have reaffirmed their commitment to step up efforts in the areas of fiscal consolidation, structural reforms and privatisation.
The Eurogroup welcomes the Terms of Reference for an independent evaluation of the implementation of the anti-money laundering framework in Cypriot financial institutions, involving Moneyval alongside a private international audit firm, and is reassured that the launch of the audit is imminent. In the event of problems in the implement ation of the framework, problems will be corrected as part of the programme conditionality.
The Eurogroup further welcomes the Cypriot authorities' commitment to take further measures.These measures include the increase of the withholding tax on capital income and of the statutory corporate income tax rate. The Eurogroup looks forward to an agreement between Cyprus and the Russian Federation on a financial contribution.
The Eurogroup urges the immediate implementation of the agreement between Cyprus and Greece on the Greek branches of the Cypriot banks, which protects the stability of both the Greek and Cypriot banking systems.
The Eurogroup requests the Cypriot authorities and the Commission, in liaison with the ECB, and the IMF to finalise the MoU at staff level in early April.
The Eurogroup notes the intention of the Cypriot authorities to compensate potential individual victims of fraudulent practices, in line with established legal and judicial procedures, outside the programme.
The Eurogroup takes note of the authorities' decision to introduce administrative measures, appropriate in view of the present unique and exceptional situation of Cyprus' financial sector and to allow for a swift reopening of the banks. The Eurogroup stresses that these administrative measures will be temporary, proportionate and non-discriminatory, and subject to strict monitoring in terms of scope and duration in line with the Treaty.
Against this background, the Eurogroup reconfirms,as stated already on 16 March, that – in principle - financial assistance to Cyprus is warranted to safeguard financial stability in Cyprus and the euro area as a whole by providing financial assistance for an amount of up to EUR 10bn. The Eurogroup would welcome a contribution by the IMF to the financing of the programme. Together with the decisions taken by Cyprus, this results in a fully financed programme which will allow Cyprus’ public debt to remain on a sustainable path.
The Eurogroup expects that the ESM Board of Governors will be in a position to formally approve the proposal for a financial assistance facility agreement by the third week of April 2013 subject to the completion of national procedures.
Annex
Following the presentation by the Cyprus authorities of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:
1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.
2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.
3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework,after having heard the Boards of Directors of BoC a nd Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.
4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.
5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with fullcontribution of equity shareholders and bond holders.
6. The conversion will be such that a capital ratio of 9 % is secured by the end of the programme.
7. All insured depositors in all banks will be full y protected in accordance with the relevant EU legislation.
8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus.
The Eurogroup is convinced that this solution is the best way forward for ensuring the overall viability and stability of the Cyprus financial system and it s capability to finance the Cyprus economy.
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"Troika to contact Russian gov't on deal" = "Hey Putin.... knock knock." "Who's there?" "SUCK IT!"
yup
GALVESTON, TX -- Officials say a vial containing a virus that can cause hemorrhagic fever has gone missing from a research facility in Galveston, but say there's no reason to believe there's a threat to the public.
http://abclocal.go.com/ktrk/story?section=news/local&id=9039011
No Cypriot parliament vote needed?? Dont get those pesky democratically elected representatives involved - well played EU...
Will somebody please find out;
1) Where are the Cypriot politicians banking and getting their paycheque from?
2) Where are the Cypriot police banking and getting their paycheques from?
Seriously, why the fuck are these people still working if their money is about to evaporate? I suspect it's because their money is in tact, safe, corrupt.
Global banksters astride humanity...
Fuck us all.
Sheldon Schaeuble: Knock-Knock-Knock "Putin?"...Knock-Knock-Knock "Putin?"...Knock-Knock-Knock "Putin?"
Remember Brando and the balls...
Bat shit crazy
“newly adopted Bank Resolution Framework”
Whew!.. a breath of fresh air.
So much better than the old bank framework where there was an expectation that private property was secure.
WHY Cyprus was put through all this:
[quote] The Eurogroup welcomes the Terms of Reference for an independent evaluation of the implementation of the anti-money laundering framework in Cypriot financial institutions, involving Moneyval alongside a private international audit firm, and is reassured that the launch of the audit is imminent. In the event of problems in the implement ation of the framework, problems will be corrected as part of the programme conditionality. [/quote]
Emphasis mine.
LINK TO: “newly adopted Bank Resolution Framework”
Read it and weep, you will be dead and gone before you finish.
Did you mean Humphrey Bogart in the Caine Mutiny,with the ball bearings?
I bet this wouldn't have been the decision of the Troika if any of those assholes had money in the Cyprus banks.
Sounds like Obama. Do not need that pain in the ass congress involved.
THIS IS GRAND THEFT, AND THEY CALL IT A "DEAL?"
In what dictionary does the word "resolve" mean "STEAL?"
They think they're so clever, taking the PRIVATE PROPERTY of these people, and expect no consequences???
AND HOW MANY WEEKS DOES THIS KICK THEIR CAN? WHAT WILL BE THE NEXT THEFT?
ANYBODY WITH MONEY STILL IN THE BANKS WILL REALIZE THEY'RE NEXT. "TAKE YOUR MONEY AND RUN."
"All of your base...base...base...Are belong to Us...Us...Us..."
And why the hell did they have to call it the "Troika"? Sounds creepy. Couldn't they have called it "The Committee for Public Safety"...or maybe "Department of Euroland Security""?
They are downplaying this big time, I have a very strange feeling that we may be looking at the start of another false flag. Also ask yourself this, if the economy was about to tank wouldn't be better to blame the tanking of it on a sickness that is spreading around the nation. And on top of that I'm sure that this fever is tough on old people.
Grillo and his ilk.
Rabid skunks in Russia and now fevered rodents in the US..sounds about right
Yeah, but then Putin will say "we never forget" We will take you down! I will look forward to that! Wait until the Cyprus people start destroying the banks too!
I will cheer the Russians on too! Take the EU Down!
He had his chance.
Putin really doesn't need to do any such thing.
The Russian Mafia, however, will likely be taking pot shots at selected EU leaders... if indeed they were harmed financially.
As Mathematicians say: Q.E.D. Where is collapse, abyss etc predicted by "Tyler"? Myself and others who said from the very beginning that this is nonevent proved to be correct once again.
Seriously?
OK, from a physicists perspective, relatively speaking, splitting the 99th nucleus is a non-event giving the entirety of a chain reaction.
Opening up the possibility of stealing deposit accounts in order to bail out the banks is hardly a "nonevent."
If that little nugget of information resonates, it could detonate the entire world of fiat banking.
pods
You guys living in your fantasy world based on wrong ideology, ignorance and brainwashing by blogs like that. There is no resonance in your sense of the word. Stock markets in Asia are up and rally will continue.Your stupidity will never pay off.
Now, where is that bitcoin chart?
That is why I don't use my stupidity and play around in "markets."
pods
and yet, here you are in the comments section of said blog. You'll claim that you are trolling, but the reality... you're trying hard to convince yourself of something.
Bitcoin is at $71 as I type this, and if your so fucking stupid to think that "confiscating rich peoples money in banks they thought were safe two weeks ago, is the answer, who's the dumbfuck who's brainwashed and living in a fantasy world now??
I can tell your just some schmuck with no money and a big mouth, because if you had real money, money above the fantasy insured level the EU is talking about, you'd be shitting your pants right now and trying to transfer it out of the EU banks the minute they open tomorrow!! Which is what 100's of billions will be doing over the next two days or week across the EU, Spain, France, and Italy to be specific!
But good luck with that thesis, the stock market never goes down bullshit, it worked out great for the citizens of Cyprus, and the foreign account holders, im suure it will be different this time, everywhere else!
everyhing is a "non event" until the event that "nobody could have seen coming" brings the house down. This isn't an "if" this is a "when".
Non event? Closing banks, invoking capital controls, and stealing depositors money is a fucking a typical day in the neighborhood.
I remember people who kept saying that about Mt. St Helens too.
'your hubris is defencevless, as is your logic equally impaired ...by your lack of knowlege regarding human nature that dictates all rhymings of history'
'if and only when you rest your laurels upon the politicians purse, that the real carnage manifest itself-- like a hybernating bear in its winter den that finds itself awoken in a sinkhole before the first thaw-- pities naught the fist foul that crosses ones path, for hunger outwits ones instinct'
Attenion Rusisan Oligarchs:
Opulance?
You no longer has it...
"I also like savings de moneys... just not in Cyprus banks."
Still chuckling over your awesome reference, ShortTheUS. In honor of that timely post, I offer this for anyone who didn't get the joke:
http://www.youtube.com/watch?v=CjWYbcbpiWA
Or for anyone who just wants to bask in the irony.
Haaaaaa..!
Dmitri....Is this true, what he is saying?
$$ New national anthem for CYPRUS and the FEDS free mkts... http://youtu.be/GUfS8LyeUyM
Everybody knows it's coming apart ...
*EU COMMISSION SAYS NO CYPRUS PARLIAMENT VOTE NEEDED: SCHAEUBLE
It's for their own good. Doctor's orders!
Moral hazard occurs when victims can vote against their own fleecing.
Does the defendant get a vote on the jury? God forbid!
As Led Zeppelin used to sing ... WE ARE YOUR OVERLORDS
We don't need to bother Parliament about changes we made to those pesky bankruptcy laws. We're now going to have a good bank, bad bank.
We've already been running good cop / bad cop on you people.
Zere iz no need for democracy.
+1 for the Zep reference.
...this too, shall not pass, before the advent of tomorrows, morrow
You can take Germany out of Nazism, but you can't that Nazism out of Germany....
This isn't Germany. This is "Troika." The best thing Germans could do for the German people is get the heck out of the Euro.
And troika is ECB as well, which means largely Germany - just hear Schaulble talk....
These people are chameleons. They're only 'German' until the money is gone.
come on fuckers speak already !
Schaeuble: Hello Russia, sorry you just got screwed.
Gazprom exec gets money taken by the EU.
Gazprom exec sends a note to EU:
"Who runs Bartertown?"
pods
they can't all be bottom bitches,... c'mon
are the people conditioned enough to take this buggery?
The bleating says yes...
so many asses and only one broomstick
Bank runs start tomorrow in the rest of the Eurozone.
DavidC
Bullshit! Life goes on as usual.
Nah i'm with DavidC. I must be dreaming. Did they really just skank everyone's deposits over 100k and give not give them a say in the matter? This will be contained?
"yes" and "we will see." they can't be faulted for doing nothing...they can be faulted for doing this of course. again this is a "working group"...Russia will be informed of the decision...nothing more. There's already a massive British military presence on the island...there will be no Russians coming ashore to "take it to the man." it appears they closed my "European Court of Justice loophole" as well...but that would be my approach. "Use the Americans' good offices to file claims with the appropriate (or inappropriate) Agencies." this thing came a real surprise to me...can't say it was a surprise to the President "cuz he ain't sayin sheeet" but no one wants to arrive in the Middle East "with the sound of car bombs going off in Baghdad." so sure...this strikes me a shocker actually. "game, set, match Eurogroup." And Prada of course. What's next? Wagner? http://www.youtube.com/watch?v=esEuBNd_sfY
yep, seriously. What would you do if you had large deposits at banks in Italy, Portugal, Greece... or really anywhere in Europe for that matter. They've all been 'Corzined' BY THE STATE!!! Holy fuck what a unbelievably terrible precedent this sets, everywhere.
I seriously hope the FUCK bank runs do start! The people will be speaking then - Loud and Clear! You can NOT steal our money!
See how these gangsters work? Take it away from the people of the country to vote on and shove it in their ass. Sound familar, kinda like Pelosi, Reid and Obama with Obamacare! Hows that workin out?
The fact that the bankers had to do an end run around parliament shows how terrified they must be about the whole house of cards collapsing if this goes to a vote. As so many have said so many times, they are desperate to do ANYTHING to keep it all from unraveling and will ignore any law or rule. They are not even pretending to hide it anymore. I think they are just one spark away from losing total control and having revolution spring upon them.
The thing that they apparently don't recognize is that the richest depositors are also the most dangerous. They have just fucked with big, old, powerful money. THAT HAS CONSEQUENCES in a way that taking candy from babies does not. If I had any part in this, I would be looking over my shoulder for the rest of my days.
Fuck Microsoft!
Victim of Windows 8?
How can there be no vote? How can another entity legislate for a sovereign country? Why do I feel stupid posting this question?
"How can there be no vote? How can another entity legislate for a sovereign country?"
Because in the New Normal Facism 99.9999% of people don't matter. You are a serf, and you will OBEY!
This is how all 'deals' start. Then they fall apart.
I am glad everyone is "risk on" full knowing that banks are going to be allowed to start going under again. Frankly, I am disturbed. The only acceptable outcome was a full backstop and prop job.
At least Legarde had dinner with a man.
or "had a man for dinner."
The Russian assassins have reached Brussels it seems, on the Eurostar no less
That fucking Schaeuble tried to pull a practical joke on me the other day. He wheeled around in his wheelchair and had his dick hanging out of his pants with something on it.
The tip of his dick was stuck inside the cap of a bic ink pen. But this is where he got me, because it actually wasn't stuck at all, he had plenty of room to move it around.
That fucker tricked me just like he did Cypriot, destroying a massive number of jobs along the way.
We've got a done deal! Resume your usual Central Bank piracy...sorry we can't give you peasants any details it's none of your business just empty your pockets and get back on those oars and ROW dammit!
Of course there can be no vote of parliament.
1) They've got an Empire to run. Who needs all that bullshit
2) That way all the dirty work gets done and none of the MP's need to look like the bad guys. They call all look like the good guys. "Ah, it was out of our hands..."
Why were the Troika so pissed off last week when the Parliment was voting down proposals?
Suddenly you don't need the Parliment to vote?
now that you mention it...where's Ghordius?
This is a very good example of what it means to lose your sovereignty. You don’t need a parliament anymore; you don’t need a Congress anymore, you don’t need a president anymore. You just need Bernanke or the Troika. If the banks need the money, the banks will decide how much they need and from whom. Congress doesn’t even need to come back from their stupid vacations because Bernanke will decide. Congress gave the power to the bankers in 1913 and went home.
Loss of sovereignty means the loss of government, loss of sovereignty means the loss of representation, loss of sovereignty means the loss of freedom.
These bankers have taken the sovereignty from these European nations and they want to take it from America; and they will unless somebody stops them.
I'll just leave this here....again....if someone would like to forward it to oh say Rand Paul and Keith Ellison for a jointly sponsored bill, that would be a nice zolt in the nuts tomorrow morning.
http://www.scribd.com/doc/67758041/List-of-Demands-October-6-2011
'List of Demands to Protect the People of the United States of America from Financial Catastrophe'
Just the basics: Sack Bernanke, close NYC office of the Fed and Treasury, prohibit certain of their market-distorting practices, lifetime ban on Goldman, Morgan, other TARP recipients from Federal employment, contact bans between them and government, mark-to-market reinstatement.....nothing major, just a first step in a peaceful direction.
The bankers have already taken sovereignty away from Americans. Remember in 2008 when Hank Paulson told us martial law would begin if he wasn't given $800 billion of the people's money to give to the bankers?
Yep, politicians are not even relevant anymore. They are shown to be completely owned by the bankers with this move. The playbook has now been updated, and will be repeated again and again. The next crisis will dictate this same "solution". As a result, The only hope is the anti-EU parties everywhere outside of Germany will be strengthened. Besides the bankers, the biggest political winner in this will be Merkel, as she will be seen as stronger in Germany, since she was able to enforce her will on Cyprus. But she and Germany will be viewed much more negatively (if that is even possible) in the periphery. She may have saved her re-election with this gambit, but when she plays this hand again with the next EU insolvent, she may find that they will not continue to roll over if the anti-EU coalition builds. No wonder the bankers had to try ANYTHING to prevent parliament from having a say in this.
Wait a minute. The bankers?
It sounds to me like the terms of the deal resolve the banks in question the old fashioned way - according to the principles of the capital structure.
The equity holders and the debt holders are wiped. The uninsured depositors lose out to the extent necessary to recapitalize the bank.
Sure there is some arbitrary decision making about splitting the good bank from the bad bank at Laiki etc but nothing out of whack with respect to the capital structure. Certainly nothing crazy like the first deal that the Cypriot parliament (rightly) rejected.
Lot's of bankers are going to be out of a job. Lots of bank investors are going to be screwed.
What's not to like from the Austrian perspective?
The banks were insolvent, there was a huge fuckin' hole, and it got plugged by the people who were, according to the capital structure, on the hook to plug it.
What's the problem? I yield to none in my contempt for "banksters" and I may well be missing something but which "banksters" are walking away bailed out here?
I understand that the Greek banks have a lot to lose here, which is in turn putting the core Troika bank(sters) at risk. Otherwise why not just write it off? THAT would be Austrian. Don't plug the hole, shoot the bank and let the live assets go elsewhere.
Sorry - I spoke imprecisely.
By "plugged" I meant "vaporized".
As in, the value of their investments and deposits are erased from the liabilities side of the balance sheet. They are no more. This is the Austrian way.
Laiki is resolved. Wound up (or down, if you prefer). El Finito. Gonzo. Drwnd. This too is Austrian.
There are still some good assets in Laiki - and insured deposits which must be made honored. They have to go somewhere. Why not Bank of Cyprus? There are some arbitrary decisions taken here but it's not clear to me these are out of scope for the banking regulators. That's what they do. They regulate banks. Again, with respect to who gets hurt in the capital structure, it seems in line.
If the "Greek banks" have a lot to lose here, it's not clear how their bacon is getting saved by this deal. If they are bondholders or big depositors they just got reamed.
Again, I could be missing something - I almost certainly am - I'm just not seeing justification for the (very often perfectly justified) reflexive vitriol against the "bankers".
Not trying to defend them so much as trying to see where blame really lies.
I previously opined these banks should be allowed to fail so that part's good as you indicate. However, it is unclear that the bondholders were wiped as there was an earlier statement that senior debt holders would have to "contribute" to the recap. "Contribute" does not sound "wiped". Also, there was earlier mention about monies realized from the restructure going to pay "other debts" which sounded like certain creditors (govt entities, favored financial institutes?) are to receive priority over the uninsured depositors in access to assets. Those were the two problems I felt should be clarified.
@Just Ice - I interpreted "full contribution" as wiped. Confirmation in the FT:
Don't know about your second point; agreed it would be troubling but "official sector" as opposed to "private sector" will become impared approximately... never.
I'd turn my original post around - rather than ask what might be wrong with this deal (invevitably it will be something), let me just observe that there are a hell of a lot of things in this deal which the house view here at Zero Hedge has been begging for since the onset of the financial crisis.
And now it happens and people are like "omg total theft"...
wtf?
I would view the second point as that akin to the MF Global problem...when commodity account holders were going to be placed behind JPM as creditor in claim priority it was, essentially, theft (whether technically legal to get by with or not). But, yeah, I think we pretty well concur.
I'll tell you what the problem is. Waaay over here, in this backwater filled with impudent peasants known as America, my gasoline price just went up a little more. Also a loaf of bread is up too. Not all at once, but bit by bit. And where I come from that's called stealing.
Anyways when you say "bankers will be out of a job" you mean some dumbass working as a loan officer in...Cyprus? Oh yes I suppose so. Meanwhile, Corzine is still free, isn't he?
"we symathise with the Cypriot people at this time" - fuck you curly boy
Didn't we hear from Russia earlier their only acceptable scenario is 'Cyprus out of the Eurozone'?
I guess Merkel just figures she can bitch slap them around like a Greek?
I'd like to see the Russians just start whacking all these fucks like they're playing duck shoot at the country fair.
We stole it fair and square!
I am not installing microshyte fucking silverlight!
Treating Russia like a red headed step child is not clever. Hitler was outraged by the Treaty of Versailles, it took him about 20 years but he got his revenge. In 20 years all our troops could be out of Europe and Russia could be in better shape. What goes around, comes around.
I thought about CNBC's Maria Bartiromo's signature broadcast sign-on question, "Do you know where your money is?" just the other day.
I couldn't help but think that the FED might have to make her change it from now on so it won't freak people out.
maria's is safe-she's married to a juiced in WS Tribesman
ECB will guarantee deposits. no banks runs, no panic, no worries. a non-event
cant watch thoes fools anymore they don't seem to enthusiastic about this round of utter bullshit, god help this fucked up planet!
News flash to all Euro governments: YOUR GOVERNMENT IS AS SOLID AS DOG SHIT IF THE TROIKA WANTS SOMETHING DONE.
10 billion euros isn't much in the scheme of things. go to sleep all
10bn used as collateral and leveraged to support many other insolvent banks smells like 2008 to me.
Why do you think the ECB is willing to push the envelope for a measly 10bn?
exactly MaxHeadroom. this is not a "mountain out of a mole-hill" thingy. there is the "uncertainty principle" but other than that this thing...and i hate to say this...but it looks to have been done by TRUE professionals. (gotta say besides being impressed at a certain level i'm a little envious) the only mistake i see was naming themselves "the eurogroup." the fact that that group is doing the presentation and not the PM's is not good. Secretary of State Kerry..."you've been warned." Get you best folks on this one. And by that i mean UNBIASED folks in addition to being "that good." You just made a trip over there to pave the way for the President's trip...i know i'm pissed off by this and i'm a professional couch potato.
how many god damn hands does she have??on the other hand
Alright so when comes the news they're going to do the same thing in every other Eurozone nation? Spain first or Italy... Tough choice. Can't wait to see Farage in Parliament with this fuel under him.
No vote simply means the politicians don't have to be accountable. As Obama has demonstarted here in US: you have no need of a plan to fix anything as long as you can paint your opponents as worse than you. My question is what happens to the bondholders of the soon to be closed bank? And what is the extent of the deriviatives on those assets?
The bondholders are going to be wiped out in the bad bank... and will likely absorb significant losses in the good bank, as was stated in the Q&A session of this announcement. The other thing that was addressed was that the Cypriot legislature had previously voted (November 2012) on provisions that would have allowed an IMF-type restructring to take place. The only thing missing was the approval of capital controls, which was approved a few days ago.
The good news is that the final solution is a good old fashioned private sector bank restructring-- I'm sure patterned from the IMF template. Take good assets based on insured deposits (liabilities) and place it in a good bank... and place the rest in a bad bank structure and unwind it, following the seniority of the capital structure.
The bad news... is that the EU has already opened the can of worms on insured depositors. If push comes to shove, they WILL throw insured depositors under the bus, as the original tax levy on depositor idea was the EU's own stroke of genius. At this stage, it appears the IMF was able to convince enough people that sacrificing one bank and restructuring another one was the better route.
If the next banking is a bigger crisis and derivatives are involved, make no mistake what the EU is likely to do in order to protect is own banking system. Cyprus was a workable solution that didn't need an EU solution imposed via depositor levies-- yet they opened that Pandora's Box anyway.
If the politicians don't stand up and demand a vote, they should be accountable. They are hired to represent the people that voted for them to represent them. Hang em if they don't throw a shit fit.
Grasping at straws!
They are desperate!
Tear down the Central Banks and their political puppets!
More Jedi Farce Crap...
I can't see the webcast - it just says "Bad Request". Must be the feed for the Cypriot people.
I really believe that they don't know what they've just done.
DavidC
How'd you like to be a fly on the wall(probably in next building would be a good idea) when Troika has to let Russia know of the deal.
so much for private property rights,,,,,facscists...
I'm a little surprised at the response from zh posters. This is exactly what should have happened - insured deposits are made whole and protected, while everyone else is fucked. Exactly the way it should be and exactly what should have happened to every bank in the US that was/is insolvent back in 2007-8 - we may actually be having a REAL fucking recovery by now if it had been handled the way it was supposed to be. Sure the average citizen/taxpayer would have been fucked hard, but not nearly as hard and for as long a period of time as the fucking we have headed our way now.
Don't you see something missing here?
Equity and bondholders are supposed to be wiped out first. But that's too big of a hassle.
I agree, but does anyone know what the market cap of cyprus bank debt/equity is? Would be interesting to see how many billions missed the chopping block. Tylers?
No. Bondholders and shareholders, the ones who took the risk, should be the first ones in line, NOT depositors. The reason the ECB doesn't want that is because it's accepted Greek debt as collateral from Cyprus already and doesn't want to take the hit - although what may happen now they might wish they'd done that.
DavidC
see #1 above:
"1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors..."
Yes, this is the way the system should have worked in the US:
http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-cyprus-...
You are right on Duke Dog.
Agreed. Duke Dog is right on.
Not a great solution for any depositor, but my understanding is that equity and bondholders get worse. This is not only true with Laiki but with Cyprus Bank as well.
One thing that has been overlooked but hasn't is... who at these banks are going to be held accountable for all the terrible investment decisions? What's going to happen to these banking executives that abused their fiduciary priviledges (as 'duty may not be the proper term in Cyprus)?
Exactly. Where in all of this is rule of law?
Saw that after I'd posted, but that's only Laiki.
DavidC
We cannot, in any shape or form, call anything involved in this, a default.
Credit Event Horizon will suck the world into a void that we will not be able to pull out of.
These troika fucks have devastated Cyprus' economy as badly as it would be if they had declared war.
I am not sure about that T for T. I've been fascinated by the Cyprus situation from the start. It appears to me, from wading through lots of information, misinformation and disinformation, that the government of Cyprus was trying to dump this loss on all depositors in all banking institutions. The Troika, having been presented with that plan approved it. Then it went public and all hell broke loose. It seems like the masses prevailed in this situation, whereas in the US the masses lost. Only the depositors in the insolvent institutions along with the shareholders and bondholders will bear the brunt of the losses in Cyprus. The Cypriots may want to consider the replacement of their parliamentarians for even considering Plan A. Cyprus will be a stronger country with this resolution.
If your assertions are true, the Troika should have never considered approving it, as it opens the door for others to consider it as viable option. If the EU wants to avoid the prospect of future bank runs, the Troika might want to change their tune... pronto.
I agree Aman. And that is probably why they will remain quiet about this fiasco. If they thought Cyprus was inconsequential and the elites could pull this off then they were probably not paying close attention. I think they learned a lesson and won't make this mistake again.
Olli-uh Rehn-uh is-uh one-uh of-uh those-uh people-uh who-uh can't-uh stop-uh saying-uh uh-uh.
Davidc-uh
Vlad's Put in 3..2..1...
I had sashimi for breakfast and the glow has kicked in (disclaimer). This is Vlad's Put, or at least with his acquiescence. The so-called oligarchs have always been problematical and quixotic with their support (whilst stashing the tax-free dosh). The EU needs the Reluctant Russians on board with the Syria 'rescue' and now if rumours be true the main obstacle is hospitalized with a few lead-made holes (also Mister B the blabbermouth had his mouth sealed in Ascot). Rescues cost, thus oligarchs pay. Call it a delayed tax payment laundered through Cyprus (the patsy and bolthold) to the EU to fund all and necessary (and keep their cartel going). Vlad got the shield removed from borders and most likely a new lease for his port. Next stop...
(note to self: martinis are more enjoyable)
I fail to see how this helps anyone in Cyprus longer term. Now is the time to leave the EU. Take the bank restructuring jammed down by the ECB if you will but if Cyprus doesn't leave the EU now then the Cypriots are the biggest losers on the planet.
It doesn't.
DavidC
That's my point. And any elected official in Cyprus better react for his people or face the consequences.
i'm still waiting for my teevee to show me the cypriot people celebrating in the streets.
This is on teevee? Where? On the sci-fi channels right before the infomercials?
Agree 100%.
DavidC
Prediction:
I foresee a significant uptick in the "suicide" rate among Cypriotic politicians and members of the Troika. This time the Russians will do than go thru Lagarde's panty drawer....
Long - Suicide Notes and Heavy Metals
Short - European life insurance companies
Actually, no. The parliamentarians tried their best to protect the big depositors with a less than 10% haircut. Now the big depositors will lose much more of their uninsured deposits. The government of Cyprus would not initially seek approval from the Troika for plan A unless there was political support at home. The Cypriot officials chickened out when this went public. The Troika must be furious that it looks like Plan A was their own creation because it harmed the citizens of Cyprus more than the present resolution. I say kudos for the Troika. Now Ollie and the rest of them should go public and explain to the average Cypriot how their elected officials were about to sell out to the big depositors. That is the reality of this whole situation. It is too bad that Elizabeth Warren was the only voice in the US that spoke out about the way the US financial system benefited at the expense of everyone else. Our elected officials with the assistance of unelected officials sold us out.
The Troika should have never entertained the idea of a depositor levy at the very start... just should have rejected it outright as it affected insured depositors.
I believe those in trouble in the Cypriot government should be all those who decided to abstain from their votes... those were essentially the 'yes' men that would have thrown their insured depositors under the bus.
Those in government were not yes men- I'd suggest they were bought and paid representatives of the elites just like 99% of the elected representatives in the US. They should all be hung out to dry for this event.
Fucking traitors...
HEAR COME THE RUSSIANS ........Ahhhhh
Fiddling while Rome burns. These fuckers are more delusional than the most extreme psychopathic humans that have ever lived, during the long history of delusional fucks.
I predict everyone we have seen in this farcical charade will lose his/her head--literally--within the very near future.
Just picture bloody bursts of breath rising from meaty shredded necks that once supported overgrown heads...
Asian markets not appearing to be drinking the Koolaid ,well off that spike high
I love how they call it "hair cut". It's not a hair cut... it's theft!
When bond and stock holders are not affected you are exactly right.
Well I guess the bond and stock holders for Laiki do get wiped out.
But that it will spill over to depositors over $100k is because the money is not based on a gold or other backed standard. In a non-fiat system that money wouldn't even be there without it being backed by something in the first place.
Yes, Its a little short,, no? Decapitation is more accurate but that restores the meme of guillotines into these people.
"Theft" is such a nasty word. It implies someone is stealing and stealing is illegal. Hair cuts, however, are a normal thing to get when one's hair has grown out too much. They're done by the old and somewhat honorable profession, the barbers (made famous by Rossini). What would you rather get, someone robbing you or your sideburns trimmed?