Rampapalooza As Cyprus-Troika Reach Deal (Updates)

Tyler Durden's picture

UPDATE: It appears the 'deal' to default/restructure the banks has been designed to bypass the need for parliamentary votes, since it is theoretically not a tax.

While we have little color on what kind of carnage the President of Cyprus had to accept to his fellow countrymen, the news is that :


The terms, unsurprisingly what zee Germans wanted, are:

i) Laiki to be wound down;

ii) Bank of Cyprus to survive but with deposit haircuts of up to 40% for the uninsureds, and

iii) deal would see secured deposits in Laiki moved to Bank of Cyprus.

In other words, a deal far worse then the original on proposed by the Eurogroup last week - when the banks still existed. The key appears to be the 'saving' of the insured depositors (crucial to avoid a pan-European bank run) and the crushing of the 'whale' depositors.

A more granular breakdown of the deal's "accomplishments", but with the same result for large depositors, via Reuters:

  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 and Laiki. It will take 9 billion Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalization 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 recapitalized through a deposit/equity conversion of uninsured deposits with full contribution 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 program.
  7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.
  8. The program money (up to 10 billion Euros) will not be used to recapitalize Laiki and Bank of Cyprus.

As Bloomberg further clarifies, uninsured depositors, or those with over EUR100,000 in savings may be completely wiped out: "Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said."

Farewell Russian oligrach money. We hardly knew ye.

S&P 500 futures and EUR are surging, Gold is dropping modestly.

 We await final confirmation of the final terms of the final deal once the Cypriot people wake up (and don't forget the ECB 'standard of living' rules).  

The Cypriot Parliament still has to vote for this - and not one of them voted for it last week.



Filling the 'Cyprus' Gap



Treasuries sold off- 10Y back to 1.945% (+2bps) and 30Y 3.17% (+3bps)


This is far from over...

So let us get this straight, we have no further information on the actual terms of the deal than we did on Friday afternoon; the government (who rejected the deal last week) has no details of the deal yet; and the actual impairment for the depositors is far worse than last week's rejected deal; and the market is rallying... 

It would appear the week was spent sorting through the names of bank accounts in each bank and the one with the most ending in '-ov' is to be wound down...Laiki


Step 1 appears to be 0500GMT Eurogroup Meeting (as per Holland's Diesel-Boom) agreement...


UPDATE: There is talk that there may be no need for the government to vote for this - since it is not a 'tax' but a bank restructuring. It seems they have kept it in the bankers... the ECB (in its independent way) tells the Cypriot NCB what it should do, the Cypriot central bank then restructures its bank how it sees fit - good/bad bank and haircuts where it sees fit - this then gets around need for vote from government AND any possibility of a European Union law (on taxation) being broken...

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JeremyWS's picture

Europe's fixed.... Oh wait.

greased up deaf guy's picture

whew! that was a close one. back to american idol...

THX 1178's picture

Europe is fixed... in principle.

Supernova Born's picture

I'm not changing the channel yet. This is not over.

redpill's picture

The local politicians will be squeezed until they pop.

cifo's picture

Are we still expecting a bank run on Tue, when the banks re-open?

cifo's picture

Deal made over dinner. Barroso drinking Barolo.

notbot's picture

Oh good. I WAS going to take all my money out of my Cyprus account, but now I know it's safe. Whew.

Supernova Born's picture

So how much money will be left in banks after depositors at 100K+ euro disappear from European banks?

If they think this will only impact depositor behavior in Cyprus they are in for a surprise.

Pop goes the Wiesel.

macholatte's picture

...the one with the most ending in '-ov' is.......



Nope. That was so 1940's.

YBNguy's picture

Tyler, have those cypRIOT cams ready for the a.m., Im looking forward to some non-fictional mayhem.

TwoShortPlanks's picture

One of the pillars which must be removed, in order for the 'Great Game' to proceed, is the removal of Fiduciary (trust) from within the financial system. This is what Cyprus is really all about.

Before Gold may again be the medium of wealth storage, the current Fiat System must be erroded from a cancer within, so that no external blame may be assigned.

This has been another announcement from the team at Agenda21: It's good to be the King! https://www.youtube.com/watch?v=lZKiYgcgBAY


eatthebanksters's picture

I guess theft is no longer theft...isn't that what they are telling us?

TruthInSunshine's picture

If anyone thinks the non-resolution of the Cypress bankruptcy, involving the seizure of accounts with more than 100,000 in them, is the end of the story, stay tuned.

The bank runs in the core of the EU, and especially Spain and Italy (the firewall) will now commence, having been made a certainty by the handling of Cyprus by the incompetent incompetent EU bureaucrats, with heads firmly implanted up their asses.

Look for an follow up announcement this week of a major increase in € denominated accounts going forward, this week, by said incompetent EU bureaucrats.


sunaJ's picture

What this has morphed into - if it did not indeed set out to be this in the first place - is a much more striking phase of this currency war.  There will be an opposite, if not greater-than-equal reaction to this.  Russia and China are going hardline.  They will develop a rivaling scheme.  The question I have is, what do the major manufacturer and a major oil producer have to gain by developing some fucking competition to a tired, overbought paradigm?  That is the golden question.

TruthInSunshine's picture

I meant to write this above as my last paragraph:


Look for a follow up announcement this week of a major increase in DEPOSIT INSURANCE (well above 100,000) in € denominated accounts going forward by said incompetent EU bureaucrats - because now they will have to aggressively react to what was a very predictable response by any rational person or entity having more than aforementioned amount on deposit in any EU bank.

Also, look for tremendous pressure on € denominated money market accounts.

e_goldstein's picture

It's not theft, it's rehypothication--or at least that's what Corzine told me.

anonnn's picture

The Deemer-In-Chief has made his pronunciamento. Adjust your viewpoint accordingly.

Lore's picture




Are Cypriot MPs a moral bunch?  Do they have guts and courage?  


sunaJ's picture



Strike one: Violating Godwin's Law.

Strike two: Recommending lawsuits as salvation.


Lawsuits??  That's the problem.  Take your bit of cheese and maybe you won't get your neck snapped.  No.  No more lawsuits.  Outright fraud and treason has been, if we are lucky, barely addressed by tort law.  They do not give a shit about what payout they give you.  They own the bank, so stop thinking like a fucking lemming.  Criminal court for this shit.

Lore's picture

Come off your high horse. You refer to criminal court for the same reason I mention Hitler.  These people are evil.  The time to stand up is NOW, before it escalates.

sunaJ's picture

Okay, +1 for mentioning Hitler's appeasement strategy, since Godwin's Law does not really apply when facing true corporate fascism.  I cannot, however, do anything about the lawsuits.  They are the crumbs to the mutts, flung from the table of those that think they are elite.

Lore's picture

You're right.  I'm not under the illusion that any tier of psychopaths gives a hoot about human cost. I just see their behavior as still somewhat and temporarily constrained by "the social fabric," to use Kyle Bass' term.  There's still time for wiser hands to intervene and pre-empt. 

Oh, to be a fly on the wall at some of the meetings around the world!

new game's picture

every 'body' in volved has not got what they deserve yet...

mjcOH1's picture

"Are we still expecting a bank run on Tue, when the banks re-open?"

I see you're an optimist.

The Big Ching-aso's picture

A run on the banks vs a bank on the run.   I guess they somehow are linked.  

TwoShortPlanks's picture

A run on the Banks is exactly what's been happening while the doors have been closed....to the public!

Thank You!

This has been another announcement from the team at Agenda21: Ben Dover is not an employee, it's a Mission Statement!

Perpetual Burn's picture

Jokes on you if you still think Russians have not transferred their money out yet.

Manthong's picture

It’s just a good thing that there is no volatility in US equities anymore,

NoDebt's picture

30 minutes to spare before the new episode of The Walking Dead.  That was close.  Glad it's all fixed. 

AlaricBalth's picture

I've never watched that show. Is it about European banks?

Cathartes Aura's picture

gotta love the use of the word "fixed" - as in the dog's bollocks?

aka, neuter'd.

EscapingProgress's picture

There will be no real solution. Just like there is no real solution for any of the PIIGS to this day. These Troika douche bags will still be talking about "solutions" for Cyprus right up until the next flaming zombie domino falls and everybody forgets about little Cyprus.

grunk's picture

They'll be no impairment of any accounts ending in -utin."

defencev's picture

They'll be no impairment of any accounts ending in -utin."

This is pretty good! LOL

The Big Ching-aso's picture

I'm waiting for the day when a tax isn't a real tax, a bankruptcy isn't a real bankruptcy, and an ass-rape isn't a real rape.  Oh, wait.

howenlink's picture

You meant an ass-rape isn't a real ass-rape.  An ass-rape could be a bank statement or an ATM machine.

franzpick's picture

Yes, this whole episode has revealed the solution: Gandhi-like non-participation, vote against corruption with WITHDRAWAL swipes of your ATM/bank cards, all the way to $1.00. 

Depositors of the World Disperse (the "DWOBBLIES"?),  the ZeroHedge ZeroBalance faction. or maybe the ZeroHeroes...

EscapingProgress's picture

When will the people start robbing the banks?

The Big Ching-aso's picture

This is amazing.   Deposit Insurance was never needed because The Whales' deposits are the deposit insurance.   Wow, I bet they won't get over this irony especially if they've contributed to the Deposit Insurance fund.

new game's picture

so - all that said carry on - no defalt, cyprus will bow to the ptb were right- clap, clap, clap.

what has been learned; this mutha fuckin experiment is not going to fail even if we blow the lab off the face of the earth.

sociopath narciss. do not see the world as we do. their power of credit is the new bullets of control.

they are getting ever more desperate to avoid defaults-seizing private property, a bedrock of self determination and liberty.

IMO the first shot that made a splat has been fired. if this doesn't get violent soon, well, a whole lotta people are in for a long period of time being controlled in ways they never dreamed of./..

akarc's picture

How will this fix Cyprus? When/"IF" them banks open who in Gods name will leave any money in them. Damn they been trying to max out the ATMS

NoDebt's picture

You ask too many questions.  Just go watch TV.  It's all fixed.  That's all you need to know.

MsCreant's picture

That is EXACTLY what is being said on the mainstream news this very early morning. So many lies were being told I was floored. I can't sleep.

toys for tits's picture

They now have maximum withdrawals limits.  

So if you go to the bank everyday to withdraw money, then they are going to try to talk you into keeping money on deposit.

The Big Ching-aso's picture

Raping a whale doesn't come without ramifications.  Usually they flip out and kill things.