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Have The Russians Already Quietly Withdrawn All Their Cash From Cyprus?

Tyler Durden's picture




 

Yesterday, we first reported on something very disturbing (at least to Cyprus' citizens): despite the closed banks (which will mostly reopen tomorrow, while the two biggest soon to be liquidated banks Laiki and BoC will be shuttered until Thursday) and the capital controls, the local financial system has been leaking cash. Lots and lots of cash.

Alas, we did not have much granularity or details on who or where these illegal transfers were conducted with. Today, courtesy of a follow up by Reuters, we do.

The result, at least for Europe, is quite scary because let's recall that the primary political purpose of destroying the Cyprus financial system was simply to punish and humiliate Russian billionaire oligarchs who held tens of billions in "unsecured" deposits with the island nation's two biggest banks.

As it turns out, these same oligrachs may have used the one week hiatus period of total chaos in the banking system to transfer the bulk of the cash they had deposited with one of the two main Cypriot banks, in the process making the whole punitive point of collapsing the Cyprus financial system entirely moot.

From Reuters:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

 

No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

So while one could not withdraw from Bank of Cyprus or Laiki, one could withdraw without limitations from subsidiary and OpCo banks, and other affiliates?

Just brilliant.

And if there was any doubt that the entire process of destroying one entire nation was simply to punish Cyprus, it can be completely cleared away now:

ECB officials contacted Latvia, another EU country that has received large Russian deposits, to warn authorities against taking in Russian money fleeing Cyprus, two sources familiar with the contacts said.

 

"It was made clear to our Latvian friends that if they want to join the euro, they should not provide a haven for Russian money exiting Cyprus," a euro zone central banker said.

If one thinks there is any material Russian cash therefore left in Cyprus with this epic loophole in place, we urge them to make a deposit in the insolvent nation. One person who certainly will not be allocating any of his money into Bank of Cyprus is German FinMin Schaeuble:

German Finance Minister Wolfgang Schaeuble said the bank closure had limited capital flight but that the ECB was looking closely at the issue. He declined to provide figures.

Perhaps because if he did, it would become clear that the only entities truly punished by this weekend's actions are not evil Russian billionaires, but small and medium domestic companies, and other moderately wealthy individuals, hardly any of them from the former "Evil Empire."

Companies that had to meet margin calls to avoid defaulting on deals were granted funds. Transfers for trade in humanitarian products, medicines and jet fuel were allowed.

The stealth withdrawals by Russians of course means that the two megabanks are now utterly drained of capital, and that the haircuts on those who still have unsecured deposits with the two banks will be so big it will likely mean a complete wipeout of all deposits. As in 0% recovery on your deposits!

In other words, by now any big Russian funds in Cyprus are long gone, and the only damage accrues to the locals: for one reason because their money over the critical EUR100K threshold has been "vaporized", and for another because the marginal driving force and loan demand creator in Cyprus, the Russians, are gone and are never coming back again.

This is what passes for monetary real-politik in the New Normal - an entire nation becomes collateral when pursuing a wealthy group of people. And the "wealthy group" is victorious in the end despite everything...

If we were Cypriots at this point we would be angry. Very, very angry.

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Mon, 03/25/2013 - 17:06 | 3374116 flacon
flacon's picture

War aginst electronic paper money by the electronic paper money war mongers. Is that why Zibnew said TECHNOCRATIC because it's like "THIS BEAT IS TECHNOCRATIC"?

Mon, 03/25/2013 - 17:06 | 3374132 Divided States ...
Divided States of America's picture

There has never been a moment in the history of mankind where the wealthy gets hosed for the sake of the common peasantry. I thought this was the case....but guess I was an idiot.

Mon, 03/25/2013 - 17:14 | 3374160 redpill
redpill's picture

The common peasantry will get their insured deposits, but there won't be much to do with them now that the Cypriot economy will be plunging into an abyss of depression for the next decade at least.

Mon, 03/25/2013 - 17:16 | 3374173 gmrpeabody
gmrpeabody's picture

You just can't make this shit up...

Oh wait..., maybe you can...

ROFLMAO

Mon, 03/25/2013 - 17:22 | 3374213 whotookmyalias
whotookmyalias's picture

LOL!  Take that!  Oh wait.....

Mon, 03/25/2013 - 17:30 | 3374240 Kitler
Kitler's picture

 

Job well done. Bonuses for everyone!

Mon, 03/25/2013 - 17:40 | 3374281 gmrpeabody
gmrpeabody's picture

Apparently, the toughest thing the Russians had to do was to remember their pin code.

Mon, 03/25/2013 - 17:43 | 3374291 The Phu
The Phu's picture

Me thinks Dijsselblom's template needs to be fixed... the next time the EU tries this, they better not leave the back door open.  Oh, those crazy Russkies!!!! Sneaky little bastards.

Mon, 03/25/2013 - 17:46 | 3374304 THX 1178
THX 1178's picture

Does this all assume that the 100% haircut for the remaining cypriot bank accounts will be enough? And if the 100% haircut happens, wont it mean riots in the streets like nobody's business? I mean-- isn't "collapse" pretty much certain? Economic or social? Or both?

Mon, 03/25/2013 - 17:54 | 3374339 James_Cole
James_Cole's picture

The amount of stupidty involved with this mess is truly mind-boggling. Each time you think they've reached the limit they go further.

FORWARD!

Mon, 03/25/2013 - 18:04 | 3374382 SafelyGraze
SafelyGraze's picture

just got back from Russian Oligarchs meeting

boy are they mad

had planned to deposit billions in latvia, but ..

nixsky on that!

they are asking what to do with billions and billions

can't park it in a bank

can't park it in bit coin

where oh where to park it

if only there were a way

 

Mon, 03/25/2013 - 21:59 | 3374430 TruthInSunshine
TruthInSunshine's picture

Lest there be any doubt that the entire global fractional reserve fiat (whatever fiat, so long as it's conjured & distributed by a central Modern Money "Mechanic/Creature") financial system is a giant criminal racketeering enterprise:

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.

 

No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.

I was never supportive of this whole destructive exercise in idiocy that was ostensibly implemented to "save" Cyprus from the moment it was spoken of (in whatever variation of confiscation schemes that it was). The claims about "hot Russian money" and Cyprus being some tax haven island nearly singularly floated on pillars of dirty laundry seemed  to be blown massively out of proportion by the Main Stream Proxy Mouthpiece Media from the start, and rightfully warranted a very healthy dose of skepticism all along (which the actual data now shows was a justified skepticism).

This was all another case (in a long history and volume of such cases) of a blood letting of average citizens in a nation that claims to be an allegedly sovereign one (but which clearly has a deeply captured political and regulatory structure), on the altar of the global banksters, after all, just as many initially surmised.

Continental Europeans will see the Cypriotic Treatment, in all types of variations on the basic scam. Unless someone could prove that this isn't and hasn't been some intentional knocking over of dominos, cascade now beginning, that should be any rational person's presumption.

As a brilliant, truth-y philosopher, observer of "the system," & comedian once said:

"They're coming for whatever you have. And they'll get it eventually. They'll get it all."

Mon, 03/25/2013 - 23:20 | 3375423 Spirit Of Truth
Spirit Of Truth's picture

Told ya....that Russians are plotting the destruction of world Capitalism.  The Kremlin's malintent never changed with the supposed end of the Cold War and seeming collapse of Communism:

http://thespiritoftruth.blogspot.com/2010/03/quick-review-of-history.html

http://thespiritoftruth.blogspot.com/2009/05/russias-secret-war-plans.html

http://thespiritoftruth.blogspot.com/2011/01/historical-epiphany-russias...

Wouldn't be surprised if using Cyprus as the initial falling domino of the worldwide Ponzi scheme of high finance is part of their grand strategy.

Mon, 03/25/2013 - 22:54 | 3375462 willwork4food
willwork4food's picture

@Truth- Thanks for that. Good views on things. Carlin would agree.

Mon, 03/25/2013 - 23:07 | 3375515 Bananamerican
Bananamerican's picture

"It was made clear to our Latvian friends that if they want to join the euro, they should not provide a haven..."

Who the hell would "want" to join the EU at this point?

Tue, 03/26/2013 - 00:13 | 3375617 Kirk2NCC1701
Kirk2NCC1701's picture

Not so sure everyone can handle the truth or stay focused on it:  That the Brits had even MORE money in Cyprus banks than the 'Oligarchs'.  How did the Bail-In/Get-Out work out for the Brits? 

I can see it now: Bond and Miss Onatop do a midnight raid.  Bond did what Bond does: A quick in & out, get the job done.  She gets the media flash, he gets the stash.  For Queen & Country, eh James?

While Bond does Onatop, MI-6 does Berezovsky.  Both killer deals.

Tue, 03/26/2013 - 05:12 | 3375869 StandardDeviant
StandardDeviant's picture

Hell of an accusation, that last one.  What is your evidence, Mr. "handle the truth"?

Mon, 03/25/2013 - 18:31 | 3374446 cifo
cifo's picture

Who TF keeps billions in a bank?

 

Mon, 03/25/2013 - 19:36 | 3374691 ILLILLILLI
ILLILLILLI's picture

Well, when the warehouse is overflowing with banknotes, you gotta put them somewhere....

Mon, 03/25/2013 - 21:23 | 3375104 Matt
Matt's picture

Not Walter White, that's for damn sure:

http://www.stockme.fr/img93418ca6f1/BB.jpg

Mon, 03/25/2013 - 20:07 | 3374827 PathForward
PathForward's picture

To keep the entertainment rolling, the Russian oligarchs could purchase a few silver futures contracts and then stand for delivery...

Mon, 03/25/2013 - 19:22 | 3374639 Turin Turambar
Turin Turambar's picture

Stupidity?  I'm not so sure.  If I were a Cypriot bankster, I'd prefer to make a hole available for the Russians Oligarchs through which they could remove their monies.  It sure beats the alternative - a 6 foot deep hole for me in which to take a dirt nap.

Mon, 03/25/2013 - 19:47 | 3374749 Clycntct
Clycntct's picture

I think your on to something$

Mon, 03/25/2013 - 22:04 | 3375256 SDShack
SDShack's picture

I bet the Cyprus bank officials were more than happy to move that Oligarch money for the right "fee", even thought the banks were supposed to be closed. The first deal was stealing 10%. The final deal was stealing 40% up to 70%. Something tells me the Cyprus bank officials would be happy with 10%, and probably the Russians too. 10% of 40B Euro (supposed held by depositers over 100,000E) can buy you out of a lot of trouble. So what if they are breaking a few laws. The rule of law doesn't exist for bankers anyway.

Mon, 03/25/2013 - 22:38 | 3375413 masterinchancery
masterinchancery's picture

Yep, and maybe family members too. Whereas gold in a safety deposit box is the alternative.

Tue, 03/26/2013 - 03:06 | 3375710 The Navigator
The Navigator's picture

You'll know that the Russians got their money out if (IMF Chief) Christine Lagarde is still above ground in 30 days.

Mon, 03/25/2013 - 21:41 | 3375158 Mike in GA
Mike in GA's picture

Oh I'm sure our current crop of economic lever pullers will redefine world-class stupidity when it's their turn. 

Especially when the Nobel Prizewinners opinions are included.

 

Mon, 03/25/2013 - 23:55 | 3375605 ejmoosa
ejmoosa's picture

Well, these are, in the end, government officials, correct?

 

Did your eally expect a different result in the end?

Mon, 03/25/2013 - 18:18 | 3374414 akak
akak's picture

 

Does this all assume that the 100% haircut for the remaining cypriot bank accounts will be enough?

Nyet!

Due to the flight of Russian capital from the banks in Cyprus, all Cypriot small and medium-sized depositors will therefore now be forced to take a 150% haircut on their accounts --- that's right, folks, they will have to PAY for the privilege of having lost their life savings!  That is simply justice, bankster-style.

Mon, 03/25/2013 - 18:22 | 3374427 fonzannoon
fonzannoon's picture

Akak they made it clear insured deposits were to be left alone. That was their whole stupid theme today. How can tomorrow's theme be "insured deposits to be confiscated to make up for uninsured deposits having transferred out"?

Mon, 03/25/2013 - 18:37 | 3374476 Al Huxley
Al Huxley's picture

You're assuming there has to be some kind of coherency and historical continuity in the story Fonz, in which case your point would be valid.  But as the media and politicos show time and again, they have absolutely no problem changing today's story without ever referencing or even considering whether it contradicts yesterday's story.  They refuse to acknowledge the issue, so from the media's perspective it doesn't exist.  'We've always been at war with Eastasia'.

Mon, 03/25/2013 - 18:45 | 3374508 fonzannoon
fonzannoon's picture

true enough. if they end up taking insured deposits after all I just hope it shakes people up. But it won't.

Mon, 03/25/2013 - 22:44 | 3375426 jon dough
jon dough's picture

I think the Russkies got the week so they could pull this off. Rather than it being a big, fat, OOPS, it was part of the plan, all along.

Mon, 03/25/2013 - 19:54 | 3374781 CptAwesome
CptAwesome's picture

No, we have always been at war with Eurasia.

/sarc

Mon, 03/25/2013 - 23:17 | 3375542 jeff montanye
jeff montanye's picture

"Winston Smith works as a clerk in the Records Department of the Ministry of Truth, where his job is to rewrite historical documents so they match the constantly changing current party line. This involves revising newspaper articles and doctoring photographs—mostly to remove "unpersons," people who have fallen foul of the party. Because of his proximity to the mechanics of rewriting history, Winston Smith nurses doubts about the Party and its monopoly on truth." 

another terrorist?

Mon, 03/25/2013 - 20:49 | 3374987 RockyRacoon
RockyRacoon's picture

DjizzBoom diplomacy.    I like the sound of it.

Mon, 03/25/2013 - 21:41 | 3375160 TheFourthStooge-ing
TheFourthStooge-ing's picture

akak said:

Due to the flight of Russian capital from the banks in Cyprus, all Cypriot small and medium-sized depositors will therefore now be forced to take a 150% haircut on their accounts --- that's right, folks, they will have to PAY for the privilege of having lost their life savings!  That is simply justice, bankster-style.

Your comment, in addition to being an exemplary example of cynical cynicenism, might prove to be more prescient than you realize.

Due to the Russian capital floating away from Cyprus like the smoke from dozens of burning pallets of €100 notes, the real underlying problem (as opposed to the official problem, which the drastic "solution" of seizing bank deposits was supposed to resolve) remains unaddressed.

Quite possibly, someone within this clusteurofuck is shitting gold-plated tungsten bricks because the problem they intended to paper over with the stolen loot remains unpapered.

The next time another bizarre "template" is proposed, keep an eye out for unraveling in unexpected places.

Mon, 03/25/2013 - 17:47 | 3374316 jcaz
jcaz's picture

Blah- the smart, dirty money was gone from Cyprus a month ago- what do you think started all this in the first place?

Mon, 03/25/2013 - 20:36 | 3374945 The Big Ching-aso
The Big Ching-aso's picture

Well they may have withdrawn quietly but I have a feeling they'll return with a Big Bang.

Tue, 03/26/2013 - 06:59 | 3375953 Mountainview
Mountainview's picture

I wonder if the oligarchs had no better idea than to leave their money on savings accounts...I suppose Cyprus bank worked as intermediaries and the money traveled on to God knows where!

Mon, 03/25/2013 - 17:52 | 3374323 chubbyjjfong
chubbyjjfong's picture

The bank manager with a gun held to his childs head: "Yes sir, no pin neccessary. How much did you need transferring?.. certainly".

Mon, 03/25/2013 - 18:10 | 3374394 Gief Gold Plox
Gief Gold Plox's picture

BTW Tyler just gave you the comment of the day award!

https://twitter.com/zerohedge/status/316305602739597312

Mon, 03/25/2013 - 18:31 | 3374449 Pairadimes
Pairadimes's picture

This explains a lot. The fact that certain wealthy Russians were able to get their money out before taking a haircut explains why there is not a large pile of Cypriot bureaucrats in the street in front of the bank.

Mon, 03/25/2013 - 19:50 | 3374768 Muddy1
Muddy1's picture

digitized banking, baby

Mon, 03/25/2013 - 21:18 | 3375082 Dungeness
Dungeness's picture

And just as tough, simply mention that oil and gas supplies to the EU could be on holiday as well. Perhaps, indefinitely?

This drama is better than any episode of As The World Turns...

LOL

Mon, 03/25/2013 - 22:40 | 3375418 masterinchancery
masterinchancery's picture

Yes, a cold winter could have been unfortunate, but now all is good.

Tue, 03/26/2013 - 00:44 | 3375655 Kirk2NCC1701
Kirk2NCC1701's picture

Chekhov tell me that he still doesn't bank in Cyprus, ever since his ancestor Ollie Garkov lost his shirt there.  Kirk out.

Mon, 03/25/2013 - 21:18 | 3375090 sunnydays
sunnydays's picture

No wonder there has been silence from Russia and they did not make a deal with Cyprus.  They were already moving all their money.   

I would loved to have seen the faces of the EUC when they found out the Russian money was gone. 

Classic!

Mon, 03/25/2013 - 22:26 | 3375359 dtwn
dtwn's picture

So this is why Putin wasn't so upset today. . . . . .

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