Banking Panic in Cyprus as accounts raided by European Union and government

Cyprus bank bailout

Germans kill Cyprus offshore banking industry and tourism

German Chancellor Angela Merkel accomplishes what the Nazis could not: ruling Europe, UK

60,000 Britons out millions of pounds thanks to the Germans

by West Side Davie

Who wants to holiday in Cyprus? How about some offshore banking transfers or savings? Thinking of buying a vacation residence?

For Brits, Europeans and just about anybody else in the world the answer to these questions just became a solid “NFW” (that’s slang for “No thank you”) as the Cypriot government moved on Friday to seize up to 9.9% of all bank accounts in the country. Electronic transfers were stopped and the auto-teller machines were emptied within a few hours of the announcement.

“This is a breach of fundamental property rights, dictated to a small country by foreign powers and it must make every bank depositor in Europe shiver. Although the representatives at the bailout press conference tried to present this as a one-off, they were not willing to rule out similar measures elsewhere – not that it would have mattered much as the trust is gone anyway.

If you can do this once, you can do it again. if you can confiscate 10 percent of a bank customer’s money, you can confiscate 25, 50 or even 100 percent. I now believe we will see worse as the panic increases, with politicians desperately trying to keep the EUR alive.

Depositors in other prospective bailout countries must be running scared – is it safe to keep money in an Italian, Spanish or Greek bank any more? I don’t know, must be the answer. Is it prudent to take the risk? You decide.

This is a major, MAJOR game changer and the fallout will be with us for a long time to come. I believe it could be the beginning of the end for the Eurozone as this is an unbelievable blow to the already challenged trust that might be left among investors.”

… Lars Seier Christensen,, CEO Saxo Bank, Denmark on his blog

If you have below 100,000 Euros in a Cyprus bank the government will only seize 6.9%. How nice of them! What’s next to go, holiday home expropriations via a 25% tax? Why not? Once a government starts grabbing private property, that’s really it. We can talk about how much to take and what to take but debating the morality is over – it’s a done deal.

Why is this happening, you might ask? The Germans won’t bail out Cyprus’s banks unless everybody Cyprus takes a hit: much the same as the Barbados Government did with CLICO victims. It’s really all the same, isn’t it?

This is bad business for Barbados too – and for a lot of reasons.

People are going to be nervous and reluctant to spend or travel. All those condo projects on the island are, overnight, looked at in a different way by Brits and Europeans. Everything is unsettled. Throw in the Harlequin Hotels and Resorts scandal and there isn’t much except clouds on the horizon for travel and tourism in Barbados and the greater Caribbean.

Further Reading

Daily Mail: The great EU bank robbery: British taxpayers to bail out victims of outrageous raid on Cyprus accounts

About the cartoon: Someone sent it around in an email with a Greek caption. We’ve inserted the English caption but we haven’t a clue where to give credit. If it’s yours, it’s brilliant, and please give us permission to use it!

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13 Comments

Filed under Barbados, Business & Banking, Offshore Investments

13 responses to “Banking Panic in Cyprus as accounts raided by European Union and government

  1. Will this affect Business accounts too?
    I know a lot of Russians who use Cyprus as a Off Shore set up……
    big big numbers

  2. It was to get at those Russian accounts which was the real motivation.

    We forget the whole start of the “offshore” financial business was for people to protect themselves from their own government,
    Obviously there has been an awful lot of dodgy money being salted away, in offshore accounts as well.

    Just think at the moment governments have to compete for us to set up our businesses in their countries. So those offering the best fiscal terms, administration services and reliable infrastructure get the business. Knowing that another country and tell them to help themselves to the contents of your bank account whenever they want (sorry under special circumstances as defined by ?) somewhat changes things.

    Look for the gold price to shoot up so more muggings coming !

  3. John Smith

    Well, at least we now know where those wonderful “News of The World” wannabe journalists are hiding…
    BFP, how far have you fallen?
    West Side Davie, once you get past the Daily Mail rhetoric that is prominently displayed on their front page every time Germany beats England in Football (The Panzers are coming, Blitzktieg!) and actually check a dictionary to understand what Nazi means before using big words you read in some comic book, people might actually take you seriously.
    If you would have listened to more factual news sources you would have seen that the German Minister of Finance actually was against the 10% for fear what it would do to investors confidence.
    But the EU I believe had enough of these countries playing a game and asking everybody else to pay for their follies.
    Fact is that 30% of the bank accounts in Cyprus are Russian owned and used to launder money under very shady circumstances. Because Cyprus had the weakest banking regulations fraudulent investments were the run of the day. No wonder Cyprus has one of the highest banking densities in the world, it was banking wild west style.
    BBC interviewed a British Couple yesterday who were living in Cyprus on an early retirement and who had moved all their money to a local bank. When between sobs they were asked why they moved all their money to Cyprus the response was simple: Nobody else would give them the great conditions Cyprus would. That does sound a bit like Clico with their fabulous promises of investment returns…
    Funny, how many of those Clico investors would now with the greatest of pleasures take a 10% hit in return for the rest of their investment?
    Is the Cyprus idea a good one? Well, I believe that the German Minister of Finance was right, as much as we want countries to be more accountable, and Ireland has proven that it can work, taking 10% off everybody’s bank account will do little to re establish the confidence in the markets we so desperately need and I do not believe that it will pass the Parliament in Cyprus. On the other hand, it is about time for somebody to be held accountable and for the party on other person’s cost to stop.

  4. Bill

    Stick to your competencies BFP. Regurgitating tabloid headlines makes me cringe.

  5. 202

    Tabloid headlines? I didn’t know that CNN, BBC and Google News were tabloids. You learn something new every day. If that 10% levy goes through without a riot or civil protest, look out for Chris and crew trying the same with the supporting statement that it has been done in other jurisdictions and its for the good of the country. What’s next – reduced NIS pension payments so that government has more to spend (sorry, invest)? Remember that 15 – 17.5% temporary VAT increase and all those who supported it as a good TEMPORARY measure?

  6. Fourth Reich alive and Well

    Germany wanted all these countries in th EU with non floating currency so they could sell their goods and services. instead these countries should have been on their own currencies for 10 years until the got their countries financial house in order.

    If the Russian fraudulent accounts were the goal, why attack across the board!

  7. 31

    what is the difference between this and devaluating bds dollar in Barbados?

  8. Bill

    Anonymous I don’t see BBC, CNN etc calling Germans Nazis. Google news only aggregates sources so yes it does include tabloids.

    If Cyprus were independent they would use monetary stimulus to prop up the banks and it would have very similar effects on deposit holders.

  9. Green Monkey

    Did Cyprus government & IMF miscalculate when they they overlooked the fact that much of the money they would confiscate from the Cyprus bank accounts belonged to ex-KGB agents or to Russians with ties to the spy agency?

    All Hell Is Breaking Loose After Cyprus Catastrophe

    snip

    The people at the IMF, which have spearheaded this disaster, never expected the ‘Cyprus Solution’ to blow up in their face the way it has….

    “This has quickly turned into a PR nightmare because it is not a ‘tax,’ but instead a ‘confiscation.’ They have stolen KGB money in order to meet the liabilities of the banks. Up to this point, bank depositors have been held whole in this most serious Western, and by consequence international financial meltdown.

    snip

    To take money from the leading economic entities in Russia, is to take money from the former KGB officers, and taking money from them is extremely dangerous. I think the reality has quickly set in for the leaders of Cyprus that they have aided in the confiscation of the most serious and dangerous money you could possibly touch. It has these leaders more afraid for their lives than their bank accounts.

    http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/3/18_Sinclair_-_All_Hell_Is_Breaking_Loose_After_Cyprus_Catastrophe.html

  10. @ John Smith
    Remember Clico only offered half a % more than the other financial institutions to attract funds to them on “deposit” so to speak. Likewise the Icelandic banks (prior to collapse) only offered a half a % it does not take much when interest rates are so low.
    @ Anonymous
    As you say no difference in both cases good savers are hurt but people with big debts (like government) benefit. Just like inflation.

  11. sith

    @Anonymous
    “what is the difference between this and devaluating bds dollar in Barbados?”

    My bet woud the big difference is the amount of the devaluation. Do we all really think the Barbados dollar which has no market to trade in is worth half the value of a US dollar? In Cyprus 90% of a Euro which can be traded is still a whole lot better than 100% of a Barbados dollar that has no market to trade in. Barbados monetary system is adding to the inability to control the economy. You could tax the Barbados dollar savings by 50% and it would have no effect on the continuing inability to attract US$ from tourists and investors. If the Barbados dollar had a free floating currency the reality of a free monetary policy would be felt very quickly either with an increase or decrease in currency value.

  12. just want to know

    Drumbeat, I am so glad that someone remember the investors in CLICO. The election over so Fumble S. & his yardfowls has put CLICO to rest!!

  13. Well in Cyprus it actually looks like capitalism is going to be allowed to prevail, or very nearly, that means the dodgy bank (Laiki) is going to go under and the shareholders and staff loose out and both knew the risks (or were supposed to) bond holders will also loose out but receive some equity (and will not be protected like previous solution suggestions), small deposits are protected by insurance, But all other depositors who used the good banks are fine, except for some tax bills which will come to all.
    The politicians who strongly suggested that the bank buy all those dodgy Greek (and Cypriot) bonds pretend they never did and get off scot free and of course they always do. Gordon Brown made Lloyds (known as the “turtle” bank because it was slow and steady) take over the racy HBOS rather than let it go down and of course nearly the whole thing came down and again he got off scot free. So what do the people who choose to deposit money and buy shares in the turtle bank do? Suck salt. And of course overspending politicians is why the government bonds were issued in the first place. Well who is scot free again?

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