Stunning Bailout For Cyprus —Bank Depositors To Get Instant 10% Tax Before Banks Reopen This Week

[dixiegrrrrl]

Eurozone leaders and the IMF on Saturday announced an unprecedented levy on all deposits in Cypriot banks as the sting in the tail of a 10-billion-euro bailout for the near-bankrupt government in Nicosia.

The levy will see deposits of more than 100,000 euros in Cypriot banks hit with a 9.9 percent charge when lenders re-open their doors on Tuesday after a scheduled bank holiday on Monday.
Under that threshold and the levy drops to 6.75 percent.

http://www.businessinsider.com/cyprus-bailout-deal-2013-3

Notice what happened: the theft of depositior's money was announced on today, Sat. when banks are closed until Tuesday.
All electronic banking is halted also.
On Tuesday customers will find that anywhere from 6.7% to 9.9% of their money is...gone.
Those who hold cash out of banks have lost nothing.

But other banks in Europe will suffer if depositors decide they cannot trust the government and the banks.
Oh.....Nothing prevents our government from doing the same, the gov't declared bank holidays during the Depression.

[JimDandy]

1. When has our government

taxed depositors a percentage of their deposits held in a bailed out U.S. bank? Before or after the FDIC was formed?

[dixiegrrrrl]

2. Bank holidays during the Depression

I could have been clearer...

[JimDandy]

3. Worried me there!

Thanks.

[NutmegYankee]

6. I thought bank holidays were to stop runs on deposits. nt

[dixiegrrrrl]

12. Back then, they were. But the effect is the same..

Your bank suddenly and unexpectedly tells you that you cannot access your money for X number of days.
Most people keep most of their spending money in the bank.

In Cyprus's version of a 3 day bank holiday,
suddenly you cannot use the debit card, or the ATM card to get money out, the bank is not only closed
but so is access to your money.
And, in the case of Cyprus, when the bank opens, you have less money than before the holiday.

[HiPointDem]

15. Bank holidays didn't take or tax deposits. They simply closed the doors, typically for a matter

of days.

[dixiegrrrrl]

16. Cyprus seems to have done both.

They announced the ..."tax" this am, AND stopped all electronic banking till Tuesday when banks are physically opened again.

[HiPointDem]

29. which is the difference between what happened in the depression and what's happening in cyprus,

that's the point of the comment.

[dipsydoodle]

4. c. half of those accounts

are held by non resident Russians. http://www.democraticunderground.com/1014426959

[dixiegrrrrl]

5. awww jeez, Dipsy..I did not see your earlier post.

Sorry.
But still, in today's world of global banking, does it matter who has the account?
locking the accounts and stealing some of the deposits is a pretty brazen move.

[dipsydoodle]

8. Not a problem

especially from you.

As I pointed out elsewhere the woes of Cyprus's banks originated with loans to Greek banks which went sour and also the collapse of their construction industry as happened even more so in Spain. They badly need re-capitalising which is what some of this bailout may refer to but only, I guess , if one or more is nationalised.

[dixiegrrrrl]

9. Going to be really interesting on how europeans react to this.

The instutional depositors may not do much, but what will the average citizen do, I wonder.

[dipsydoodle]

11. I've edited this - What you might not appreciate

Last edited Sat Mar 16, 2013, 04:31 PM - Edit history (1)

is that below the level of 100,000 Euros funds are protected by the EU against adverse circumstances. The UK figure for example is £80,000.

edit it add :

There was later news on this :

People in Cyprus with less than 100,000 euros in their accounts will have to pay a one-time tax of 6.75%, Eurozone officials said.

Those with greater sums will lose 9.9%.

Depositors will be compensated with the equivalent amount in shares in their banks.

>

The levy itself will not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.

http://www.bbc.co.uk/news/world-europe-21814325

[oldhippie]

19. So does that mean that the people with less than ....

... the 100,000 Euros in deposit in those banks won't be taxed? Or that they will be reimbursed the tax by the EU? What is the effect of this protection to the smaller depositors?

[dipsydoodle]

22. There are two issues

see link at reply #21.

One is that of guaranteeing deposits IF a bank folds completely.

The amounts referred to here are a different matter - they are a tax by the Cyprus govenment.

[oldhippie]

25. Thanks, ...

It was a little confusing, and I am genuinely curious as to how this will work.

The depositors getting an equivalent amount of stock in the banks is an interesting twist. So people are going to become involuntary stockholders in the bank? Hmmmm, I wonder how that would go over in the US?

Anyway, thanks for the info. I would appreciate hearing more as you keep up with this.

[FarCenter]

7. There's no reason why the US govt couldn't levy a property tax on financial assets.

Property taxes are levied by state and local governments on real property and chattel.

Inheirtance and estate taxes are property taxes.

[dixiegrrrrl]

14. It is WHO is setting the taxes, tho. It wasn't "state and local governments "

Would you like to wake up Monday and find your bank decided today to take a certain % of your savings
and give it to a bigger bank in another country, without any discussion with you?

[dipsydoodle]

21. see edit to #11 above

and this : http://moneyfacts.co.uk/guides/savings/depositor-protection-schemes-if-a-bank-goes-bust180112/#European%20Economic%20Area

With effect from 1 January 2011, UK, EU and EEA deposit protection has been unified under the terms of the Deposit Guarantee Schemes Directive. This means there is a Europe-wide minimum of €100,000 protection per individual per bank.

http://moneyfacts.co.uk/guides/savings/depositor-protection-schemes-if-a-bank-goes-bust180112/#European%20Economic%20Area

[dixiegrrrrl]

23. Does that mean the money Cyprus takes is "insured"

and the depositor will it get it back???

[dipsydoodle]

26. Two issuesi independent of each other.

First under EU law deposits up to 100000 euros are guanteed if a bank folds completely.

Secondly thats not whats happened. The tax of 10% whatever mentioned is a TAX by the government under which those affected will get bank shares in return. If the banks did fail and the governemt had to back those sureties the country would sink without trace. Thats part of the reason why the uk partly nationalised RBS and Lloyds - to ensure they didn't fail.

[FarCenter]

28. It is the Cyprus government that sets the tax

The parliament is meeting Monday to pass the legislation.

It is either loose 10% to a tax or lose most of the money to a banking collapse and withdrawal from the Euro.


CYPRUS PRESIDENT: Nation Faces Total Financial Collapse And Euro Exit Without Bailout

Read more: http://www.businessinsider.com/cyprus-bailout-statement-by-the-president-of-the-republic-mr-nicos-anastasiades-2013-3

[hay rick]

10. Globalization irony.

The Reuters article cited in dipsydoodle's thread: http://uk.reuters.com/article/2013/03/16/uk-eurozone-cyprus-idUKBRE92F02P20130316

From that article: "The bailout was smaller than initially expected and is mainly needed to recapitalise Cypriot banks that were hit by a sovereign debt restructuring in Greece."

The people pay for the foolishness of the banks. It sounds like the banks got into trouble by investing in foreign (Greek) bonds and a significant part of the haircut will be borne by foreign (mostly Russian) depositors.

[dickthegrouch]

13. If I had an account stolen from, I'd call the police

I hope they're ready for a massive increase in the volume of theft complaints

[oldhippie]

20. What do you think the police will do about it?

Really?

[dipsydoodle]

27. Its a government tax

Do you phone the police when your taxes increase ?

[Ruby the Liberal]

17. Cyprus is a known haven for Russian money laundering operations

I doubt this is the crowd you want to be pissing off. Good luck to them.

[dixiegrrrrl]

24. LOL..I was thinking the same thing.

[Paul E Ester]

18. whomever hoarded their money instead of putting it in their bank

Will be 10%- 6.7% richer than the person who did.

The state will also have to sell off it's state assets.

It's bad timing for the cypriots "In 2011 that they had discovered gas deposits of around 7-8 trillion cubic feet (200 billion cubic metres), 40 per cent of the EU's annual demand."

In a couple years they would be as rich as the saudi's, but will have to settle for being forever in the debt to Europe instead.

http://www.cyprus-mail.com/commerce-and-industry/gas-export-now-much-more-urgent/20130315