Cyprus Banks Like Iceland’s Dwarf Economy as Clients Pay

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http://www.bloomberg.com/news/2013-03-18/cyprus-bank-assets-dwarfing-economy-to-make-aid-exception.html

The European Union’s decision to force Cypriot savers into a bailout came after banks grew so large that they dwarfed the nation’s economy, resembling Iceland’s finance industry before its collapse.

Cyprus’s bank assets swelled to 126.4 billion euros ($164 billion) at the end of January, seven times the size of the 18 billion-euro economy, from 78 billion euros in 2007, data from the European Central Bank and the EU’s statistics office show.

The Cypriot government announced an unprecedented tax on deposits three days ago, seeking European aid after its banks lost 4.5 billion euros on Greek sovereign debt and failed to meet euro area capital requirements. Troubles on the Mediterranean island have resembled those of Iceland, which seized control of its banks in 2008 when they were unable to finance debt 12 times the size of the economy.

“The banks grew as they amassed funds from wealthy foreigners and now that size is too much for the country to handle on its own,” Philipp Haessler, a European banks analyst at Equinet AG in Frankfurt, said by telephone. “Cyprus is being made an example of.”

[dipsydoodle]

1. General updates today, Tuesday, here

http://www.guardian.co.uk/business/2013/mar/19/eurozone-crisis-cyprus-bailout-government-vote#block-51482f8bb5799f28f712f94f

and here : http://live.reuters.com/UK/Event/Eurozone_Crisis_4

In general its considered that this afternoon's vote at 4pm GMT won't pass the necessary measures, Cyprus's ability to keep its banks liquid runs out Thursday this week, next Monday is a bank holiday too and at the current rate their banks won't be open until at least next Tuesday.

You will also find a note here that It is also rumoured that the Kremlin is privately offering to help bail out Cyprus in exchange for the right to use a naval base in the Greek part of the island. http://www.democraticunderground.com/101658493

Were that to happen then Mr Zimmerman's song comes to mind : A Simple Twist of Fate. Part of the background to these woes was the absense of sufficient regulation of the US financial industry which caused the 2007 collapse. It would indeed be ironic if a bi-product of that was a Russian navel base in the Med.

[hack89]

2. Cyprus is where Russian oligarchs put their money. nt

[dipsydoodle]

3. Vote has now been moved to tomorrow - Wednesday.

according to local Cypriot news.

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4. it's like a moving target. nt