Bank of Cyprus depositors lose 47.5 pct of savings

Adan Salazar
July 29, 2013

Bank depositors in the eastern Mediterranean island of Cyprus who have been fortunate enough to have saved over €100,000 in their private bank accounts will have more than twice as much pillaged from their savings as they were initially led to believe last March, in a deal reached which bankers say is necessary to fund the nation’s $13 billion “bail-in” package.

 Bank of Cyprus huge offices in Aglandjia suburb of Nicosia Republic of Cyprus / By Petros3, via Wikimedia Commons
Bank of Cyprus huge offices in Aglandjia suburb of Nicosia Republic of Cyprus / By Petros3, via Wikimedia Commons
“The Cypriot government says depositors at the country’s largest bank will lose 47.5 per cent of their savings over the 100,000-euro ($132,519.46 US dollars) insurance limit,” reported CBC News.

Deputy government spokesman Victoras Papadopoulos said the European Central Bank had reached “a definite percentage” for the bail-in Monday during negotiations with the European Commission, the International Monetary Fund and troika representatives.

Savers were already bracing for a 60 percent wealth confiscation as initial estimates speculated the “bail in” package at around 37.5 percent, with an additional 22.5 percent of deposits being held in escrow until the government could hammer out the finer details of the bank’s restructuring.

At the same time, savers had no choice.

Banks closed for nearly two weeks after news of the “haircut,” and imposed draconian measures to prevent savers from trying to pull their cash at the last minute, “including unprecedented restrictions on debit card use and cash withdrawals.”

As terms of the deal specify, Cyprus’ second largest banker Laiki will be forced to close, and the nation’s second largest lender, the Bank of Cyprus, will impose a “haircut” on shareholders, bondholders and depositors with accounts larger than €100,000, as funds are only insured up to that amount.

The confiscation of savers’ funds should be viewed as a red alert warning to flagging nations and all who place faith in the Eurozone monetary system. They can and will plunder the wealth of middle class citizens without thinking twice.

“Anyone with an ounce of common sense who has over €100,000 euros deposited in European banks should now be scrambling to convert some of it to precious metals or at least spreading it out in smaller amounts between different banks,” Prison editor Paul Joseph Watson wrote in March.

According to Zero Hedge, the fact that the “tax” has upgraded from an initially proposed “37.5 percent gentle trim” to more of a “47.5 percent Brazilian wax,” is not a good sign:

Alas, we have bad news for Cyprus, or rather for those evil oligarchs (and other innocent and naive people who believed the lies) who still haven’t managed to bribe enough local bankers and pull what remains of their money: the “final” haircut will be far higher than 47.5%. And at a 10% rate of increase every 3 months, we expect the final 60%+ haircut to be revealed some time before the end of the year.

Similar sentiments have been echoed by Danish Saxo Bank CEO Lars Seier Christensen, who believes Cyprus’ bailout “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.”

“If you can do this once, you can do it again,” Christensen wrote on his blog at back in March when the Cypriot government was still mulling over a levy of 9.9 percent. “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.”

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