Decided: 37.5 percent haircut for uninsured depositors at Bank of Cyprus

[dixiegrrrrl]

Laiki customers with savings of more than 100,000 euros, which are not guarenteed, will lose even more money than Bank of Cyprus customers.

The Central Bank of Cyprus has prepared a decree, leaked to the media on Friday night, that foresees a 37.5 percent haircut for uninsured depositors at Bank of Cyprus and which paves the way for the resolution of Cyprus Popular Bank (Laiki) to begin.

Deposits under 100,000 euros at Laiki are to be put in a “good bank” that will be merged with Bank of Cyprus, the island’s largest lender, as part of the overhaul of the financial sector that President Nicos Anastasiades agreed to in order to clinch a deal with the eurozone and the International Monetary Fund for a 10-billion-euro bailout.

Laiki customers with savings of more than 100,000 euros, which are not guaranteed by the Cypriot state,
face even greater losses than uninsured Bank of Cyprus customers who will receive equity as part of the haircut. The Central Bank of Cyprus also said on Friday that capital controls on the island would be extended for another five days.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_29/03/2013_490832

They are doing this despite a letter from the Governor's office that it is illegal.


see here for info on the letter:
http://www.democraticunderground.com/?com=view_post&forum=1002&pid=2585671

[muriel_volestrangler]

1. The difference is that was about a plan to do it for all banks

whereas the current plan is for the 2 banks that are insolvent. Obviously the unguaranteed deposits are at risk when a bank has failed, or there would be no need for a guarantee for the lower amounts.

The February proposal: http://www.ft.com/cms/s/0/1d17a320-736f-11e2-9e92-00144feabdc0.html

[Ruby the Liberal]

2. Holy Mother of Pearl.

This 'good bank bad bank' thing is going to blow sky high.