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Bail-In Terms Agreed

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Bail-In Terms Agreed

Postby Demonax » Wed Jul 31, 2013 1:55 am

Bail-in terms agreed! From the Financial Times:

Milder than expected final terms for Cyprus bail-in unveiled

The Cyprus government and central bank on Tuesday announced milder than expected final terms of a bail-in for uninsured depositors at Bank of Cyprus but signalled it could take years before their remaining funds are fully unfrozen.

Deposits above the guaranteed limit of €100,000 will face a 47.5 per cent haircut, while an additional 5 per cent of total deposits would be made available for withdrawal by account holders on top of the 10 per cent already returned in cash, according to a joint statement by the finance bank and the central bank.

“This development brings to an end an extended period of uncertainty,” the statement said.

Bank of Cyprus will have a core tier one capital ratio of 12.5 following the bail-in, compared to a minimum of nine required by international lenders when the three-year bailout programme comes to an end.

The unprecedented bail-in of depositors was agreed with the EU and International Monetary Fund as part of Cyprus’s €10bn emergency rescue in March.

At that time account holders feared they would lose as much as 60 per cent of their funds after the government announced a 37.5 per cent haircut of uninsured deposits and placed another 22.5 per cent in an escrow account to cover unspecified future needs.

Depositors will receive shares in a slimmed down Bank of Cyprus as part of the bail-in and will earn interest on funds still frozen, which will be placed in six-, nine and 12-month time deposits with the bank retaining the right to roll them over.

Christopher Pissarides, the Nobel Prize-winning Cypriot economist who is advising the government, said it could take up to two years before the eurozone’s first controls on capital movement, which were imposed in March, are fully lifted.

The bail-in would wipe out about €8bn of deposits while still leaving Bank of Cyprus as the island’s largest lender. Bank of Cyprus acquired some assets from Popular (Laiki) Bank, the second-largest, which was shut down as part of the bailout agreement.

Former depositors in Popular Bank would hold about 18 per cent of Bank of Cyprus, followed by Russian and Ukrainian companies represented by prominent Cypriot lawyers, among them President Nikos Anastasiades, with about 16 per cent, according to unofficial estimates.

Andreas Neocleous, a Limassol-based lawyer with a sizeable number of eastern European clients who kept funds in Bank of Cyprus, said: “They [the clients] felt bitter and angry at the way their money was seized . . . but can now look forward to making something back in the future if the bank’s share price goes up.”


http://www.ft.com/cms/s/0/85eb3cea-f943 ... z2aZkxNWXX
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Re: Bail-In Terms Agreed

Postby GreekIslandGirl » Wed Jul 31, 2013 9:27 am

Demonax wrote:. . . but can now look forward to making something back in the future if the bank’s share price goes up.”


That sounded fair when it was first suggested. It will of course mean more foreigners owning Cyprus' profit-making companies but that's the price of opening up to world markets, one way or the other.

(Just so long as they managed to save us from being forced to throw in some Gas shares too.)

I think Cyprus' model is being touted at present to save Barclay's Bank.
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Re: Bail-In Terms Agreed

Postby Demonax » Wed Jul 31, 2013 1:30 pm

GreekIslandGirl wrote:
Demonax wrote:. . . but can now look forward to making something back in the future if the bank’s share price goes up.”


That sounded fair when it was first suggested. It will of course mean more foreigners owning Cyprus' profit-making companies but that's the price of opening up to world markets, one way or the other.


I thought the Germans were motivated by supposed Russian 'dirty money' in Cyprus. Turned out most of these savers were not oligarchs but honest middle class entrepreneurs who have been devastated by this crisis and now these Russians have been handed shares in Cyprus's biggest bank!

Good luck to them, I hope they can recover some of their stolen money but the whole thing has been nothing but a hypocritical mess.
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Re: Bail-In Terms Agreed

Postby Paphitis » Wed Jul 31, 2013 2:00 pm

It will of course mean more foreigners owning Cyprus' profit-making companies...


Yes I hear they made so much profit they required a "Bail In" to avoid bankruptcy!

Honestly, I think some people here are on drugs! :roll:
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Re: Bail-In Terms Agreed

Postby Demonax » Wed Jul 31, 2013 2:07 pm

Just confirmed by the president of Bank of Cyprus on Astra radio that the majority of shareholders will be Russians!

Should be an interesting first shareholder's meeting!
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Re: Bail-In Terms Agreed

Postby kurupetos » Wed Jul 31, 2013 3:05 pm

Demonax wrote:Just confirmed by the president of Bank of Cyprus on Astra radio that the majority of shareholders will be Russians!

Should be an interesting first shareholder's meeting!

Please confirm this with a reliable source.
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Re: Bail-In Terms Agreed

Postby Demonax » Wed Jul 31, 2013 3:19 pm

kurupetos wrote:
Demonax wrote:Just confirmed by the president of Bank of Cyprus on Astra radio that the majority of shareholders will be Russians!

Should be an interesting first shareholder's meeting!

Please confirm this with a reliable source.


The source is the President of Bank of Cyprus referring to private savers. Who else are these depositors-turned-shareholders?
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Re: Bail-In Terms Agreed

Postby Demonax » Wed Jul 31, 2013 3:23 pm

Troika announcement on Cyprus programme. On track but short term risks remain:

http://www.ecb.int/press/pr/date/2013/h ... 31.en.html

So the operation was a success. The patient is still alive. :?
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