Cyprus - EU bailout on the horizon

[Sam Lord]

It seems that the goverment of Cyprus has spent the last year doing everything it could to avoid going to the EFSF for money out of fear that they would be obliged to, in return, make changes to their corporate tax rate, currenty the lowest in the EU. Also public services would be savaged.

http://www.cyprus-mail.com/opinions/...onomy/20120527

So the Cypriots borrowed some 2.5 Billion from the Russians to fund themselves for 2012 but now they need a big wack of change to recapitalise the Cyprus Popular Bank following the haircut it took on Greek bonds. Approaches have been made to the Chinese with no apparent result to date and their Central Bank Governor now says that a EU bailout cannot be excluded.

http://famagusta-gazette.com/eu-bail...-p15562-69.htm

[C. Flower]

It seems that the goverment of Cyprus has spent the last year doing everything it could to avoid going to the EFSF for money out of fear that they would be obliged to, in return, make changes to their corporate tax rate, currenty the lowest in the EU. Also public services would be savaged.

http://www.cyprus-mail.com/opinions/...onomy/20120527

So the Cypriots borrowed some 2.5 Billion from the Russians to fund themselves for 2012 but now they need a big wack of change to recapitalise the Cyprus Popular Bank following the haircut it took on Greek bonds.

Approaches have been made to the Chinese with no apparent result to date and their Central Bank Governor now says that a EU bailout cannot be excluded.

http://famagusta-gazette.com/eu-bail...-p15562-69.htm

We were all told that the Greek haircut was handled without repercussions.

Cyprus is only a little island. What did they need 2.5 billion for?

[Ephilant]

Cyprus is only a little island. What did they need 2.5 billion for?

Cyprus happens to be a divided country remember? Demilitarization zones and all that. The military cost buckets of money, and keeping an artificial border like that going is very expensive. You guys should know all about that.
On Cyprus they even have a "military tax" levelled on anybody who declares an income in Cyprus. And if you thought Ireland wasn't keeping too much of an eye on their banks...

[Sam Lord]

Cyprus is only a little island. What did they need 2.5 billion for?

The short answer:

revenues:: $10.74 billion
expenditures:: $12.64 billion (2011 est.)

[MPB]

The ECB must be loving this. They force countries to bailout the European Banking system, they are responsible for and then lend the money to the countries in order for them to fund their very existance, thus making debt slaves of sovereign nations.

So the Bankers crash their own system and end up owning the whole lot.

I seem to remember the same thing happening over a similar time frame, happening after the US formed its Independent Central Banking system.

[DCon]

The short answer:

revenues:: $10.74 billion
expenditures:: $12.64 billion (2011 est.)

they are in much better shape than us

[Sam Lord]

We were all told that the Greek haircut was handled without repercussions.

Just came across this:

We knew it was due to happen, but it will come as a relief to Greece's banks anyway - the Greek government's bank support fund has handed out €18bn to the four biggest banks in the country, to shore up their capital levels after they took big losses on their holdings of Greek bonds as part of the country's debt restructuring.

The Greek government got the money to give to the banks from bonds issued by the EFSF eurozone bailout fund. If that all sounds to you like a massive game of pass the parcel, you're not alone...

http://www.telegraph.co.uk/finance/d...y-28-2012.html

So the bondholders took a haircut to lower the Greek debt but the Greek government than has to borrow €18bn to give to the banks who took the loss? I can't be understanding this correctly ...

[PaddyJoe]

Just came across this:



http://www.telegraph.co.uk/finance/d...y-28-2012.html

So the bondholders took a haircut to lower the Greek debt but the Greek government than has to borrow €18bn to give to the banks who took the loss? I can't be understanding this correctly ...

I'm afraid you understand it perfectly correctly even though it's complete madness. Reuters have a good analysis of the recap here

ATHENS, May 22 (Reuters) - Greece's bank stability fund approved an 18 billion euro ($22.96 billion) injection to rescue its four largest banks on Tuesday, and an official said they would get the urgently needed funds as soon Wednesday.

Bankers say the recapitalisation will allow them to again receive funding from the European Central Bank (ECB), which cut off some Greek banks last week because they lacked enough capital to be considered solvent.

http://www.reuters.com/article/2012/...8GM48W20120522

[C. Flower]

I'm afraid you understand it perfectly correctly even though it's complete madness. Reuters have a good analysis of the recap here

http://www.reuters.com/article/2012/...8GM48W20120522

Unaligned told us yesterday that the Treaty would rule out the possibility of Ireland defaulting on any debt.

I wasn't sure, but when I looked at the Article on paying down debt, it could be read that way.

[C. Flower]

*Not waving but drowning" Cyprus needs a bailout too.

The reason for the bailout is given as mainly due to the Greek default.

There is no doubt that if/when Ireland defaulted/s on substantial sums there would be a domino effect.

http://www.breakingnews.ie/business/...ss-554640.html

[Sam Lord]

Cyprus has indicated that it intends to ask for a bailout for its banks.

ratings agency Fitch said the country, which has a population of one million, would need 4bn euros to support its banks, the equivalent of almost a quarter of its GDP, or economic output, last year.

http://www.bbc.co.uk/news/business-18586532

[ang]

Cyprus has indicated that it intends to ask for a bailout for its banks.



http://www.bbc.co.uk/news/business-18586532

Its looking like €10BN now (for state&banks) which is over half the size of the Cypriot economy.

http://www.reuters.com/article/2012/...8HQ0OX20120626

[DCon]

this will help!

zerohedge ‏@zerohedge

ECB SAYS CYPRIOT GOVERNMENT BONDS NOW INELIGIBLE AS COLLATERAL

[C. Flower]

Cyprus could have borrowed at 4% from Russia and China.

http://www.presseurop.eu/en/content/...medium=twitter

Perhaps the Government wanted the terms of the Memorandum to "restructure" its economy and people.

[ang]

Looking like Cyprus may need more than the €10BN estimated -

“Your public finances are in a worse shape than we expected,” Maarten Verwey, a troika official and a deputy head of the commission’s Directorate General for Economic and Financial Affairs, said according to the minutes of the meeting obtained by Bloomberg News. “It is clear you have problems in your banking sector. It is not just the major banks in Cyprus, but the problems affect the entire banking sector.”

http://www.bloomberg.com/news/2012-0...-finances.html