ECB & IMF to Cyprus: "You're Screwed"

Cyprus told: take bank levy or leave euro

Excerpt:

The European Central Bank has threatened to cut off funds propping up Cypriot banks on Monday, precipitating the island's exit from the euro if agreement was not reached on Sunday night at the emergency meeting between eurozone finance ministers, the president of Cyprus Nicos Anastasiades, and the bailout troika of the IMF, European Commission and the ECB.

The Europeans, with the Germans and the IMF taking a particularly hard line, demanded the winding up of Cyprus Popular Bank, the country's second biggest, and the restructuring of Bank of Cyprus, the biggest financial institution.

The parties considered new proposals that had emerged over the weekend with European officials speaking of a levy of up to 25% on Bank of Cyprus depositors with accounts holding more than €100,000, plus a further levy of up to 5% on similar deposits in other banks.

"The numbers have not changed. If anything they've got worse," said Wolfgang Schäuble , Germany's finance minister. He said that last week's agreement to raise €5.8bn had to be achieved. This time, however, savers with less than €100,000 would be spared, meaning the burden would fall much more heavily on the wealthy than the 9.9% levy proposed for their accounts last week.

Comment: Image sources: IMF, ECB, Government of Cyprus. Think it could not happen here? Our President and Democratic controlled Senate are unconcerned. More.

Cyprus sacrifices the Laiki Bank

Cyprus Adopts Bank Overhaul Plan - Parliament Passes Emergency Measures to Close Lender, but International Creditors Raise Doubts
Excerpt:

Meanwhile, the Parliament in Nicosia passed two key bills that would allow it to close down its second largest bank, Popular Bank of Cyprus, and aggressively curtail the free flow of money on the island. The bank restructuring law would see depositors in Popular Bank, also known as Laiki Bank, to lose as much as 40% of their savings above €100,000, Cypriot and European officials said. As details of the latest plan emerged late Friday, there were signs that the country may be forced to also resolve Bank of Cyprus, its biggest lender. The government in Nicosia was fighting to avert this by proposing an even deeper levy on the lender's uninsured depositors than one demanded earlier by euro-zone partners, according officials involved in the bailout talks.

Comment: Can you imagine one's bank being closed for an entire week?! The Eurozone crisis continues.

What happens when your country goes bankrupt

Depositors Pay Price in Cyprus Bailout Deal

Excerpt:

Depositors in Cypriot banks will be hit with a one-off tax on their savings, as part of a €10 billion ($12.96 billion) bailout for the Mediterranean island from the euro zone and the International Monetary Fund. The deal, announced early Saturday, marks the first time in the euro zone's five-year-old financial crisis that depositors in bloc's banks will lose money. Accounts with more than €100,000 will be taxed at 9.9%, those with less at 6.75%, raising an expected €5.8 billion for the near-bankrupt nation.

So what's a depositor going to do?: Depositors in Cyprus Rush to ATMs

Nervous depositors in Cyprus rushed to ATMs Saturday to drain their accounts following a bailout agreement with international creditors that includes a levy on all the country's bank accounts. Lines formed at many ATMs as people scrambled to pull their money out after word that the €10 billion ($12.96 billion) rescue package Cyprus agreed with its euro-area partners and the International Monetary Fund included a one-off levy on deposits.