Mar 272013
 
 March 27, 2013  Posted by at 7:57 pm Finance
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Zero Euro Bill

Yeah, some things in life are inevitable. That's why it was no surprise, though still endlessly amusing, to find that while depositors of Laiki Bank (aka Cyprus Popular Bank) on the island itself have been unable to get to their money for 10 days now, Laiki's 4 branches in the UK have all that time simply remained open for business.

Which also means that richer clients in Cyprus will lose between 40% and 100% of their savings above €100,000, unless they were smart enough to fly to Britain in time and transfer it all to another bank. Still, Laiki Bank UK is simply a branch of the mothership Laiki Bank on Cyprus, with the difference that deposits fall under UK deposit "compensation" laws. Unlike Bank of Cyprus UK, Laiki is not incorporated under UK law.

And I had been wondering why everyone was talking about Russian depositors in Cyprus, but nobody mentioned the Brits, who must have tons of bank accounts there, the island being a former colony and all. I guess perhaps I have my answer now.

Laiki has had UK branches since 1974, nothing strange there, long running ties (though never incorporation). But it also has majority interests in banks in Russia, Ukraine, Estonia, Malta and other countries. Maybe someday we'll find out what happened there since March 16. For instance, how much money was taken out at Laiki Moscow in the past 10 days?

For the moment, I'd be satisfied with details on what went on in its UK branches. What remains at Laiki will need to be used to pay off debt. But if the ship has been leaking like a sieve all the time, how much is left to do that with? And whatever has been taken out will come at the expense of what has not: it could easily be the difference between losing 40% or 100%. Just a guess, to be sure, but that's all anybody has right now.

UK Chancellor of the Exchequer George Osborne (who today sent another plane carrying €13 million in cash for British soldiers stationed in Cyprus) says he's working on a plan to exempt British branches – and their clients – of Cypriot banks from the worst of the Laiki mess, i.e. make all British citizens whole.

Leaving the UK branches open for business, and not telling the outside world, would seem to be a firm step in that direction. Think maybe the 4 branches have called their (best) clients with a warning or two? After a friendly call from Osborne's office? Barclays has "offered" to speed up opening accounts especially for the purpose. Good patriots…

Holland and Britain made 340,000 savers at Iceland's Landesbanki whole when it collapsed in 2008. Will they do the same this time? For all those people who moved their money and accounts to Cyrpus to avoid domestic tax schemes? This has the makings of a good story. Unless you're simply a hard working Cypriot living on Cyprus. Then you're simply screwed.

 


Home Forums Laiki Bank: Some Depositors Are More Equal Than Others

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March 27, 2013 at 7:57 pm #8391

Raúl Ilargi Meijer

Zero Euro Bill Yeah, some things in life are inevitable. That's why it was no surprise, though still endlessly amusing, to find that while deposit
[See the full post at: Laiki Bank: Some Depositors Are More Equal Than Others]

March 28, 2013 at 12:23 pm #7255

John Day

One must really wonder about who intended what in this drawn out fiasco of squeezing out all the blood before applying the tourniquet.
We were told that the Russian oligarchs would be caught with their pants down and all their ill-gotten gains in far away, remote, inaccessible Cyprus would be forfeited to shore up the poor little country.
This would prevent the ECB from taking the whole loss. The ECB was reported to hold a lot of bank bonds from Cypriot banks, and Cypriot government bonds. Maybe they still do. Later we heard and heard and heard that details couldn’t be worked out, until they finally fell back on just letting the poor bank collapse naturally, and let the chips fall where they may…
However, by then we were hearing that the nasty Russians got their assets out through English branches.
Just who gave whom a reach-around here? (Please forgive my indelicacy)
How many more details will we slowly get, of how the little people got sucked dry when their representative appeared to protect them, but somehow did nothing of the sort?

March 28, 2013 at 1:45 pm #7256

hidflect

The whole economic system has delaminated. The rich can skidaddle at will now from any risks regardless of the cost to countries and their citizens.

March 28, 2013 at 5:25 pm #7257

gurusid

Hi Folks,

Interesting timing on Russian military exercise:

From AFP via yahoo:

Putin orders unscheduled Black Sea military exercise

Russian President Vladimir Putin on Thursday ordered unscheduled military exercises involving thousands of troops and dozens of ships in the Black Sea region, the Kremlin said.

The order was presented to Defence Minister Sergei Shoigu in a sealed envelope at 4:00 am (2400 GMT), his spokesman Dmitry Peskov told Russian news agencies, adding the exercises would involve 36 ships and up to 7,000 troops.

Is that loose change or a sabre I hear rattling…

L,
Sid.

March 28, 2013 at 6:21 pm #7259

p01

Boy, those Russian oligarchs could have taken out a lot more than a few millions had their boss let the banks open branches and issue tons of credit in Mother Russia.

As of today, no branches of foreign-based banks operate in Russia

Too bad; it’s still 1-0 for the [strike]holders of bank stocks, bonds and RE[/strike] Banksters.

March 29, 2013 at 1:59 am #7261

Nassim

P01,

Hold no deposits is even better advice than “hold no debt”

Cyprus Finance Minister: Uninsured Laiki Depositors Could Face 80% Haircut.

Asked if, like in other bank closures, it could take six to seven years before depositors get back there money, he said: “maybe yes. And the amount [returned], could be 20%. Certainly, for depositors above 100,000 euros it could be a very significant blow.”

http://www.foxbusiness.com/news/2013/03/26/cyprus-finance-minister-uninsured-laiki-depositors-could-face-80-haircut/

March 29, 2013 at 6:48 am #7266

Professorlocknload

Not to worry, Cyprus is about to become the richest nation in Europe, at least for a short while!

http://www.businessinsider.com/trucks-carry-cash-for-cypriot-banks-2013-3#ixzz2OqWjV42E

April 1, 2013 at 6:17 am #7304

TheTrivium4TW

More evidence for the people who just love being conned into thinking government is anything more than a legalized, debt pushing mafia…

Cyprus President’s Family Transferred Tens Of Millions To London Days Before Deposit Haircuts

http://www.zerohedge.com/news/2013-03-31/cyprus-presidents-family-transferred-tens-millions-london-days-deposit-haircuts

Nassim, how about… “neither a lender nor a borrower be?”

I think that covers all bases.

April 1, 2013 at 11:10 am #7305

Nassim

Sounds good. :)

Actually, it is very sound advice. I never have borrowed and on the very few occasions I did “lend” money it led to those borrowers no longer wanting to know me. I guess they think I will ask for it back thirty plus years later.

April 3, 2013 at 1:06 pm #7324

backwardsevolution

“The promise given was a necessity of the past: the word broken is a necessity of the present.”

― Niccolò Machiavelli, The Prince

April 8, 2013 at 7:24 pm #7366

Jack

I found this link on Youtube
http://www.youtube.com/watch?v=5zD7xR0DGuE

What he is saying is similar to what we have here.
The collapse will happen in a few years he says.
Few years could be 2 years and up.

In the mean time Jeff Berwick
is starting a community in Chile.
http://galtsgulchchile.com/
He says Canada is very connected to USA so I presume that is why he wants to stay from here.
If it was me I would start that community here in Canada.

April 8, 2013 at 10:11 pm #7367

jal

http://www.zerohedge.com/news/2013-04-08/guest-post-real-cyprus-template-one-youre-not-supposed-notice

Guest Post: The Real Cyprus Template (The One You’re Not Supposed To Notice)

Longtime correspondent David P. (proprietor of Market Daily Briefing) charted some very interesting data that enables us to follow the money–specifically, Eurozone money in the “foreign deposit sources” (deposits in Cyprus banks that originated from outside Cyprus).
It appears the key preliminary step of the Real Cyprus Template is that money-center banks in Germany and other “core” Eurozone nations pull their money out of the soon-to-implode “periphery” nation’s banks before the banking crisis is announced.
As David observed, “I think this explains a lot about something that has always puzzled me: why the delay in resolving Cyprus after the Greek haircut?”
Here is David’s explanation and two key charts:
(read the article to find out who were the winners and losers)

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