Mar 26 2013
Now savings could be raided across Eurozone: Finance chief warns more EU taxpayers could be targeted as Cyprus rescue set to become first of many
The Daily Mail
I use banks as little as possible. I certainly never leave more than is enough to cover my my direct debits… After all, who in their right mind would entrust their hard earned to be looked after by a bunch of ruthless gangsters… My advice? Draw it out while you still have it all. If ya don’t, you have no reason to moan when a large chunk of it gets snatched.
- Jeroen Dijsselbloem spooked global markets with his comments
- He said that owners and investors must be held responsible for failings
- EU finance chiefs in last-minute agreement after 10 hours of negotiations
- IMF chief: ‘It will form a lasting, durable and fully financed solution’
- Savers with more than £85,000 will lose up to 40 per cent of their money
- Uninsured funds to be frozen and used to pay off debts in bank restructure
- Cyprus will not to need to vote on deal because bank law already in place
- But Germany may have to hold vote before agreement can take effect
- More than 60,000 British expats live on the island, so many face losses
PUBLISHED: 18:26, 25 March 2013 | UPDATED: 22:41, 25 March 2013
Savers in the eurozone could see their bank accounts raided in the struggle to shore up the single currency, a senior EU official warned last night.
The Cyprus rescue package – under which bank customers will have a chunk of their cash seized to bail out troubled lenders – could become a template for dealing with other creaking banking systems, Jeroen Dijsselbloem suggested.
The remarks from the head of the eurozone’s finance ministers contradicted days of assurances that the Cyprus bank deposit raid was a ‘one off’.
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Last night Mr Dijsselbloem launched a desperate attempt to undo the damage, writing on Twitter:
‘Cyprus specific case. Programmes tailor-made to situation, no models or templates used.’
The suggestion that savers in other eurozone countries – potentially in Greece, Spain, Portugal, Italy and even France – could be hit with a similar levy triggered a big slump in banking shares.
There was growing anger in Cyprus at the terms of the deal, with some senior politicians on the debt-stricken Mediterranean island suggesting it should quit the euro rather than accept it.
In what was branded a ‘fundamentally anti-democratic’ move, the German Bundestag will get a vote on the Cypriot bailout, while the island’s parliament will not.
After Cypriot MPs refused to back a deposit tax on all savers, a deal agreed with the EU and the International Monetary Fund will affect only the wealthiest – those with more than £84,660 (100,000 euros).
They will lose up to two-fifths of their bank savings. The deal will hit thousands of wealthy Russians who have stashed their money in Cyprus, amid widespread allegations of money laundering.
It will also bankrupt many Cypriot businessmen overnight.
Because the bailout plan is a restructuring – with one lender, Laiki, wound down altogether – it will not need to go to the Cypriot parliament for approval.
Germany rubbed salt in Cyprus’s wounds by declaring it was delighted with the outcome.
German finance minister Wolfgang Schauble said: ‘This is bitter for Cyprus, but we now have the result the [German] government always stood up for.’
Cyprus had been given until yesterday to raise £4.9billion to unlock a £8.5billion EU/IMF bailout, or face bankruptcy.
David Cameron said the crisis in Cyprus was a reminder both that Britain was right not to join the euro and of the need to press on with deficit reduction.
‘It is good that an agreement has been reached,’ the Prime Minister said. ‘The first proposal to tax people’s bank accounts under £100,000 was a complete mistake and I’m glad that has been avoided.’
Experts said Cyprus faced years of hardship in order to remain in the euro.
Shortages of food and medicine are expected in the coming weeks because of a lack of cash in Cypriot banks, the majority of which will reopen today following more than a week of enforced closure. The Bank of Cyprus will remain closed until Thursday, with a withdrawal limit of 100 euros.
Fiona Mullen, an economist specialising in Cyprus, said that while the deal had prevented an overnight exit from the euro, many Cypriots would wonder if it would be better off leaving anyway.
‘They feel very betrayed by an awful lot of countries in this and I think that there are going to be longer term implications,’ she said, adding there might be a ‘short term crunch’ on supplies of food, medicine and other essentials.
She said economic growth was likely to suffer: ‘Let’s say minus 15 per cent for the first year and minus 5 per cent the next year.’
Archbishop Chrysostomos II, head of Cyprus’s Orthodox Church, repeated his calls for an exit from the single currency.
Earlier, Mr Dijesselbloem, who is the Dutch finance minister, had said: ‘If there is a risk in a bank, our first question should be “OK, what are you in the bank going to do about that? What can you do to recapitalise yourself?”
‘If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.’
Eurozone bank shares were hit by his remarks. Italy’s Intesa Sanpaolo slumped by 6.2 per cent, Santander slid 3.2 per cent, Société Générale 6 per cent and Credit Agricole 5.8 per cent.
Read more: http://www.dailymail.co.uk/news/article-2298973/Now-savings-raided-Eurozone-Finance-chief-warns-EU-taxpayers-targeted-Cyprus-rescue-set-many.html#ixzz2OcYgVe3r
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