# Depositors Burned in Cyprus



## Lightning (16 Mar 2013)

In the run up to the Irish bailout, a large flight of deposits, took place in Ireland. Many feared that there was going to be losses imposed on depositors. Others thought that it was an irrational fear. Maybe it was a rational fear, at the time, as it turns out depositors are not immune to haircuts, as Cyprus has just proven.

It is a deposits for equity swap, shame the equity is worthless ... 
Deposits under 100,000 EUR will lose 6.75%. 
Deposits over 100,000 EUR will lose 9.9%. 
Equity will be given in lieu of the deposit loss. 

Moneysavingexpert.com have said, on Twitter, that the FSA guarantee should compensate UK savers in Cypriot banks that were protected by the FSA up to 85,000 GBP. The same does not apply to non UK savers.


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## theresa1 (16 Mar 2013)

[broken link removed]


So much for a guarantee.


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## Lightning (16 Mar 2013)

Yeah, it seems that the 'tax' supersedes the deposit guarantee. A worrying precedent.


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## mcriot29 (16 Mar 2013)

Whats the odds of that in ireland could it happen 
Also is the anpost 10 year bond at 250k only safe to the frist 100k


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## noproblem (16 Mar 2013)

Can you imagine being a bank worker in Cyprus on Tuesday morning?


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## mcriot29 (16 Mar 2013)

I can see it in ireland soon


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## theresa1 (16 Mar 2013)

mcriot29 said:


> Whats the odds of that in ireland could it happen
> Also is the anpost 10 year bond at 250k only safe to the frist 100k






The repayment of all State Savings™ money is a direct, unconditional obligation of the Government of Ireland.

There is no upper limit on the amount protected.
There is no expiry or end date for this protection.


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## oldnick (16 Mar 2013)

Just when people were thinking of bringing back the money they put in overseas deposits ....


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## Palerider (16 Mar 2013)

Now I'm confused just when it seems Ireland is making its way out of these woods this hits, as a depositor should I move or should I stay..?, can I trust the €100k guarantee...??..I have stayed when many on this site recommended a flight but after today I am scared....


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## Dr.Debt (16 Mar 2013)

I wouldn't worry too much. Today's tax announcement on Cyprus bank deposits is mainly to do with taxing dirty Russian money that is holed up in Cyprus banks. A number of european countries have continuously cited Russian money laundering in Cyprus as a reason for not supporting a Cyprus bail out. I suspect that this is their way of resolving that particular issue.


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## itsallwrong (16 Mar 2013)

Is the swap immediate or do they plan to impose it asap?
Heard on the radio today that there is a run on the banks to get money out !


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## Alexmartin (17 Mar 2013)

Dr.Debt said:


> I wouldn't worry too much. Today's tax announcement on Cyprus bank deposits is mainly to do with taxing dirty Russian money that is holed up in Cyprus banks. A number of european countries have continuously cited Russian money laundering in Cyprus as a reason for not supporting a Cyprus bail out. I suspect that this is their way of resolving that particular issue.




Fine if you only hurt the dirty people, but ordinary savers are also getting robbed.

im looking today to find out how to remove my savings from irish banks and put them somewhere safe.

is there any thread on the best ways to do that?


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## IsleOfMan (17 Mar 2013)

Dr.Debt said:


> I wouldn't worry too much. Today's tax announcement on Cyprus bank deposits is mainly to do with taxing dirty Russian money that is holed up in Cyprus banks. A number of european countries have continuously cited Russian money laundering in Cyprus as a reason for not supporting a Cyprus bail out. I suspect that this is their way of resolving that particular issue.


Or that's the excuse that they are giving.


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## Lightning (17 Mar 2013)

The parliament in Cyprus are voting on this tomorrow. 

If approved, then up to 9.9% of peoples savings get taken. If not approved, with confidence gone in Cypriot banks, who knows what will happen if/when the Cypriot banks reopen on Tuesday. 



Alexmartin said:


> Fine if you only hurt the dirty people, but ordinary savers are also getting robbed.



Agreed. Cypriot pensions who had their life savings in banks are getting hit. There are far more ordinary Cypriot people getting hit than rich Russians with offshore accounts.   



Alexmartin said:


> im looking today to find out how to remove my savings from irish banks and put them somewhere safe.
> 
> is there any thread on the best ways to do that?



Start by reading this thread.


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## oldnick (17 Mar 2013)

People who  2-3 years ago moved Euros out of their Irish accounts and opened accounts in other currencies often lost out.

Many people moved their money into sterling. There are many posts on AAM especially 2010-2011 about how to open U.K. accounts.

Well, depending on the date, people who moved,say, €100k may have got £80k-sometimes less, depending on exchange rates.  
Furthermore, few sterling deposit accounts offered within 2% of what the best Irish banks were offering.

So, the person who got £80k sterling in U.K. may have, after 3 years,  £85k gross. Today that's worth less than € 100k.

The person who kept €100k in Ireland may have over €110k.

So, anyone who bought €100K three years ago has "lost" ten grand !

A very crude example and I ignore tax. And ,yes, everything can turn around.Sterling and Dollars can shoot upwards and Euro collapses. Who knows ?

The point I'm making is that getting rid of Euros -which was the craze on these pages a couple of years ago - was not such a good idea. Even transferring Euros from an Irish to a German bank  lost the investor 2% a year.


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## dub_nerd (17 Mar 2013)

Palerider said:


> Now I'm confused just when it seems Ireland is making its way out of these woods this hits, as a depositor should I move or should I stay..?, can I trust the €100k guarantee...??..I have stayed when many on this site recommended a flight but after today I am scared....


 
I stayed too, and I'm scared too, but to be honest my rationale was that there is nothing you can to guarantee your savings so you may as well take the best rate going, wherever that is. I've tied up a lot of cash in term deposits, so couldn't move it now even if I wanted. The bottom line is even if the government robbed 10% I'd still be showing a profit after 3-5 years, whereas if I'd moved to sterling, dollars, Swiss francs, or "German euros", I'd be showing a loss even if I avoided the 10% hit.


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## Lightning (17 Mar 2013)

Lots of Cyprus news today.

There will be an extra bank holiday in Cyprus on 19 March 2013. 
Vote on depositor haircuts delayed until tomorrow. 
Government may be 6 votes short of passing depositor haircuts bill.
Lots of dooms day predications as to what happens if the bill does not pass.


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## The Ghoul (17 Mar 2013)

A couple of points:

1) It seems that there was a 100k guarantee in place and that it is being reneged on. That is somewhat worrying.

2) The reaction of the general public not just in Cyprus but across the eurozone. There could well be a mini bank run because of this. People are already jittery and when they hear of depositers being burned in Cyprus they won't really care about "explanations" about how Cyprus is a "special case" due to dodgy Russians with offshore accounts.

All things considered I think I will hold firm with my State Savings and UB/BOI/PTSB accounts but I also expect to have a few worries this week.

This story will of course result in opportunities for some - eg if someone was thinking of buying shares in a certain Irish bank they might do well to wait a couple of days and see if this Cyprus business results in a nice dip.


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## theresa1 (17 Mar 2013)

This could be the next lehman brothers moment. The foolishness of taxing deposits below €100,000 I just cant get over. I feel so sorry for the people of Cyprus.


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## oldnick (17 Mar 2013)

Watching various Cyprus TV stations in the last few hours lots of various comments ,not all in agreement, from Cypriot public, politicians, economists etc...
Some funny,most hysterical, but a few with a grain of truth.

- This measure won't go through. There'll be armed rebellion.
- The Germans didn't occupy us in the War but now we're their slaves.
- The Turks stole from us in the past -now it's our fellow Europeans.
- They're after us because of our friendship with the Russians.

More logical comments:-

- Who'll invest with us again?
- How can we pay our bills/debts when they've taken 10% of the money? It was mainly customers's money 
(_This last is an interesting comment that came up a few times - many Cypriots are sole traders who ,like many sole traders lodged money into bank before paying suppliers. In effect they used customers money for some cash flow and to make a bit of interest. Very little was actually the  sole traders own cash. I suspect that many traders in Cyprus will use this as a delaying tactic for covering debts. More problems._)
- I'll never deposit money in Cyprus in whatever currency or in any bank in Euros again.

----------------------------
Only a few people accepted that either they take the medicine now and suffer for a while - or suffer far far worse for a long time.

And almost nobody in Cyprus feels that they were in any way to blame- despite "having partied" for the last several years. Sounds familiar?

However, the big difference between Cyprus and Ireland is the fact that no Cypriot feels that anywhere in EU is a safe place to keep money. Maybe we're starting to feel the same.


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## Lightning (17 Mar 2013)

The Ghoul said:


> It seems that there was a 100k guarantee in place and that it is being reneged on. That is somewhat worrying.



That is the key thing. At least with the IBRC liquidation, anyone covered by the different deposit insurance schemes was fully compensated. 

Since when does deposit insurance of 100% of the first 100,000 EUR per person per institution, that is in every EU country, not mean 100%? 

Peoples trust in all EU deposit insurance schemes has been severally dented.


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## Marion (17 Mar 2013)

Without wanting to be seen as unsympathetic to the plight of depositors in Cyprus (whoever they are), I am bemused that nobody seems to be concerned at the plight of public sector employees in Ireland when their salaries were pillaged by Croke park1, and its successor  Croke Park 2 by a far greater amount.

:


Marion


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## Marion (17 Mar 2013)

Cashier

It's all very relative and close to the bone. 


Marion


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## theresa1 (17 Mar 2013)

Reuters: Cyprus in talks to change bailout bank levy for those with savings below 100,000 euros to 3% & 12.5% for people with larger amounts


Even 1 % is too much if you ask me below €100,000.


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## Ravima (17 Mar 2013)

Why the big surprise? Irish Government stole 0.6% of all private pension funds on an annual basis for 4 years. Cypriot Government steals 6%+ of all bank accounts. Spanish, Italian & Portuguese Governments yet to make decisions?? 

After that, the nightmare when perhaps Irish Government can look again at taking more and Germans can dictate how much!


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## RichInSpirit (18 Mar 2013)

*Cash is too liquid*

Cash is very liquid and easy for other people to get their hands on. 
Land on the other hand is rather unliquid and hard for other people to grab.


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## Godfather (18 Mar 2013)

I'm so sad... I'm thinking of moving my savings back to Germany...  So sorry!

Why such a tax in Cyprus? Isn't anyone aware of the domino effects on Europe this is going to generate? I agree with theresa1 who wrote that this is another Lehmann Brothers-case. I can only agree...


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## kdoc (18 Mar 2013)

Yep, judging from some reports, it looks like the terms are going to be changed. Maybe the 9.9 and 6.7 were really just opening statements. It looks like a negotiation process is in train.


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## Lightning (18 Mar 2013)

It was a signed and sealed deal with Eurozone minsters including Noonan. The massive outcry is the only thing brining people back to the table. 

I would be surprised if anyone with deposits under the deposit insurance level of 100,000 EUR gets hit. The repercussions are just too great. 

What is at stake is the credibility of all bank deposit guarantee systems throughout Europe.


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## Importer (18 Mar 2013)

I dont think the EU is too concerned about who pays what as long as the final tax take on the exercise is 5 billion or higher.

The temptation is there now to tax the higher balances more and the smaller balances less. My guess is that if they try and do this, the Russians will throw them a curve ball. Still all to play for.


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## paulgreen (18 Mar 2013)

The longer the final decision is delayed (banks now closed until Thursday) the more chance that it will be watered down or in fact a different approach will be thought out.

If Noonan had any input into this decision he ought to hang his head in shame and is not a fit a proper person to be minister of finance raping the population should not be on the agenda and it's a line that should never have been crossed there is now NO trust anywhere.

What were the finance minister thinking when they come up with this? just goes to further enforce the fact that the men in grey suits haven't a clue and it will only be when we get a fundamental change in the way we vote and the political parties as we know them are changed will we get rid of these parasites.


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## robd10 (18 Mar 2013)

theresa1 said:


> The repayment of all State Savings™ money is a direct, unconditional obligation of the Government of Ireland.


  In your opinion, can I conclude from the statement above, is a guarantee that covers any circumstance.  Unlike the “deposit insurance” which seems to have limitations, as in Cyprus.  
Disregarding interest rates, would State Savings seem the safest place for a deposit?


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## Lightning (18 Mar 2013)

robd10 said:


> In your opinion, can I conclude from the statement above, is a guarantee that covers any circumstance.  Unlike the “deposit insurance” which seems to have limitations, as in Cyprus.
> Disregarding interest rates, would State Savings seem the safest place for a deposit?



State Savings 'guarantee' and deposit insurance are too very different things. They both carry different types of risk.  

State Savings sell an investment product. Not a deposit product. The investment product typically has a fixed return akin to a deposit product. However, the risk is exactly the same as holding Irish government bonds. You are pari passu (equal) to all other bond investors. There is no cap. There is no limit. The risk should in theory be equal to the risk of the credit worthiness of the state. 

With deposit insurance, the Deposit Guarantee Scheme, protects the first 100,000 EUR per institution per person. The risk above 100k, in the absence of the ELG, should equal to the credit risk of the institution that you have the deposit in. The risk below 100k should equal the risk that the CBI has enough to pay compensation, as the CBI did in the case of the IBRC liquidation. 

A new risk, thanks to Cyprus, is that a state will impose a 'tax' that supersedes deposit insurance.


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## Lightning (18 Mar 2013)

Meanwhile in Cyprus, president Anastasiades lacks the votes to pass the bill. Banks closed for the next few days at the very least.


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## Dermot (18 Mar 2013)

The Cyprus situation raises the issue of the credibility of guarantees from any source and sets a very dangerous precedent. This could have unforeseen consequences. It could get out of hand. If it was reported that a number of big corporations withdrew funds from any of the vulnerable countries banks who knows what could happen


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## Marc (18 Mar 2013)

In January 2012 Standard and Poor's downgraded its long-term credit rating for the Republic of Cyprus from BBB to BB+ citing it's opinion of the effect on Cyprus of deepening political, financial, and monetary problems within the eurozone, with which Cyprus is closely integrated.

The downgrade also reflected the view of Cypriot financial institutions' significant exposure to Greece, which was believed to further exacerbate Cyprus' existing external vulnerabilities.

Savers in Ireland should note that this downgrade was equivalent to moving from where Ireland is currently rated, down just two notches.

Roll the clock on a little over a year and S&P's concerns appear to have been realised with the Cypriot banking system now requiring a bailout of some €10-12 billion, and in a new twist in the ongoing saga, the government has been forced to consider imposing burden sharing upon ALL depositors.

The proposal on the table is that those with deposits below €100k in a bank will be “taxed” at 6.75%; those with deposits above €100k will be “taxed” at 9.9%, contributing approximately €6bn to the bank bailout in total.

This proposal overrides existing depositor insurance schemes. Although most of us have been assuming that no matter what, deposits up to €100,000 are protected under an EU-wide deposit protection scheme, instead savers will receive equity in their respective banks by way of compensation.The shortfall of €4-6 billion will have to come from the ECB/IMF.

This highlights, at a time when Ireland is about to end the Eligible Liabilities Guarantee, the very real risks faced by savers in deposit institutions subject to "guarantees" which is that the guarantee is really only as good as the ultimate backing of the country issuing it. In the case of Ireland this means a Sovereign State rated just two notches above Cyprus.

It seems reasonable to assume that anyone with over €100k in deposits with a single banking group should expect to bear some risk in the event of a collapse of a bank. As we know, this has already happened in Ireland with certain structured products issued by Anglo Irish Bank having already defaulted.

However, the key insight from Cyprus is that a precedent has now been created in terms of the socialisation of losses across bank deposits and now not even €100,000 can be viewed as "certain".

We have argued consistently for the last 5 years that risk and expected returns are related. If an Irish bank is paying above the market rate of interest for deposits, then this has to be seen as some manifestation of risk.

We recommend that cash and fixed interest investments should have an average AA+ credit rating and this now rules out virtually every single institution operating in the Republic of Ireland with even RaboBank now "only" rated AA.

With interest rates so low on bank deposits, it seems possible that savers will now be more willing to consider alternatives and most, without a clearly thought out plan, will be prey for the financial services sales machine.

Before you leap out of the frying pan and into the fire think about what you need your money to do for you, and consider working with a financial planner who has your best interests at heart rather than a commission based sales person who will tell you what you want to hear.


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## Lightning (19 Mar 2013)

Great post Marc. 

The Cyprus bailout vote is taking place shortly. It is expected to be rejected.


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## Lightning (19 Mar 2013)

The Cyprus bailout has been rejected by parliament.


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## Lightning (19 Mar 2013)

Worst case, 2/3 majority of ECB board decide to pull Emergency Liquidity Assistance, which would be followed by a Eurozone exit and conversion to a new currency. 

More likely, Cyrpus will simply renegotiate. This needs to happen urgently.


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## Lightning (19 Mar 2013)

Emergency Liquidity Assistance. Money from the ECB to banks. 

Irish banks still have huge ELA but it is declining fast. Cypriot banks have huge ELA exposure.


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## theresa1 (19 Mar 2013)

ECB Responds To Cyprus, Says "Will Provide Liquidity To Cyprus Within Existing Rules"


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## chewchew (19 Mar 2013)

Can anyone explain to me why the EU are putting pressure on the Cypriots to penalise depositors, and why they didn't apply the same pressure to Greece, Portugal, and Ireland? 

Have the ECB changed tact, in which case if Ireland were to need a 2nd bailout, can we expect them to push for a similar deposit tax applied to Irish bank accounts?


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## Lightning (19 Mar 2013)

chewchew said:


> Can anyone explain to me why the EU are putting pressure on the Cypriots to penalise depositors, and why they didn't apply the same pressure to Greece, Portugal, and Ireland?



They wanted the cash to come from the banks balance sheets. Bondholders make up a very small percentage of banks balance sheets in Cyprus, not enough to cover the bailout. 

However, one could argue, small or not, they should have been wiped out anyway as a starting point. 



chewchew said:


> Have the ECB changed tact, in which case if Ireland were to need a 2nd bailout, can we expect them to push for a similar deposit tax applied to Irish bank accounts?



Given the reaction to Cyprus, I think everyone knows that taking insured deposits from bank accounts was a mistake. 

Hence, maybe it wont occur again. However, precedent has been created.


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## paulgreen (19 Mar 2013)

Fair play to the Cypriots they have held there nerve when a lot of bigger country's have and would have given in.There is NO way Brussels will let them go bankrupt as it will be too embarrassing for the un-elected elite the people who thought up this robbery should be sacked or better still hung from lamp posts!

I hope the Cypriots take Russian cash and stick 2 fingers up to the parasites in Brussels who are bleeding us dry with no end in sight.

Enda take note the next time your on your knees lapping up to these chancers show some balls for once in your life!


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## CadillacMan (19 Mar 2013)

From rte.ie :
Cyprus's parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout this evening.
The vote by the small state's legislature was a stunning setback for the 17-nation eurozone.
It came after lawmakers in Greece, Portugal, Ireland, Spain and Italy had repeatedly accepted unpopular austerity measures over the past three years to secure European aid.

Fair play to the 1.1 million Cypriots who raised their voices in protest.  More balls than us Paddies.


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## callybags (20 Mar 2013)

I think I'd much prefer to owe money to the ECB or the IMF rather than Russia.

Wouldn't like to be in the Cypriot boat at all.

I don't understand all the posts saying "Fair play" - "more balls than us" etc.


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## Lightning (20 Mar 2013)

Unbelievable that the EU said that deposit insurance does not cover governments imposing levies to take part of the deposit ... 

*Deposit guarantees only protect against bankruptcy, not levies, says EU*

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_19/03/2013_488598



> Guarantees on deposits in the European Union are only there if a bank completely collapses, and does not protect from fiscal steps decided by parliaments, the European Commission said on Tuesday, defending a decision to impose a levy in Cyprus.
> 
> The euro zone's demand at the weekend that Cyprus place the levy on bank accounts as part of an emergence financial rescue has created a backlash in Cyprus and prompted many Europeans to accuse Brussels of disrespect for its own rules.
> 
> EU law guarantees deposits up to 100,000 euros per customer, per bank. But Commission spokesman Simon O'Connor said those guarantees only existed: «in the event of a bank failure."


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## pudds (20 Mar 2013)

CiaranT said:


> Unbelievable that the EU said that deposit insurance does not cover governments imposing levies to take part of the deposit ...
> 
> *Deposit guarantees only protect against bankruptcy, not levies, says EU*
> 
> http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_19/03/2013_488598



think that is what they call 'moving the goalposts' so much now for any trust  from Joe soap  going forward, 'a bird in the hand is worth two in the bush' springs to mind.


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## Jim2007 (20 Mar 2013)

CiaranT said:


> Unbelievable that the EU said that deposit insurance does not cover governments imposing levies to take part of the deposit ...



Well since when did the guarantee cover taxes?  There is nothing unbelievable about, the EU is simply reiteration what was already fact!

Every single type of investment product has risks and is subject to taxes and the lesson people need to learn is that they need to make themselves better informed about how they manage their money.


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## Lightning (20 Mar 2013)

There is a difference between a tax, like a tax on interest on deposits, and a levy on capital accumulated. The latter is new.


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## Dermot (20 Mar 2013)

Jim2007. "Every single type of investment product has risks and is subject to taxes and the lesson people need to learn is that they need to make themselves better informed about how they manage their money."

I admire a lot of your posts and I agree with the generality of your comment.  I try to keep myself informed on a lot of things including financial matters but I had not come across any advice that warned of the tax on the deposits like what has happened in Cyprus.  I like your ordinary lay person would not be reading specialist financial magazines but I think a lot of so called financial experts were surprised at this move if they told the truth.


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## Chris (27 Mar 2013)

Jim2007 said:


> Well since when did the guarantee cover taxes?  There is nothing unbelievable about, the EU is simply reiteration what was already fact!
> 
> Every single type of investment product has risks and is subject to taxes and the lesson people need to learn is that they need to make themselves better informed about how they manage their money.



+1

With almost everything else people do research. Before buying TVs or computers people search online reviews and expert opinion; before buying a car they do the same and even go for a test drive or pay a mechanic to check it out.

But when it comes to banking pretty much nobody does research, because there is a perceived safety of regulation and deposit insurance. I've always said that deposit insurance is completely worthless and should be abolished for the reason that it gives a false sense of security and discourages due diligence. Cyprus is the perfect example of this point.


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## galwegian44 (27 Mar 2013)

Chris said:


> +1
> But when it comes to banking pretty much nobody does research, because there is a perceived safety of regulation and deposit insurance. I've always said that deposit insurance is completely worthless and should be abolished for the reason that it gives a false sense of security and discourages due diligence. Cyprus is the perfect example of this point.



Agreed Chris, we don't have a Bank Guarantee despite what you may hear from the government or from Europe. If the situation demands it then our capital deposits will take a haircut also. If the exposure deems it then even accounts under €100,000 will be targeted. The reasoning behind this is that there is no plan in place to solve this crisis and Germany et al are just fire-fighting - how long have they known about the issue in Cyprus and what have they done to plan for this.

It's years now since they talked about a collective deposit insurance scheme, much like the FDIC in the USA but what has been done - nothing. European leaders promised they would create a Eurozone wide scheme but the Germans have opposed it and ironically Cyprus supported them on this.

Take a look at the other European countries with banking sectors that dwarf their GDP, who is going to be next, and more importantly what 'rules' will be applied by European leaders at 3AM in the morning. No planning, no leadership!

Even with the countries that are anchoring the Eurozone (Germany, France) the banks (BNP Paribas, Deutsche Bank etc) are highly leveraged, what happens when they look for a bailout?

For me, the Cyprus decision is a tipping point, I would have said 12 months ago that this situation would never arise. What will happen in the next 12 months? And bear in mind that the large depositors who have been burned (and those in other countries watching this) are already preparing not to be burned at the next banking fiasco (we, the small depositors may not be into financial due diligence but these guys are). So maybe next the small depositor will be burned, this is my expectation as it was the first attempt in Cyprus also.

I'm not quite sure what to do to minimise risk right now but if there is a €100K 'guarantee' in Ireland then my deposit per institution will not exceed €20K. And for the first time in my life I'm looking at gold coins, definitely going to start by putting 20% of my deposit value in something tangible.

The big problems have yet to be addressed by the European 'leaders'.


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## dub_nerd (27 Mar 2013)

Up until late last year I steadfastly avoided all but the very biggest of (non-Irish) banks. Eventually it seemed that there was no point in missing out on higher interest rates available from Irish banks, since the EU seemed determined that no bank would be allowed to fail, in spite of costs to taxpayers (which I was paying for). So, now I'm six months into several three and five year term deposits... and EU depositors are finally getting  burned. Thanks EU. More disastrous handling of the eurozone crisis. I'm resigned to the fact that these clowns will eventually take some or all of my life's savings to pay for the fallout from a bubble that I never partook in.


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## Chris (29 Mar 2013)

Jim2007 said:


> Well since when did the guarantee cover taxes?  There is nothing unbelievable about, the EU is simply reiteration what was already fact!
> 
> Every single type of investment product has risks and is subject to taxes and the lesson people need to learn is that they need to make themselves better informed about how they manage their money.





galwegian44 said:


> Agreed Chris, we don't have a Bank Guarantee despite what you may hear from the government or from Europe. If the situation demands it then our capital deposits will take a haircut also. If the exposure deems it then even accounts under €100,000 will be targeted. The reasoning behind this is that there is no plan in place to solve this crisis and Germany et al are just fire-fighting - how long have they known about the issue in Cyprus and what have they done to plan for this.
> 
> It's years now since they talked about a collective deposit insurance scheme, much like the FDIC in the USA but what has been done - nothing. European leaders promised they would create a Eurozone wide scheme but the Germans have opposed it and ironically Cyprus supported them on this.
> 
> ...



Good points made there, and I agree that nothing has been done to address the financial crisis. It started with the realisation that private citizens, private organisations and sovereign governments had taken on way too much debt. And the "solution" has been to transfer those debts to governments and run even higher deficits. But the underlying problem, i.e. too much debt, has only gotten worse!

As for holding up the FDIC as something to introduce here, I would strongly oppose it. The FDIC is even less capable of handling a Cyprus style situation. It insures trillions of dollars worth of deposits, but according to Wikipedia had only $19 bn in reserves in 2010. 

I agree with your plan of moving into tangible stuff. While I have very little cash left within this country I also have very little cash full stop.


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