Worried about savings in Cypriot banks: What should/am I allowed to do?

M

Mally10

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Hi :) New member here. So glad to have found this site, because we're absolutely clueless when it comes to financial issues. So, my mother has retired and deposited the amount she received, yk, in case she needs medical care etc. Also, we received a small amount from his insurance after my father passed away and we've deposited it in a cooperative's bank. Questions:

I know they're secured in the European Union for up to 100 000. BUT, we hear our economy is doing very badly. How secure is it really if the state is collapsing financially?

What should/can we do? Are we even allowed to open an account from abroad (say in England, which is outside the Euro) and transfer our money? My husband's registered in an English university as a distance learning student, could I use that? Which banks are safer? And what is the rate there? God we're so concerned we're thinking if putting cash in a deposit box is the best option

Looking forward to receiving your replies :)

Thank you very much
 
Hi Mally,

Firstly, this is an Irish website.

There are rumours of a bailout for Cyprus before the end of June 2012. Personally, I would not keep money in a Greek or Cypriot bank right now.

I know they're secured in the European Union for up to 100 000.
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No, they are not. Deposits in a Cypriot bank are guaranteed by the relevant authorities in Cyprus. There is no pan European/EU guarantee as things currently stand.

Are we even allowed to open an account from abroad (say in England, which is outside the Euro) and transfer our money?
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You can open an offshore account. There is a good comparison of offshore rates .
 
Thank you very much for your replies :) So sorry, I hadn't realized this was an Irish site. Again, I'm so completely clueless when it comes to financial issues, it's even difficult for me to figure out what a bailout means or its possible effects. Our bank insists our deposits (which give us a monthly rate of 4.50% interest, good, no?) are safe, and only if our country goes bankrupt will we lose them, but that's not likely etc. Do note that our bank has bought a lot of Cypriot bonds.

So you're saying that if there is a bailout by the end of this month (*shudders*), there's a good chance we will lose our deposits? Should I rush to transfer them to another bank now? And should I keep the currency in Europe, or should I switch to say British Sterling? Berkleys has got a branch here, but they're giving a rate of like 1%. We're talking about amounts of around 50 000 Euros for us and around 80 000 for my mother. Even if I transfered the deposits to another Greek or Cypriot bank here the possible negative effects would be the same, no? Because I get it it's best to keep your money in different places. Then again our deposit expires (i.e. we will get the interest) on July 10th, and we're not sure if we should rush into anything now.

Thank you SO MUCH for volunteering to help out clueless me :)
 
Dear Mally

I can say that I am very familiar with Cypriot banks and I do have some insight however its impossible to say for certain what will happen exactly.

You dont say which bank you are dealing with in Cyprus.
Cyprus Popular Bank is deeply exposed to Greek Government bonds. Basically in lay mans terms it has lent huge amounts of money to the Greek government and the markets believe that there is a very high chance that the Greek Government will default on these bonds. If there is a default, Cyprus Popular Bank will need support to avoid collapse. Bank of Cyprus is slightly better but still to be avoided. Universal bank should be avoided also.

If you decide to keep your money in Cyprus, I would turn to Arab Bank or Societe General (the French bank)

Personally, I would repatriate my money to the UK but only time will tell if thats the best option or not.

I wouldn't panic yet. I dont think you will lose your money overnight. More than likely the big three banks will need a government or EU bailout but its hard to see how ordinary depositors will lose their money in the near term
 
Dear Importer,

First of all thank you very much for your very informative reply. I should have clarified that I'm just a Cypriot, no relation to the UK or Ireland at all. So, yeah, I'm really thankful I came accross this site, and for the replies I've received despite the fact that I have nothing to do with Ireland. The reason my family is trying to figure things out is that we've had bad things happen to us before (e.g. after my parents became refugees, they had to spend ten years paying off morgage for the house they lost in the war), so no bad case scenario is hard for us to believe anymore.

Our bank is the Cooperative bank, as most of us are public servants. I am also talking on behalf of my sister in law, who is in a financially desperate situation, as her child has a very serious medical condition (needs unbelievably expensive drugs, can never leave the house or meet with other children etc) and our government has now reduced funding even to people who need it desperately. Yep.

Anyway, our bank has apparently bought A LOT of Cypriot Governemnt bonds, and from what we've been hearing that was a disastrous move in the case of a bailout (though, again, as dumb as I feel to admit it, I'm not quite sure what all of this means). Now we've been hearing they'll reduce the public servants' salaries even more than they did last September, and, really, we can completely understand that they should if it means saving people's savings. But is that what it means? Will the 100 000 insured amounts really be insured if Cyprus is going down the hole financially? Should we all try to transfer money to banks such as Arab bank or Barkleys or Societee Generale (which have branches here) even if they give us very low interest rate (our bank gives us 4.5% for savings with three months deadline. Better safe than sorry and all? If a state collapses financially, branches of foreign banks are still safe, no? And how long before can sb know that the 100 000 regulation won't be applicable anyway (so as to transfer t heir money on time)

I honestly feel sorry for askign so many questions, and probably using all the wrong terms. We just don't know what to do, you know?

Thank you :)
 
Mally10 said:
Our bank insists our deposits (which give us a monthly rate of 4.50% interest, good, no?)
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4.50% AER is a very good EUR deposit rate for a 3 month term deposit.

2.80% AER is the average EU EUR deposit rate according to the Central Bank of Ireland.

3.56% AER is the average Irish deposit rate according to the Central Bank of Ireland.

Greek banks pay up to 6.50% AER for a 6 month term deposit.

Obviously, there is a link between risk and reward. With what is going on in Cyprus and Greece right now, one would think that you are better prioritising risk management over reward.
 
I actually had no idea until recently that not all banks gave such a high deposit rate. Huh. It fugures.

So, I called my bank today, and they're apparently insisting there's absolutely no way the 100 000 regulation won't stand, it'll only happen if there is no state and something like that doesn't happen etc. I wonder, is that what happened when countries like Iceland and Argentina went bankrupt? Did those people lose their savings? And now the issue is figuring out how to transfer the money and all

CiaranT said:
4.50% AER is a very good EUR deposit rate for a 3 month term deposit.

2.80% AER is the average EU EUR deposit rate according to the Central Bank of Ireland.

3.56% AER is the average Irish deposit rate according to the Central Bank of Ireland.

Greek banks pay up to 6.50% AER for a 6 month term deposit.

Obviously, there is a link between risk and reward. With what is going on in Cyprus and Greece right now, one would think that you are better prioritising risk management over reward.
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