Excluding Parliament + Total Wipe-Out 100% Haircuts "In The Best Interests Of The People..." (Updates)

Submitted by Tyler Durden: The European Union finance ministers have just agreed to the terms of the Cyprus-Troika deal (which we fear could mean 100% haircts for the uninsured Laiki depositors as unsecured claims in a Chapter-7-style liquidation). With democracy now a complete farce since not even Parliament will be allowed to vote on deposit confiscation as part of a financial sector bankruptcy deal, here is the island nation's shill president explaining what just happened:

• ANASTASIADES (AKA EPHIALTES) SAYS AID DEAL IN BEST INTEREST OF CYPRIOT PEOPLE

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Rampapalooza As Cyprus-Troika 

Reach Deal (Updates)

Submitted by Tyler Durden: UPDATE: It appears the 'deal' to default/restructure the banks has been designed to bypass the need for parliamentary votes, since it is theoretically not a tax.

While we have little color on what kind of carnage the President of Cyprus had to accept to his fellow countrymen, the news is that :

• *CYPRUS, TROIKA REACH AGREEMENT IN PRINCIPLE, EU OFFICIAL SAYS
• *DEAL MADE AT DINNER WITH DRAGHI, LAGARDE, VAN ROMPUY, BARROSO

The terms, unsurprisingly what zee Germans wanted, are:

i) Laiki to be wound down;

ii) Bank of Cyprus to survive but with deposit haircuts, and

iii) deal would see secured deposits in Laiki moved to Bank of Cyprus.

In other words, a deal far worse then the original on proposed by the Eurogroup last week - when the banks still existed. The key appears to be the 'saving' of the insured depositors (crucial to avoid a pan-European bank run) and the crushing of the 'whale' depositors.

 S&P 500 futures and EUR are surging, Gold is dropping modestly.

 We await final confirmation of the final terms of the final deal once the Cypriot people wake up (and don't forget the ECB 'standard of living' rules).  

The Cypriot Parliament still has to vote for this - and not one of them voted for it last week.

Filling the 'Cyprus' Gap

Treasuries sold off- 10Y back to 1.945% (+2bps) and 30Y 3.17% (+3bps)

This is far from over...

So let us get this straight, we have no further information on the actual terms of the deal than we did on Friday afternoon; the government (who rejected the deal last week) has no details of the deal yet; and the actual impairment for the depositors is far worse than last week's rejected deal; and the market is rallying... 

It would appear the week was spent sorting through the names of bank accounts in each bank and the one with the most ending in '-ov' is to be wound down...Laiki

Step 1 appears to be 0500GMT Eurogroup Meeting (as per Holland's Diesel-Boom) agreement...

UPDATE: There is talk that there may be no need for the government to vote for this - since it is not a 'tax' but a bank restructuring. It seems they have kept it in the bankers... the ECB (in its independent way) tells the Cypriot NCB what it should do, the Cypriot central bank then restructures its bank how it sees fit - good/bad bank and haircuts where it sees fit - this then gets around need for vote from government AND any possibility of a European Union law (on taxation) being broken... 

Source

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Eurogroup Press Conference - Live Webcast (And Full Eurogroup Statement)

Submitted by Tyler Durden: It's 2:30am, do you know where your deposits are? Tune in to see the Eurogroup explain how this is in the best interest of the Cypriot people, how the 'deal' illustrates the solidarity of the European people, and how the worst of the crisis is now behind us.

• *SCHAEUBLE SAYS CYPRIOT DEAL NEEDED BAIL-IN AT BOTH BIG BANKS
• *SCHAEUBLE SAYS MUCH WORK REMAINS TO BE DONE :BOCY CY, CPB CY
• *SCHAEUBLE SAYS TIME LOST ON CYPRUS, SITUATION DIDN'T IMPROVE
• *EU COMMISSION SAYS NO CYPRUS PARLIAMENT VOTE NEEDED: SCHAEUBLE
• *SCHAEUBLE SAYS TROIKA TO CONTACT RUSSIAN GOVT ON DEAL :BOCY CY 

Live Webcast here...

Here it is - in all its glory. The full Eurogroup statement explaining how there is no need for the Cypriots to vote on this, how Laiki bank is totally liquidated with equity, debt, and uninsured depositors wiped out, and how they believe in some way that this will not end in a disorderly process...

• *DIJSSELBLOEM SAYS DEPOSITOR LOSSES STILL TO BE DETERMINED
• *REHN SAYS EU TO PERFORM NEW CYPRUS DEBT-SUSTAINABILITY STUDY
• *DIJSSELBLOEM SAYS LAIKI BANK TO BE RESOLVED IMMEDIATELY

25 March 2013
Eurogroup Statement on Cyprus
The Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme. This agreement is supported by all euro area Member States as well as the three institutions. The Eurogroup fully supports the Cypriot people in these difficult circumstances.
The programme will address the exceptional challenges that Cyprus is facing and restore the viability of the financial sector, with the view of restoring sustainable growth and sound public finances over the coming years.
The Eurogroup welcomes the plans for restructuring the financial sector as specified in the annex.
These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100.000 in accordance with EU principles.
The programme will contain a decisive approach to addressing financial sector imbalances. There will be an appropriate downsizing of the financial sector, with the domestic banking sector reaching the EU average by 2018. In addition, the Cypriot authorities have reaffirmed their commitment to step up efforts in the areas of fiscal consolidation, structural reforms and privatisation.
The Eurogroup welcomes the Terms of Reference for an independent evaluation of the implementation of the anti-money laundering framework in Cypriot financial institutions, involving Moneyval alongside a private international audit firm, and is reassured that the launch of the audit is imminent. In the event of problems in the implement ation of the framework, problems will be corrected as part of the programme conditionality.
The Eurogroup further welcomes the Cypriot authorities' commitment to take further measures.These measures include the increase of the withholding tax on capital income and of the statutory corporate income tax rate. The Eurogroup looks forward to an agreement between Cyprus and the Russian Federation on a financial contribution.
The Eurogroup urges the immediate implementation of the agreement between Cyprus and Greece on the Greek branches of the Cypriot banks, which protects the stability of both the Greek and Cypriot banking systems.
The Eurogroup requests the Cypriot authorities and the Commission, in liaison with the ECB, and the IMF to finalise the MoU at staff level in early April.
The Eurogroup notes the intention of the Cypriot authorities to compensate potential individual victims of fraudulent practices, in line with established legal and judicial procedures, outside the programme.
The Eurogroup takes note of the authorities' decision to introduce administrative measures, appropriate in view of the present unique and exceptional situation of Cyprus' financial sector and to allow for a swift reopening of the banks. The Eurogroup stresses that these administrative measures will be temporary, proportionate and non-discriminatory, and subject to strict monitoring in terms of scope and duration in line with the Treaty.
Against this background, the Eurogroup reconfirms,as stated already on 16 March, that – in principle - financial assistance to Cyprus is warranted to safeguard financial stability in Cyprus and the euro area as a whole by providing financial assistance for an amount of up to EUR 10bn. The Eurogroup would welcome a contribution by the IMF to the financing of the programme. Together with the decisions taken by Cyprus, this results in a fully financed programme which will allow Cyprus’ public debt to remain on a sustainable path.
The Eurogroup expects that the ESM Board of Governors will be in a position to formally approve the proposal for a financial assistance facility agreement by the third week of April 2013 subject to the completion of national procedures.
Annex
Following the presentation by the Cyprus authorities of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:
1. Laiki will be resolved immediately - with full contribution of equity shareholders, bond holders and uninsured depositors - based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.
2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.
3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework,after having heard the Boards of Directors of BoC a nd Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.
4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.
5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with fullcontribution of equity shareholders and bond holders.
6. The conversion will be such that a capital ratio of 9 % is secured by the end of the programme.
7. All insured depositors in all banks will be full y protected in accordance with the relevant EU legislation.
8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus.
The Eurogroup is convinced that this solution is the best way forward for ensuring the overall viability and stability of the Cyprus financial system and it s capability to finance the Cyprus economy.

Source 

banzai7 

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What A Difference A Week Makes For Cyprus' Schrodinger Deposits

Submitted by Tyler Durden: Following the Eurogroup press conference, the Cypriot Finance Minister Michael Sarris is currently explaining how:

• *SARRIS SAYS TONIGHT IS GOOD NIGHT FOR CYPRUS, EURO ZONE and
• *SARRIS SAYS UNCERTAINTY ON CYPRUS ECONOMY HAS ENDED    :BOCY CY

Having avoided the "disastrous exit" from the Euro. Should we believe him? Earlier in the week he exclaimed:

• *SARRIS SAYS NOTHING WILL HAPPEN TO SAVINGS IN CYPRUS

And tonight we are told Bank of Cyprus uninsured 'savers' will face 40% haircuts and Laiki uninsured 'savers' as much as 100% (or total wipeout). It seems the lessons of Juncker are well studied in all the European Nations.
Though these are not the only contradictions this gentleman has made this week in his Junckerian manner...
On 3/20, we are told

• *CYPRUS'S SARRIS: 'WE WILL BE HERE [RUSSIA] UNTIL WE GET SOME AGREEMENT'
• *RUSSIA FINANCING TALKS WILL LAST `AS LONG AS IT TAKES': SARRIS

and then on 3/21

• *SARRIS SAYS RUSSIANS LOOKING TO AID TO MAKE UP PART OF EU5.8 BN
• *SARRIS SAYS HAS SEEN GREAT INTEREST FROM RUSSIA IN ENERGY
• *SARRIS SAYS CAN'T SAY HOW MUCH RUSSIA CAN CONTRIBUTE

and then on 3/22

• *CYPRUS DIDN'T GET REQUESTED RUSSIAN FINANCIAL SUPPORT: SARRIS

And even then the 'levy' - which would have needed a vote - was still there yesterday...

• *CYPRUS'S SARRIS SAYS DEPOSIT LEVY REMAINS `ON THE TABLE'

but most notably - he explains that:

• *SARRIS SAYS WAS WRONG TO PLACE DEPOSITS IN DOUBT

but now post major haircuts on depositors,

• *SARRIS SAYS CYPRUS HAS ACHIEVED BEST POSSIBLE OUTCOME  :BOCY CY

Source