Putin Slams "Dangerous" Cyprus Bank Deposit Theft! + Cypriot Outrage Over Bankster Robbery Could Derail Future Euro-Area Bankster Robbery

Russian President Vladimir Putin criticized Today a levy imposed by the European Union on bank deposits in Cyprus as unfair and setting a dangerous precedent.
Lidia Kelly and Alexei Anishchuk: "While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous," Kremlin spokesman Dmitry Peskov told journalists.
Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are heavily exposed to the island as a favored offshore centre for big business.
The levy, imposed as part of a 10 billion euro bailout, sparked panic among Cypriots over the weekend and hit Russian and other European financial markets on Monday.
As the Cyprus parliament prepares to vote on the measure on Monday, the government in Nicosia was working on a plan to soften the blow for smaller savers.
Russian Deputy Finance Minister Sergei Shatalov earlier said the tax would be acceptable if it was levied only on interest earned by savers.
There are almost 70 billion euros in deposits held in Cyprus. Less than half that is held by non-residents
, most believed to be Russian.
At the end of last year, Russian banks had around $12 billion on deposits with Cypriot banks and corporate deposits accounted for another $19 billion, according to Moody's credit-rating agency.
That figure is more than twice the size of the bailout, which had been repeatedly delayed amid concerns from other EU states that the close business and banking ties with Russia made Cyprus a conduit for money-laundering.
It ranks as the largest source of foreign direct investment into Russia - money that is largely Russian in origin.
NO DECISION ON RUSSIAN LOAN
Russia has made no decision yet on whether to extend the duration or ease the terms of a sovereign loan to Cyprus, a government source told Reuters earlier on Monday. Source

Cypriot Outrage Over Bankster Robbery Could Derail Euro-Area Bankster Robbery

European policy makers signaled flexibility on the application of an unprecedented bank tax in Cyprus, seeking to overcome outrage that threatened to derail the nation’s bailout. European shares and the euro fell.  

While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported.
“If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such,” European Central Bank Executive Board member Joerg Asmussen said today in Berlin. “What’s important is that the planned revenue of 5.8 billion euros remain.”
While Cyprus accounts for less than half a percent of the 17-nation euro economy, the raid on bank accounts risks triggering new convulsions in the financial crisis that began in 2009 in Greece. Moody’s Investors Service said that the move is a significant step toward limiting support for bank creditors across Europe and shows that policy makers will risk financial- market disruptions to avoid sovereign defaults.
The tax is “a worrying precedent with potentially systemic consequences if depositors in other periphery countries fear a similar treatment in the future,” Joachim Fels, chief international economist at Morgan Stanley (MS) in London, wrote in a client note.

On Line

Scenes of Cypriots lining up at cash machines raised the specter of capital flight elsewhere and threatened to disrupt a market calm since the ECB’s pledge in September to backstop troubled nations’ debt. With no government in Italy, Spain in the throes of a political scandal and Greece struggling to meet the terms of its own bailout, more turmoil could hamper efforts to end the crisis.
The Euro Stoxx 50 Index fell 1.9 percent and the euro slid as much as 1.9 percent; the currency was trading at $1.2960, down 1 percent at 11:45 a.m. in Frankfurt.
Borrowing costs in other debt-strapped nations rose. Italian 10-year bond yields climbed 9 basis points to 4.69 percent. The rate on similar-maturity Spanish yields jumped 10 basis points to 5.02 percent. Germany led gains among higher- rated nations’ securities.

Traders ‘Aghast’

“Traders and investors are aghast as these measures,” Michael McCarthy, a chief market strategist at CMC Markets in Sydney, told Bloomberg Television.
Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s Investors Services.
Cypriot banks had 68.4 billion euros in deposits from clients other than banks at the end of January. Of that, 21 billion euros, or 31 percent, were from clients outside the euro area, 63 percent were from domestic depositors, and 7 percent were from other nations within the euro region, according to data from the Central Bank of Cyprus
Cypriot President Nicos Anastasiades exhorted political factions to support the deposit levy, which he pledged is a one- off measure that will avert a collapse of the financial system that in turn would have led to the country’s exit from the euro.
“A bank collapse would cause indescribable misery,” Anastasiades said in a televised address yesterday. He called the crisis the country’s worst moment since the 1974 Turkish invasion that has left the island divided.

Depositor Swap

In a bid to ease a run on banks, depositors who keep their account for two years will receive securities linked to future revenue from the country’s gas reserves, the president said.
He said he would also seek to soften the impact on savers. The potential changes include taxing deposits less than 100,000 euros at a 3 percent rate, while setting the levy at 10 percent between 100,000 euros and 500,000 euros and at 12 percent for deposits greater than that, Antenna TV reported, without saying how it got the information.
The levy -- as of now 6.75 percent of all deposits up to 100,000 euros and 9.9 percent above that -- whittled the euro- area’s bailout of Cyprus to 10 billion euros, down from an original figure of about 17 billion euros, near the size of the nation’s 18 billion-euro economy.
“Obviously, people would have preferred to pay nothing, but it’s a better deal than it could have been,” said Marshall Gittler, head of global foreign-exchange strategy at Limassol, Cyprus-based IronFX. “It’s unusual to ask depositors to take a hit, but if they hadn’t then the hit would have fallen uniquely on Cypriot taxpayers, so in a sense it’s fairer.”

Ministers’ Call

German Finance Minister Wolfgang Schaeuble said euro finance ministers would discuss modifying the terms of the tax in a telephone conference today. They met for 10 hours overnight in Brussels into March 16 to agree to the 10 billion-euro bailout.
The bank tax was the alternative to imposing losses on bondholders in a so-called bail-in. That step was opposed by the Cypriot government, the European Commission and the ECB, German Finance Minister Wolfgang Schaeuble said on ARD television last night.
“It’s up to them to explain it to the Cypriot people,” Schaeuble said. “Clearly, the taxpayer should not be asked” to rescue banks from insolvency, he said, adding that Cyprus faced a “very difficult time” unless it accepts the tax.
Anastasiades, whose minority government took office less than three weeks ago, holds 20 seats in the 56-seat legislature. The third-biggest faction, Diko, which supported him in his February election, holds eight seats. Cyprus’s communist Akel party, with 19 seats, plans to vote no.

Road to ‘Chaos’

Afxentis Afxentiou, the governor of Central Bank of Cyprus from 1982 until 2002, told the state-run broadcaster CYBC that failure to enact the legislation “opens the road to chaos.”
The ECB’s pledge to buy bonds should prevail over market panic, though the tax on deposits brings the euro area into “uncharted territory again,” Holger Schmieding, chief economist at Berenberg Bank in London, wrote in a note.
“Given the fragile state of the banking systems, especially in Greece and Spain, anything that can impede the needed rebuilding of confidence in these banking systems can potentially cause financial and economic damage,” he said. 

Source