Cypriot banks secret liquidity revealed. The last balance sheet released by the Central bank of Cyprus confirms that the cypriot banking sector is under emergency liquidity assistance injection. Last month, I suggested in this post that the Cypriot banks were out of collateral and thus had no choice but to tap extra liquidity from the central bank of Cyprus.
This liquidity is usually provided under the emergency liquidity assistance scheme (ELA), by national central banks, with the agreement of the ECB’s council of governors. Because the data released by the central banks are not always very clear neither detailed, it it sometimes hard to interpret the figures. In the case of Cyprus’ central bank, the balance sheet available on the bank’s website is very minimalist and therefore the presence of ELA in Cyprus was still unclear. However, apparently due to an harmonisation of the data publication among the eurozone initially spotted by the FT, last Cyprus’ central bank balance sheet release is much clearer. A quick chart to sum up: Cypriot banks and some sneaky ELA [updated with Portugal] What would you do: Part 2, the Island of Surpyc. Welcome! Once more, I’m trying to help people understand how policies get made from the inside, and how something that looks like a dumb idea can often be the best choice out of a bad decision set, in the context of the ongoing Euro crisis.
The last one was pretty didactic, in that I was aiming to steer people down a path to the decisions I thought were being under-rated. This time, what strikes me about the Cyprus policy agenda is the sheer amount of uncertainty and ambiguity; nearly every idea could end up succeeding brilliantly or failing horribly. So this time round, I’m introducing a large element of chance. In this episode, as in the last one you are once again a representative of the Secret One World Government, and you have been temporarily flown in to pull the strings in the island of Surpyc, which is currently experiencing a bailout crisis… In this game you will need two dice. 1.
Certainly, anyone trying to play it properly is going to cause me to doubt their sanity. “NOOOOO!” Athanasios Orphanides: What happened in Cyprus. The Depositor Haircut. Before I went to Cyprus, before I met Panikos Demetriou, it seemed to me that ordinary people hadn’t done too badly in the rescue of the Cypriot financial system. Ordinary people with up to 100,000 euros in the two biggest banks, Laiki and Bank of Cyprus, got to keep their money; surely only the rich would suffer when the government confiscated the rest? Surely only rich people – and, in the case of those two banks, rather foolish rich people – would have more than €100,000 lying in a bank account? It was bitter medicine to swallow. But given that someone had to pay to save the country, wasn’t it better that it should be those with a lot, rather than those with a little, as in previous bailouts? Panikos Demetriou had more than €100,000 in Laiki Bank – €178,000, to be precise.
The thing about €178,000 is that it’s a lot of money if you can spend it. In 2008, interest rates in the Eurozone as a whole and interest rates in Cyprus began to diverge. The advice was 100 per cent wrong. For Rescue Line, Cyprus Prefers Loan From Russia. Shaky Cyprus teeters between Moscow and Brussels. By Peter Graff NICOSIA, June 15 Fri Jun 15, 2012 5:23pm IST NICOSIA, June 15 (Reuters) - From the sharp-suited 'biznesmeny' in their black BMWs, to the grocery selling imported vodka and whole smoked whitefish, to its Soviet-educated Communist president, the Mediterranean island of Cyprus speaks with an unmistakable Russian accent. And as the latest troubled EU nation hurtles towards a seemingly inevitable financial rescue, it finds itself teetering between Moscow and Brussels.
"They have to decide whether they want to be part of the European Union - or of the Soviet Union," said Fiona Mullen, economist at Sapienta, a consultancy. Cyprus took a 2.5 billion euro ($3.15 billion) loan from Russia last year. The actual bill is likely to be several times as high, and if Greece were to exit the euro zone it could run into double digits, a huge sum for a country with barely a million people. Many in Cyprus think the only place the country could find that kind of cash would be Moscow. Chypre va mal. Athanasios Orfanides va devoir céder sa place. A l? Issue d? Une lutte d? Influence intense, le gouverneur de la Banque centrale de Chypre ? Pilier de la BCE Cette décision peut paraître lointaine, mais elle n?
Inimitié avec le président Le banquier central s? Banques fragiles La non reconduction du gouverneur de la banque centrale survient cependant à un bien mauvais moment pour la petite république insulaire. 1,4 milliard d? Avant même cette échéance, la situation de la banque Marfin Popular Bank, dont le bilan s? Etat sous pression L? La Russie à la rescousse Où trouver alors de l? Espoirs ? Il y a quelques raisons d?
Russian expat invasion of Cyprus also has sinister overtones | World news. A mysterious Russian cargo ship limped into the Cypriot port of Limassol, this month, forced to seek shelter from a violent storm. Hidden on board the MS Chariot were four containers packed with 60 tonnes of ammunition for AK-47s and for rocket launchers. The shipment had come from Moscow's state arms company, Rosoboronexport; its shadowy purchaser was none other than the Syrian government. Cyprus, an EU member since 2004, was supposed to seize the cargo. The weapons flagrantly breached the EU's strict embargo on military supplies to the Syrian regime, which since last year has been violently engaged in shooting and killing its own citizens and anti-regime protesters.
Instead, Cypriot officials allowed the ship to leave after receiving vague assurances it would alter its route. Critics say the murky episode is further evidence of Cyprus's unwillingness to displease – and "embarrassing subservience" to – Moscow. Cyprus's reluctance to offend Vladimir Putin is understandable. UPDATE 2-Orphanides faces ECB exit after Cyprus finmin quits.
Cyprus Bank Rescue May Give $2 Billion to One Bank, Shiarly Says. Cyprus may earmark as much as 1.5 billion euros ($2 billion) to recapitalize a single bank before a June 30 deadline set by the European Banking Authority, Finance Minister Vassos Shiarly said. Shiarly, a former Bank of Cyprus executive, didn’t name the lender when he spoke to reporters in Nicosia today. Central Bank of Cyprus Governor Athanasios Orphanides said on Feb. 29 that Cyprus Popular Bank Pcl, the island’s second-largest, needs 1.35 billion euros to reach the EBA’s core Tier 1 capital target of 9 percent.
Bank of Cyprus needs 400 million euros, he said. The finance minister declined to specify where Cyprus would find the funds for a bank rescue. The budget deficit in Cyprus, which has been shut out of the markets since last May, widened to 6.3 percent of gross domestic product last year from 5.3 percent in 2010, and public debt soared to 71.6 percent of GDP from 61.5 percent, according to the European Union’s statistics agency.
Cyprus, Russia Sign 2.5 Billion-Euro Loan Deal in Moscow. Cyprus and Russia signed a deal for a 2.5 billion-euro ($3.3 billion) loan to be extended to the east Mediterranean island. The first installment, to be paid by Dec. 31, will be 590 million euros, the Finance Ministry in Moscow said today in a statement on its website. The loan is meant to help Cyprus maintain fiscal stability, the ministry said. Cyprus’s Finance Minister Kikis Kazamias and Russian Deputy Finance Minister Sergei Storchak signed the agreement in Moscow today, according to an e-mailed statement from the Cypriot Finance Ministry in Nicosia. Cyprus’s euro-denominated bonds due July 2014 rose for a fourth day, pushing the yield down 83 basis points, or 0.83 percentage point, to 24.997 percent.
To contact the reporters on this story: Natalie Weeks in Athens at nweeks2@bloomberg.net; Scott Rose in Moscow at rrose10@bloomberg.net To contact the editor responsible for this story: Natalie Weeks at nweeks2@bloomberg.net. Will 2012 be the year of bank M&As? L'agence de notation Moody's abaisse la note souveraine de Chypre. Illiquid and loopy in Cyprus. Even more Greek exposure, at local banks. Cyprus SOS.