Greece finally does something helpful for Cyprus 22 Mar 2013 Piraeus has snapped up the Greek branches of Cypriot banks. Athens’ default last year is one of the reasons why Nicosia’s banks are in trouble. Greece has proved more accommodating with the island’s departing banks than it was last year with French lenders.
Cyprus plan B targets more deserving victims 22 Mar 2013 The stricken state’s politicians are to vote on a new rescue plan. Stuffing some large depositors into a bad bank is fairer than taxing small savers. But a Cypriot plan to set up a multi-billion euro sovereign fund looks rickety and isn’t impressing the country’s euro partners.
Cyprus will struggle to make gas math work 22 Mar 2013 The struggling island is thinking about bundling future gas revenues into a fund to stave off financial collapse. But Breakingviews calculations suggest the recent discoveries off the country’s south coast won’t be enough to plug a 5.8 billion euro funding gap.
Hugo Dixon: Cyprus will pay dearly for its sins 22 Mar 2013 The Mediterranean island has committed many follies over the years - and is still making mistakes. The troika compounded Cyprus’ errors by going along with the crass deposit tax. But Nicosia is the prime culprit. Every day it delays getting real, the cost of the crisis will rise.
Cyprus exit risk is real – and manageable 21 Mar 2013 The European Central Bank has threatened to cut off Cyprus’ banks if Nicosia doesn’t take a bailout, potentially triggering a euro exit. The ECB has been pragmatic before, and will want the euro to stay intact. But an exit is manageable, and better than having the ECB buckle.
Europe can afford to hang tough on Cyprus 20 Mar 2013 The Cypriot parliament’s rejection of a plan to tax bank deposits, and rumours that Russia might make a play on the country’s banks or gas fields, have triggered speculation about alternative plans to the euro zone bailout. Europe has the power to hold firm.
Elusive future gas riches can’t help Cyprus now 20 Mar 2013 Even if early estimates of huge gas reserves prove right, recent finds off the Mediterranean island’s coast will take time and money to exploit. The dicey politics of exporting gas from Cyprus also poses risks to development. For now, Cyprus’ natural gas potential remains just that.
Hugo Dixon: All Cyprus plan Bs look dreadful 20 Mar 2013 Unless Germany bends over backwards and gives a big grant to Cyprus, the tiny island has three main options: sell its soul to Russia; default and possibly quit the euro; or patch together a new deal with the euro zone. The last option is the least bad for all.
Cyprus crisis shows unwelcome return of randomness 19 Mar 2013 The specifics of straightening out the Mediterranean island’s banking system matter less than the way policymakers are making things up as they go along. They seem to backtrack and abandon principles. It’s all too reminiscent of the shifting responses during the 2008 crisis.
Cyprus must accept a less Russian future 19 Mar 2013 Nicosia is negotiating with Moscow on how to tax Cypriot bank account holders. If insured funds are spared, the island’s Russian depositors would end up paying 60 pct of its bailout bill. Beyond that, de-russification is the price Cyprus has to pay for staying in the euro zone.
Ethical economy: Cyprus and the danger of promises 19 Mar 2013 Under the current plan, Cypriot savers’ deposit guarantees will not be truly honoured. Countries with negative real interest rates already violate the spirit of their commitments to savers. Rather than hold governments to impossible promises, it would be better not to make them.
Cyprus depositor share swap looks like a raw deal 18 Mar 2013 Account holders will lose 7 to 10 pct on their supposedly safe deposits. Receiving bank shares in return would provide some solace if Cypriot lenders looked like buys. But following their multibillion-euro bailout, they will be even more exposed to a stalling domestic economy.
… Meanwhile, Cyprus’ real bailout remains fuzzy 18 Mar 2013 Euro zone finance ministers approved a 10 billion-euro bailout for Cyprus after it agreed to the deposit levy, which will raise 5.8 billion euros. Beyond that, many questions remain about how the burden will be split among Europe, the IMF, Cypriots and the banks.
Cypriot mess sets bar high for euro banking union 18 Mar 2013 The new super regulator might not have been able to stop Cyprus’ banking blowup. Nor could it have easily protected depositors from losses. The mess does highlight the need to be able to wind down failing banks. Bringing forward the mooted bail-in regime is imperative.
Hugo Dixon: Cyprus deposit grab sets bad precedent 18 Mar 2013 Money had to be found to prevent its financial system collapsing. But imposing a 6.75 percent tax on insured deposits is a type of legalised robbery. Cyprus should instead impose a bigger tax of about 15 percent on uninsured deposits and not touch smaller savers.
Europe can make the case that Cyprus is a one-off 18 Mar 2013 The euro zone broke a taboo by hitting insured depositors in Cyprus. To avoid a panic, it must convince markets and savers that what happened there will stay there. The Cypriot banking system was indeed unique. But no guarantee from European leaders can be crisis-proof.
Europe’s bank-run defences have limits 18 Mar 2013 The decision to hit insured depositors as part of the weekend’s Cypriot bailout could prompt those in Spain and Italy to take evasive action. If so, the ECB can deploy major liquidity assistance. But a really big run would test the willingness of central bankers to support its use.
Muted markets still speak loud about Cyprus 18 Mar 2013 Investors did not seem much moved by the news of a Cypriot bank raid. Don’t mistake that calm for equanimity. European equities trade at a hefty discount to U.S. and Japanese peers - precisely because of the sort of risk that this crisis chapter makes manifest.
Euro zone gambles on depositors’ trust in Cyprus 16 Mar 2013 Depositors in Cypriot banks will contribute one third of the island state’s euro zone bailout. The country’s debt now looks sustainable, but it could spook bank account holders in other indebted countries. The move highlights the need for a euro-wide bank resolution authority.
Cyprus vote lobs bailout ball into Europe’s court 25 Feb 2013 In choosing the conservative candidate as their next president, voters in the island state have expressed their strong support for a euro zone bailout and tacitly accepted some reform-induced pain. Cypriots have delivered their part of the deal. Now Europe must do the same.