Interpreting Middle East Economic News and Analyzing Market Trends

Category: Cyprus

Dubai Group’s investment in Cypriot bank goes from €1.4 billion to zero in record time

There were not many winners in Cypriot banks recently, certainly not Dubai Group.  The death of the financial system in Cyprus was cheered by EU leaders who fought hard to have Cyprus close loopholes for wealthy Russians.  Many of the seized uninsured bank accounts were thought to be Russian own, but later word got out that a lot of Russians took their money out before the bank closures in Cyprus or during the closures via the banks’ international branches.

 

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The Cypriot euro launched today

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Heavily-guarded trucks loaded with euros headed to the Central Bank of Cyprus

Banks in Cyprus will open today at noon for the first time in nearly two weeks.  The terms of the bail-in by the Trioka were only finalized on Monday, which called for a ‘levy’ on uninsured deposit (deposits over €100,000) of up to 40%.  Banks remained closed in the meantime until further clarification and to give the government time to put in place capital controls, in effect creating a new currency, the Cypriot euro.  Here’s more from The Wall Street Journal:

 

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Egypt close to default and Bahrain one step away from junk bond status

Cyprus has been dominating the financial news over the past two weeks.  The crisis seemed to come out of nowhere and rattle financial markets.  There are many questions that come up with events like these.  One key question is, did this crisis really come out of nowhere?  Another key question is, how can we spot potential crisis in the future?  What about the Middle East and the GCC in particular, are there any trouble spots?

 

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Last-minute Cyprus deal approved without vote, offshore finance industry killed in the process

The President of Cyprus reached a last-minute deal with EU technocrats representing the European Union, the European Central Bank and the International Monetary Fund, known as the Troika.  The deal calls for stealing deposits from the wealthiest depositors in the two largest banks.  Depositors at smaller banks are saved for now.  The President’s friends are safe since he instructed them to take their money out of Cyprus last week.  In the end, the Troika gets its two wishes; 1. collect money for its clients (EU banks and investors), 2. kills Cyprus’s offshore financial center.  In the process, Cyprus snubs Russia and Turkey.  Here’s more from Reuters:

   

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EU and IMF ask Cyprus to steal from its depositors in return for bailout

Euro zone finance ministers agreed yesterday on a long-awaited bailout package for Cyprus.  The country has been asking for a bailout of its banking system for a while, but the EU, as you can imagine, has had larger problems to deal with.  Cyprus was asking for $17 billion to shore-up its banking system, equal to its annual GDP.  However, EU finance ministers had a better idea; give Cyprus less than it was asking for, steal up to 10% of depositors money and raise corporate taxes. The theft will take place on Tuesday.  Banks will be closed on Monday so that the theft can take place without a hitch first thing Tuesday morning.  There are so many things wrong with this ‘package’, but first here’s a report from Reuters:

  

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