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Leaked report states that Cyprus will need an additional €6 billion for bailout


Sync

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Oh dear. I'm starting a new thread on this because (if true) it means they need to tear everything up and start again.

Cyprus forced to find extra

Crisis-hit Cyprus will be forced to find an extra €6bn (£5.1bn) to contribute to its own bailout under leaked updated plans for the rescue.

In total, the bill for the bailout has risen to €23bn, from an original estimate of €17bn, less than a month after the deal was agreed – and the entire extra cost will be imposed on Nicosia.

Cyprus's politicians had already faced intense domestic political pressure for agreeing to impose hefty losses on savers at two struggling banks in order to fulfil its eurozone partners' demands of contributing €7bn
The report is here: http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/04/Estimate-of-financing-needs-ESMT-art-13-v09042013-1.pdf


The key from the summary is:
The European Commission, in liaison with the ECB, estimates that Cyprus's gross financing needs
amount to about [EUR 23bn] over the three-year programme horizon, i.e. 2Q2013-1Q2016. This
includes needs for the recapitalisation of the banking sector, the redemption of maturing medium- and
long-term debt including loans, and fiscal needs.

Thanks to burden-sharing measures adopted by the Cypriot authorities prior to signing the MoU in
particular as regards the recapitalisation of the banking sector, net financing needs are expected to
amount to a maximum of EUR 10bn
This...is big. Cyprus can't come up with this money. They need this money. So where's it going to come from? Do they run to Russia? Hit up the depositers still further? Pull out of the Euro?

The entire thing has been shambolic. Europe running about vacillating on what to do, no one having the authority to put their foot down. Cyprus staffed by incompetants who can't count. This is the smallest possible country to fall over, but the EU can't even get this right, or look like the likely to get it right. It's a mess.
 


Shpake

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Ah sure it's only money.;)
 

P Ryan

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just wondering, anyone here know if there has been a run on remaining deposits in the main banks there yet?
I haven't heard any reports about it, but maybe the controls are still in place?
 

Aindriu

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Thanks, Sync.

If it is true this is going to cause major ructions across the EU.

Could it be the straw that breaks the camels back?
 

cyberianpan

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Cyprus is tiny and shoudn't be too hard to figure out, as is it is well known that the Troika domestic contraction/growth figures for Cyprus way underestimate the downside. I'm not sure why the Troika aren't doing things properly, and at this stage the IMF Is tarnished.

As well as lender of last resort, IMF is more imporatnly meant to be "technical assistance of last resort". By this I mean neutral, apolitical wonks who get things right. The IMFs credibility in this regard is blown and there is no agency above/beyond them. This might be alright if just Cyprus was the problem, but way larger countries are on shaky ground.

Until there's radical reform of the IMF (Lagarde & Blanchard booted etc), the Eurozone will continue to muddle on. The only other option is that there's benevolent extra-terrestial life, and that an inter-planetary monetary fund comes to our rescue.

cYp
 

gerhard dengler

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The key from the summary is:

The European Commission, in liaison with the ECB, estimates that Cyprus's gross financing needs
amount to about [EUR 23bn] over the three-year programme horizon, i.e. 2Q2013-1Q2016. This
includes needs for the recapitalisation of the banking sector, the redemption of maturing medium- and
long-term debt including loans, and fiscal needs.

Thanks to burden-sharing measures adopted by the Cypriot authorities prior to signing the MoU in
particular as regards the recapitalisation of the banking sector, net financing needs are expected to
amount to a maximum of EUR 10bn
The key summary (in italics above) is not contained in the actual report linked here
http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/04/DSA-9-April2013.pdf

Just saying.

edit : the key summary (in italics above) could well be contained in the report linked here
http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/04/Estimate-of-financing-needs-ESMT-art-13-v09042013-1.pdf

Are there two different draft reports circulating?

Further edit : both links source two different reports about Cyprus.
http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/04/Estimate-of-financing-needs-ESMT-art-13-v09042013-1.pdf
 
Last edited:

ManUnited

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Where have the extra billions in costs come from?
I don't understand a lot of it but it looks like they have included the measures already taken after the November agreement into the total (23b).

"Description of scenarios in the DSA

The November 2012 scenario is based on the Commission's services 2013 Winter Forecast which builds on no-policy change, apart from the fiscal measures already adopted and implemented in December 2012 in line with the draft Memorandum of Understanding agreed in November 2012, and includes the costs for the recapitalisation of the banking system amounting to EUR 10.0 bn.

TheProgramme Scenario is based on the commonly agreed macroeconomic forecast and the fiscal consolidation measures incorporated in the MoU agreed between the Cypriot authorities and the Troika on 2 April 2013, including, inter alia,privatisation receipts for state-owned and semi-public companies of EUR 1.4 bn over 2013-2018, roll-over of domestic-law long-term debt of EUR 1.0bn, CBC loan asset swap of EUR 1.0 bn and sale of excess gold reserves of EUR0.4 bn"

edit: The above is from Gerhard's link which seems to be the full report.
 
Last edited:

Sync

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Are there two different draft reports circulating?
At this point I find it entirely possible.

BNY pretty much nail the problem with the growth forecast:

Simon Derrick, chief currency strategist at BNY Mellon, questioned the idea that the economy would recover within two years, recording growth of 1.1% in 2015. "Why would confidence return and make people want to put money into Cyprus?" he said. "The economy is three things – banking, property and tourism. You're not going to rebuild an offshore banking industry in Cyprus; and in tourism it's competing against Turkey, where the currency is down 50% since mid-2005."
As for the question on how the higher amount came about: The Cypriot govt and DOF can't count. They've proven that already. Their plan was based on make believe, they basically said "Yeah we'll agree to dip into the deposits of investors over 100k. We don't know to what % though". That's not a plan.
 

Howya

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Where have the extra billions in costs come from?
I suspect that the "extra" costs were always there - just the usual drip feed of ever worsening balance sheet.
 

Ribeye

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On the other Cyprus thread, some nutcase called Striploin or Porterhouse or something has been saying for weeks that the Cypriots are gonna be wiped out, deposits, pensions, the lot,

But he's just a doomer, sure he's also rabbiting on about how the mortgage problem in Ireland is actually four or five times worse than the official figures, meaning that the deposit raiding is comin here,

As I said, total fruitcake,
 

ManUnited

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On the other Cyprus thread, some nutcase called Striploin or Porterhouse or something has been saying for weeks that the Cypriots are gonna be wiped out, deposits, pensions, the lot,

But he's just a doomer, sure he's also rabbiting on about how the mortgage problem in Ireland is actually four or five times worse than the official figures, meaning that the deposit raiding is comin here,

As I said, total fruitcake,
Got my fingers crossed for you Ribeye, you need a win.
 

Malbekh

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Sorry to be a bastard Sync, but I don't think this merits a separate thread and you should merge it with the original one. While the news is new, all the conversations on this thread will revolve around the same arguments on the main thread on Cyprus banks, so you are not advancing anything new.

Please don't be upset.
 

Shpake

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On the other Cyprus thread, some nutcase called Striploin or Porterhouse or something has been saying for weeks that the Cypriots are gonna be wiped out, deposits, pensions, the lot,

But he's just a doomer, sure he's also rabbiting on about how the mortgage problem in Ireland is actually four or five times worse than the official figures, meaning that the deposit raiding is comin here,

As I said, total fruitcake,
Well it's not that this is something new. History parallels itself or repeats itself. Have you forgotten already the shreiks of Joan Burton as Lennie kept on upping the amount of Moula that the Irish banks needed...? from Euro 2 Bn to 10 Bn to 30 Bn to 60 Bn...? And much the same took place in Greece except that it wasn't the banks, it was the Government deficit that kept on being upped and upped over a period of months as the new Prime Minister went through the books... He said something to the effect that as soon as they thought everything was totted up a new gap appeared in the finance. Shocked yes, but not surprised. On the Irish mortgage problem, well that might be slightly related to the house prices which is related to the economy. I sure hope Enda has his sums done right... he is a primary school teacher after all, and should know things like that. Right?
 

Ribeye

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