Seizing depositor’s funds in Cyprus as a condition for the country to secure a €10bn loan from the EU and the IMF to rescue it’s banks would be unjust and set a “dangerous precedent” warns the chief executive of the world’s largest independent financial advisory firm.
The comments from the deVere Group’s Nigel Green come as the Cypriot parliament is scheduled to debate a revised version of the levy on bank deposits this afternoon, with a crucial vote later tonight.
Under the proposal – one which has already been revised due to a public outcry, would see all deposits of more than 100,000 euros hit with a levy of 9.9 per cent.
“Such a ‘levy’ is tantamount to government sanctioned theft of savers’ funds. This is not taxation for the public good, which one would accept, it is a ploy to protect shareholders and bondholders. It’s an outrage that the EU is encouraging one of its member governments to confiscate funds from citizens’ private accounts in this way.
Clearly, this measure will have significant, long-term economic consequences for individuals, Cyprus, and the wider EU, as it represents, arguably, the biggest disincentive to save one can imagine. Should the Cypriot parliament vote in favour of the levy, it would set a dangerous precedent of ‘haircuts’ for depositors.
If it goes ahead, it should be expected that other governments with struggling economies and vulnerable banking sectors would be tempted by, or forced into, similar raids on savers’ funds? This so-called tax poses a serious contagion risk. For example, such a move threatens to initiate potential runs on Spanish and Portuguese banks.” — deVere Group’s, Nigel Green
The deVere Group — expat wealth management specialists, advise those with concerns about their Cypriot bank accounts to contact their financial adviser to explore bona fide, effective options to mitigate the fall-out from the European banking crisis.