
“My bank account's got robbed by European Commission. Over 700k is lost.” - heelhook
https://bitcointalk.org/index.php?topic=160292
======
JumpCrisscross
When you deposit money in a bank you become a protected senior creditor, but
creditor nonetheleas, to the bank. The government insures the first €100 000
or $250 000 against losses, but that guarantee is only as good as the
government.

Jeroen Dijsselbloem, president of the eurogroup, told the FT as the bailout
was announced:

“ _If we want to have a healthy, sound financial sector, the only way is to
say: ‘Look, where you take the risks, you must deal with them, and if you
can’t deal with them you shouldn’t have taken them on and the consequence
might be that it is end of story.' That’s an approach that I think we, now
that we are out of the heat of the crisis, should consequently take._ " [1]

If you want a dollar asset as close to risk free as possible, buy Treasuries.
If you are afraid of inflation buy inflation-protected Treasuries, TIPS.

Not Bitcoins? No, not Bitcoins. The purchasing power of your savings has a
higher probability of being retained when backed by the full faith and credit
of the U.S. government than a cryptocurrency. This may very well change, but
it is not the case today, particularly if you pay your bills and buy your food
in dollars. Speculate in Bitcoins, use them to transact if you must, and
perhaps participate them as a form of activism, but do not convince yourself
that you are George Sorosing the global financial system.

[1]
[http://www.ft.com/intl/cms/s/0/68c9c18e-955e-11e2-a151-00144...](http://www.ft.com/intl/cms/s/0/68c9c18e-955e-11e2-a151-00144feabdc0.html#axzz2OWQybIgY)

~~~
adventured
No, don't buy treasuries. Getting back inflation destroyed dollars is not risk
free, in fact you're getting defrauded because you're not actually getting
your money back at all.

A quick check on what dollars will buy (the true judge of the value of a
currency), spanning 10, 20, 30, 50, 100 years tells you everything you need to
know about the destruction your capital will suffer while yielding almost
nothing to offset the devaluation. And now the Fed is working harder than ever
before to abuse the global reserve FRN standard.

Now is the absolute worst time possible to buy treasuries. The era of cheap
money is coming to a close with a frantic flailing about of currency
devaluations, binge stimulus, bailouts, and robberies. Anybody that claims
hyper cheap money lasts forever, is selling a pipedream (which may be
accompanied with the words: it's different this time).

~~~
bayesianhorse
That's plain wrong. You don't buy treasury bonds unless you know the interest
rate. Even after all the bail outs, all the crisis and despite rising
government debt there is no safer investment.

It's just usually not used as the sole investment, but rather the safest
position in portfolio...

~~~
adventured
That's exactly my point. You can't even remotely earn enough interest on
treasuries to offset the destruction in the dollar that is occurring as the
Fed generates massive inflation (aka expands the money supply at a record
pace). The M2 is expanding at 12%, and the M1 is expanding at 7.5%.

You don't have to take my word for it. The destruction has already occurred,
and is getting worse. A 5 minute effort on calculating what your dollar will
purchase today versus 10 or 15 years ago, proves that. Except now your
treasury paper yields almost nada because the Fed is acting to destroy your
'return' by holding rates artificially low while devaluing the dollars you use
every day to do so.

Treasury paper is as dangerous as holding your money in a Cyprus bank. The
next decade is going to be a fiscal disaster for the US. The bill is coming
due, and not only can the US not afford to repay its debts ever, but it can't
afford any real interest on its debt (4% * $20 trillion = bankrupt US
Government). This isn't going to happen in decades, it's happening now, which
why the Fed can't raise interest rates, can't ever sell off its holdings,
can't stop buying 85%+ of all the US Government debt being issued, and can't
stop buying mortgages. Worse yet, they're going to increase their purchases
again this year.

~~~
bayesianhorse
The argument about inflation really depends on what you have to do with the
money besides putting it into investments, and what other investment options
out there.

It is still consensus that the bond rate + inflation risk is understood much
better than any other asset I can think of. I'm talking about the financial
term 'risk' here, not the colloquial one that you are using. In financial
terms, you can have a loss without any risk and still be happy about the
position afterwards...

~~~
jrs235
The only true and safe way to stay ahead with the rampant inflation of the
money supply is: become a government contractor and get your hands on the
money first before it's effects appear in the system.

Does that make sense?

------
Shenglong
Background and summary (forgive me if some details need correcting):

Cyprus is a tiny country with a GDP not much higher than Tim Hortons. Yet, it
had something like 150 billion in private funds stored in two of its banks:
the Bank of Cyprus and Lakie. Why? Because the majority of the funds (I am
generalizing) belongs/belonged to Russians who took advantage of the people on
the conversion out of communism (dirty money). As North Americans have Swiss
bank accounts, the Russians have Cyprus. Obviously, other people have their
money in here too.

Greek's insolvency impacted Cyprus greatly, because a large portion of the
Cyprus population are of Greek descent. Thus, when the banks were figuring out
where to invest, a large portion of the funds went to Greece. As a result, the
banks lost a ton of money, and are on the verge of making the country
insolvent. The IMF said the government needed to come up with a large amount
of money.

At first they tried to pass a bill that would skim 10% off all Cyprus bank
accounts that had over 10k Euros. There was unimaginable outrage, because as
you can guess, that affects a good portion of the population. In response,
they changed the bill to only affect those with over 100k Euros.
Interestingly, this time, mostly the Russian dirty money was affected, and
there was not as much public outrage (stealing stolen money). As a result, now
30% of all bank accounts over 100k Euros are being seized.

All the North Americans probably don't realize why this is such a big deal. In
North America, we have money in companies, hedge funds, etc. In Europe, from
what I've been told, banks are the major (almost exclusive) depository. Thus,
you can imagine that this is a much bigger deal.

~~~
fakeer
So, if some country (and as you say Europe) where still primary mode of
parking your earnings is banks what are other options to play safe in case
such a seizure happens? Real estate is one I can see. What else? Gold, you
will have to keep in a bank in the end. What about shares, aren't they somehow
related to sth deposited in a bank? I mean, how do you safeguard your savings
then?

~~~
qdog
There seems to be some confusion as to what a bank is on this board.

Every time you deposit say $1 with a bank, they lend out $.90 of it at
interest for mortgages, payrolls, etc. It's these investments the bank makes
that can (and do) wreck money. The government of the US and EU recognize this
risk for most people is detrimental and offer insurance on the first 100,000
deposited.

The phrase "seized account" does not appear to be correct, more correct would
be "The Cypriot banks lost something like 40% of all deposits and all
depositors over the 100,000 insured mark have lost their investment."

Any deposit in a bank is still an investment, even if they don't pay interest,
because banks don't just put all your coins and bills in a vault, they just
mark you down as a number in their books. The risk you take is that government
backing the deposit insurance AND the bank don't do something dumb. Banks are
usually much more highly regulated than hedge funds, but a quick look at how
often banks fail (the US has something like 800+ banks on the unnoficial FDIC
watch list) should sober anyone up.

Hold physical money is the only not to be at risk of losing a deposit, and
then you have to provide for security, and you sure aren't going to earn
interest.

I'm not really enthusasiastic about bitcoins, but one could argue they solve
the problem of trying to keep a bunch of wealth out of the risk of banks,
without having to have a huge pile of physical currency/valuables.

~~~
roel_v
"Every time you deposit say $1 with a bank, they lend out $.90 of it at
interest for mortgages, payrolls, etc."

Actually, when you deposit $1, they loan out about $9 (maybe a bit less
nowadays, but still a multiple of the $1 being put in). That's what the
'fractional' in 'fractional reserve banking' comes from.

~~~
kbolino
That doesn't make any sense. You've mixed up macroeconomics and
microeconomics. A single bank cannot lend more than it has in deposits.
However, in an economy with many lenders and borrowers, a deposit (or really
any kind of expenditure) can be reinvested fractionally many times, enlarging
the money supply by more than its nominal value. Also, the multiplier "rule"
of taking the reciprocal of the reserve rate is more of a rough estimate,
since individual borrowers may not spend all of the money they have borrowed.

~~~
roel_v
You're right, I did mix them up.

------
rayiner
Yes, blame Angela Merkel and not the bank executives at your bank that loaded
up on Greek debt while Greece was careening towards insolvency.

I appreciate the PR nightmare here for the E.C. People are going to be madder
at the E.C. for wiping out depositors at this unviable bank than they would
have if the E.C. just let the whole Cypriot banking sector collapse and let
everyone lose their money.

See:
[http://online.wsj.com/article/SB1000142412788732350100457838...](http://online.wsj.com/article/SB10001424127887323501004578386762342123182.html)

~~~
cynicalkane
Blaming evil banks and profligate creditors while tightening the money supply
wasn't a particularly fruitful thing to do the last time there was a global
economic crisis, and a whole lot of modern macro was about not repeating that
mistake.

Then the world goes around and repeats the same offenses, and the public once
again buys the easy, moralistic stories. Bleh.

The fact of the matter is that the Eurozone is a bad idea, a lot of economists
said it was a bad idea, and now they're seeing their predictions come true.
For each European financial disaster it's easy to blame some convenient cause,
but eventually you have to ask: what is it about the Eurozone that is so good
at precipitating financial crises? As banks collapsed and massive financial
contagion in America was uncovered, did anyone in 2007-08 (besides a small
number of monetary-inclined economists) think the very Euro would be
threatened again, and again, and again, as America lurched along in limp but
definite recovery?

To paraphrase Bill Clinton: it's the money, stupid. The Eurozone is structured
to suck the money out of peripheral economies in times of crisis, which then
seize up like an engine starved of oil. The best banking system in the world
cannot survive if all its money disappears. Cyprus does not have the best
banking system in the world, so I guess they're worse off.

~~~
frozenport
_The Eurozone is structured to suck the money out of peripheral economies in
times of crisis_

It seems like Greece is doing much of the sucking, much to the chagrin of
their stern German neighbors.

I don't see the Euro as structurally deficient, I really think this problem is
a due to Greek culture in the early 2000s being incompatible with the EU.
Remember that Cyprus is a very small country, being half the size of
Pittsburgh.

I think many people forget why the Euro exists. It exists to grow trade and
foster connections between European countries, and it serves to level them and
their societies. This is a social agenda. If Greece stays in the Euro their
culture will have changed for the better.

~~~
Samuel_Michon
_“Remember that Cyprus is a very small country, being half the size of
Pittsburgh.”_

Cyprus is small, but it's not _that_ small.

Pittsburgh, PA: 305,704 people (Pittsburgh metro area is 2.36 million though)

Cyprus: 786,873 people

Pittsburgh, PA: 55.37 mi^2

Cyprus: 3572 mi^2

Courtesy of Wolfram|Alpha:
[http://www.wolframalpha.com/input/?i=size+pittsburgh%2C+pa+v...](http://www.wolframalpha.com/input/?i=size+pittsburgh%2C+pa+vs+cyprus)
[http://www.wolframalpha.com/input/?i=population+pittsburgh%2...](http://www.wolframalpha.com/input/?i=population+pittsburgh%2C+pa+vs+cyprus)

~~~
vacri
The way some Americans rate city populations is weird to my (Australian)
sensibilities. We assume the metro area in the city population - because the
city is referred to as a whole. If I go to visit a friend in the metro areas
of Sydney, I'm still 'going to Sydney', not 'the Sydney metro area'.

~~~
virtualritz
Actually, not some Americans, but some (or all) Australians. It all depends on
the pov. :)

Europe is the same as is most of the first world as far as bigger cities go
(bigger meaning >=1 million inhabitants). There is "city population" and
"metro area population" (outside the well-defined boundaries of the city). In
the 3rd world this data granularity often isn't available.

In Australia, I guess it may be available but the distinction simply isn't
made (which also helps making you feel bit more "important" when comparing
Aussie city sizes to other big cities in the world, I guess). ;)

When I lived in Australia I wondered why Sydney felt so small, smaller even
than my home town Hamburg, in Germany. Even though it was supposed to have 4.5
million inhabitants while Hamburg barely has 2 million. After understanding
this it all made sense. Hamburg has 1.75 million city + 3.25 metro area = 5
million ... in 3rd world/Aussie city population math. :)

Check Wolftram Alpha; you'll find there is no metro population area data for
most 3rd world/Australian cities, but it is there is for most big cities in
the rest of the first world.

~~~
rayiner
I think it's because American/Australian cities are sprawlier, so using metro
area makes them sound bigger.

At 1.75 million, Hamburg would be solidly the 5th largest city in the U.S.
However at 5 million it would only be the 10th largest metro area.

------
Samuel_Michon
Comment #7 in that thread says it all:

 _“So you trusted a small tax haven island with your money. The plan failed.
Your next step: trusting even smaller tax haven island with your money. Pure
logic.”_

~~~
qdog
Yeah...funny thing is blaming the EU. The banks were lending out the money on
what turned out to be bad assets, not sure there's any cure for that where
deposits don't get wrecked.

Iceland before, Cyprus now, not sure what they think will happen to Carribean
banks in the long run. Bitcoin might be an ok solution for people who don't
care about earning interest, but if you still want the interest you have to
deal with a lending institution.

~~~
cinquemb
even funnier thing is thinking that these haircuts are gonna do much…

the template according to troika is to do more of the same :D

granted the only future i see in bitcoins is in actual business transactions
and not earnings interests,which with typical fiat are subject to the whims of
ZIRP and central m̶a̶n̶i̶p̶u̶l̶a̶t̶i̶o̶n̶ planning :D (which [number of
business transactions with bitcoins for goods or services] has gone up these
couple of years if you look beyond the hype)

and the fact that it would be pretty hard for .gov reallocate funds in a .dat
:P

~~~
qdog
You would lend out your bitcoins at interest, just like you do with any other
currency. Unless you want to be a direct lender, you'd still use a bank.

Maybe the EU's policies led to the propagation of all the bad assets, but
Cypriot banks were offering a higher interest to attract deposits. You can't
get that higher interest without investing in somewhat riskier assets. Even
assuming the EU policy is terrible (I am no expert on the EU and want no part
of that argument, btw), the problem with the Cyprus banks was poor controls
and risk management, which was by design to attract deposits.

Pretty simple, unless you had a very good reason (tax avoidance, money
laundering, interest rate), parking money in the Cyprus banking system was a
very bad idea. So either the person with 700k was avoiding taxes, laundering
money, enjoying a higher than normal interest rate, or being foolish with
their money. I have no idea which it was, but if I personally had to oversee
such a sum, I wouldn't be parking it in such a risky place.

~~~
cinquemb
Lending is one thing, storing your wealth in a currency under ZIRP is another.
I'm lucky that I at least get dividends on my savings being with a local
credit union.

And only half of their banking system consisted of foreign deposits (not to
mention most of those deposits were able to leave the country via loopholes).
Where does that leave the individuals and small business native to cyprus? Is
it such a horrid idea of storing your money in your own country?

And since the ECB is calling cyprus the template, where does this leave the
next country that needs to be bailed out (which will happen again[1 bailout in
2010,1 bailout in 2011, 2 bailouts in 2012, 1 so far in 2013; this is starting
to look like Fibonacci's work :P]) will banking in portugal, italy, ireland,
greece, and spain be a very bad idea for people who live there, or are they
all banking in their home country for tax avoidance,money laundering and for
ZIRP to negative interest rates on their savings?

~~~
qdog
If you ever read The Wealth of Nations, it has a long history of the value of
silver(commonly used for money at the time), and the effect new mines had on
the value (overnight 1/3 value loss not unheard of). There is essentially
nothing in the world guaranteed to hold or increase in value that we use or
have ever used as money.

If you are lucky enough to have money over the limit, at least in the US, you
can open accounts at different banks to try and have more insurance. For the
native Cypriot running a legit business, yes, it's unfortunate, but that's
what has led to a central banking system. If you look back a hundred years,
bank runs were much more common, but people still had to use banks.

I don't offer financial advice, but it certainly would seem that maintaining
bank accounts above the insured limit in any of the countries you listed is
very high risk at the moment.

~~~
cinquemb
>I don't offer financial advice, but it certainly would seem that maintaining
bank accounts above the insured limit in any of the countries you listed is
very high risk at the moment.

I'd agree, but i'd like to add that one would have to be fooling themselves if
this high risk is anything but contained to the PIIGS or the EU.

ex: Some british pension accounts were hit:
[http://www.telegraph.co.uk/news/worldnews/europe/cyprus/9944...](http://www.telegraph.co.uk/news/worldnews/europe/cyprus/9944544/British-
pensioners-fear-for-savings-as-Cyprus-proposes-capital-controls.html)

I guess in any case, having any bank account over "insurance" limits in any
country isn't sound (as we've seen that even those limits can be changed
[usually changed or able to be removed at any time like what the FDIC
announced in December]). But then again, people don't usually act in a logical
manner (which I guess in a weird sense they shouldn't since any currency is
ultimately built upon trust or belief which is not directly connected to
logic).

I guess it's just better to stick to the basics (food,water,shelter) and let
the bankers worry about when their fellow citizens or russian oligarchs will
come for their heads which according to history, eventually happens :P

~~~
qdog
It would probably be beyond my abilities and knowledge to really write about
the banking system fully.

I would note, even the US has a long list of banks on the endangered list:
[http://www.calculatedriskblog.com/2013/03/unofficial-
problem...](http://www.calculatedriskblog.com/2013/03/unofficial-problem-bank-
list-declines_30.html)

Some big banks in the US seem immune at the moment, but the recent revelations
about Chase losing billions while trying not to reveal it to regulators is
just par for the course.

I personally trust the US government to back my small deposits far more than
any bank. It's not because the US government is so good, it's because the
banks are so bad.

To me, it appears that without IMF prodding and EU intervention, Cypress would
eventually have had a banking collapse that would have wiped out 100% of all
depositors. The general operation of banks when losing money seems to increase
leverage to try and make up for the losses, instead of acknowledging losses.

------
skrebbel
Oh boohoo.

The OP appears to forget that without the European Commission, _all_ of his
money would be lost.

It's like getting mad at the guy who chainsaws you out of the car that you
folded around a tree because he sawed your car into two pieces.

~~~
bobsy
If anything he should be angry at his accountant. I assume he has one if he
has 800k. How many wake up calls does someone need. In the UK when banks were
failing, before there was a solution the Government said they would guarantee
the first £50k of savers. It might have then gone up to £100k.

My parents who have a fairly large sum of money hired a decent accountant to
mitigate a large portion of the risk. Spreading their money between a fairly
large number of bank accounts.

You then look at when Iceland banks failed. Lots of people lost money.

The Cyprus banking sector size was ridiculous. It was 7x Cyprus GDP. If the
sector failed it was fairly obvious Cyprus would be unable to save it. You
have no idea what the terms would be of a bailout or if a small country like
Cyprus would get one..

So back to my main point. Get a decent accountant. Understand where your money
is going.

------
pliny
>I'm not Russian oligarch, but just European medium size IT business

I fail to see the difference, honestly.

The OP, by running a business within a society where many services essential
to that business are provided by the government and paid for by the citizens
and businesses within that society, profited directly from other people's
taxes - but refused to contribute.

I feel about as bad for him as I do for any of the other gangsters, Russian or
otherwise.

~~~
mkdir
I'm not sure why, but natermer's past several posts are all dead.

He wrote:

> The people running the government, which uses the taxes to secure loans that
> they have no intention on paying back, in order to prop up a failing economy
> that is failing because of the rules and regulations that are setup to
> maximize the illigit profit for said people running government.. those are
> the real gangsters.

> Most large state governments amount to little more then just legalized
> mafias. Ran by political and family dynasties serving the purposes of
> whoever is capable of providing them the most money and power.

> IMHO, paying as little taxes as possible is a moral imperative.

~~~
sbierwagen

      I'm not sure why, but natermer's past several posts are all dead.
    

He was hellbanned in this thread:
<https://news.ycombinator.com/item?id=4276766>

~~~
etherael
I might be missing something obvious here as I only just woke up but that
thread looks entirely innocuous and uncontroversial to anyone who doesn't
accept the constant refrains to the necessity of the state, is that really a
position that will get you hellbanned here?

------
aaron695
Putting money in an uninsured bank is an investment the same stocks or
property.

If the asset you invest in fails you lose your money.

Don't see how this is the European Commission robbing anyone.

I thought (But could be wrong) without the bailout all the money would be
lost. Isn't this them giving someone who's lost it all 20% of their money
back?

~~~
gurvinder
So where you suggest people should keep their money if the only insurance they
can get for their deposit is Euro 100k ? Matresses? Safes?

Bailout or no bailout, all money in Laikie is lost except what was insured.

Some interesting points 1) Laikie bank also had a loan of 9 Billion from ECB,
that won't be written off , even though depositor's money is written off. That
loan will be transferred to Bank of Cyprus. 2) Out of this 9 Billion half was
used by Greek branches which are not effected as sold to a greek bank, even
then Bank of Cyprus will have to pay full 9 Billion. 3) If you had a mortgage
with same bank for 300k , and had 300k Deposit, only Deposit will be reduced
to 100k , but you will still owe the bank 300k loan, as they are transferring
all good loans to Bank of Cyprus.

I can go on with more points to prove that its unfair politics just to give a
message to Rich Russians to send their money to Germany instead of keeping it
in Cyprus.

After the crisis, German banks are trying to put full page Ads in Cypriot
newspapers both in English and Russian saying that their money will be safer
in Germany!!!

~~~
X-Istence
The same thing is the case here in the US. FDIC insures up to 250k. After that
you are liable to lose it if the bank goes tits up.

In this case, the bank went tits up, he got his 100k EUR back from insurance.

As for mortgages and loans, those aren't insured to the bank either (unless
underwritten by the gov't ...), so if YOU go bankrupt the bank is out that
money. In most cases you have some equity backing that loan so even if you go
bankrupt some part of the money can be recovered by for example selling your
house.

------
Samuel_Michon
Apparently he didn't read up on deposit insurance. In most EU countries,
anything over Euro 100,000 is not safe.

<http://en.wikipedia.org/wiki/Deposit_insurance#By_EU_country>

~~~
hackerboos
Other than convenience why wouldn't you open several bank accounts?

------
ptaipale
The OP does not seem to understand that the bank account was not robbed by
European Commission, it was just lost because it was a bad investment.

He put money in a bank that failed. Presumably, he made the investment for
reasons of convenience of operating the capital in Cyprus, but also because
the particular bank he chose was paying high interest rates. It was paying
high interest rates because everyone knew the risk was high. The risk
materialised. Who is surprised?

EU helps a bit but is not prepared to compensate him for losses; this is not a
fault of the European Commission.

I'm a bit short of sympathy because of this blaming of Merkel, Rehn et al.
They're not perfect, but they are not culpable for this loss.

Cyprus has had tax as percentage of GDP at below 40 %. Northern Europe is
closer to 50 %. If you had wanted buffers provided by the state, you should
have collected taxes to do so. Alternatively, you could have stayed out of the
euro, and then the government could just print money and rescue the banks. Of
course, outside the euro you wouldn't have been such a great haven for grey
and black Russian money.

------
wmt
What is the poster suggesting? EC should've stayed out and let the banks go
bankrupt?

Oh I know, they should've just covered all the tax haven banks losses.

~~~
gurvinder
EC should have treated Cyprus in same manner they treat other countries which
are part of Euro Zone. If they can bail out Greece without a haircut which
actually caused crisis in Cyprus, why do this against Cyprus? Also it might be
a tax haven for others , but for Cypriots its their country. And this haircut
is applied to everybody who has deposits in the Cypriot branches of Laikie
bank but Same bank has branches in Greece and people with deposits in Greek
branches won't suffer.

~~~
bayesianhorse
Cypriots had continously higher interest rates on their deposits than other
Europeans. The small levy wouldn't even have eaten up these profits which are
essentially due to tax havenry and unsound business practices on a country
wide scale. No pity there...

Even if the 7% levy was all hard-earned money instead of too high interest
rate profits, this would have hardly bankrupted more than a few depositors
which were in dire straits already.

~~~
gurvinder
7% levy was proposed on all accounts, and it was illegal to put levy on
insured deposits, and it was asked to put this levy on all banks even if they
are solvent.

Can you quote what high interest rates are you talking about on deposits? And
what about interest rates on Current Accounts? Business usually pay money to
have these accounts.

Cyprus also has higher interest rates on mortgages, and most Cypriots have
mortgages, so they are not actually having any profits because of "so-called"
high rates.

If European Union is so concerned about Tax-Haven issues, why didn't they come
clean and ask Cyprus to raise tax rates as they did in 2004 when Cyprus joined
European Union, And what about Luxembourg, isn't it where Apple is registered
for saving taxes ??

------
danmaz74
So, you deposit your money in a bank with very high interest rates - very high
because they invest in risky Greek bonds. If everything goes well, you keep
the interests. If the risky investment of the bank goes bust, we (EU citizens)
should pay you the risk, even beyond the insured 100k. Is that correct?

~~~
im3w1l
>ZERO INTEREST!

>I've already explained that it's CURRENT ACCOUNT (transactional account).

>Not bank paid to me, but I was paying annual fee to the bank in order to
maintain this account and debit card.

>Current accounts are usually not affected even if bank goes bankrupt. Upon
liquidation, current account holders are paid first, as money on this type of
account cannot be gambled by bank. It's most liquid assets, like cash.

~~~
danmaz74
It's VERY hard for me to believe that anybody would keep a balance close to a
million euro in a bank with zero interest. Even I get a small interest on my
current account...

------
jgeerts
This is just undermining the bank system. There is no reason big enough to do
something like this and it appals me that some people are saying that he had
it coming.

A part of it is 'dirty' and that argument is being used to validate the
confiscation of working people's money and company's money which the EU's
economy is based upon.

The fact that they announced this before taking a decision is just beyond
stupid, any normal thinking human being knows that it's a bad approach given
that they want to prevent a bank run. People in other countries are fearing
that the same procedure will happen to them. This has a way bigger impact than
just some companies and some rich people and some bad russians, they are just
harming the image of banks in whole Europe.

Next to that fact, OP has a medium sized business, people work there, wages
can't be paid, this has a major influence on companies all over Europe and
everyone who works there. OP put his money in Cyprus because it was
profitable, is that a bad thing? You have to choose paths that are most
profitable for your company and he didn't put it in some obscure market, it
was backed by a bank, we generally trust banks.

Now they want to prevent a bank run, this is just a ticking timebomb. Whenever
the 300 euro/day rule doesn't apply anymore, there will be a bank run. No
money will be going into the bank anytime soon. They are going to regret this.

~~~
sbank
Thanks for speaking up against those in this thread who virtually blame this
guy for the wrongdoing of others around him.

------
oellegaard
While I would probably have the same reaction if I was living in Cyprus,
important points are missing here.

The way I understand it: Cyprus failed to control their economy and required
the help from the European Union. In order to lent them a crazy amount of
money, they wanted some guarantee. They could not provide anything, so their
government had to use the peoples money to pay for the governments previously
bad judgement about not saving up for bad times.

------
nekojima
It appears this is a current/chequing/checking account rather than the
savings/deposit accounts that were originally reported to be subject to the
special tax and which pay the ridiculous levels of interest (10%+).

The impact on local business is already being felt, both consumption & payment
of supplies & salaries (and soon tax remittance), and imports will suffer
significantly in the coming days and weeks too. Exports may well be paid for
and the funds remain outside of Cyprus, further creating problems for the
economy, as it goes almost all-cash and tax is evaded too. Credit card
balances can not be paid off for now either.

It will be interesting to see how Russian mobsters (and various shades of
business people) react to having millions/billions taken from them. I'd not
want to be a Cypriot politician or banker having to say no to these guys.

------
bayesianhorse
Basically, someone deposited his money in a tax haven, with patently risky
banks. Then the banks went into trouble. The European Union tries to help them
avoid total loss, and now that same someone blames the EU for the partial
loss.

Total loss was the alternative to the bailout...

------
niggler
This fellow is using Laiki bank, and the Cyprus Finance Minister said that
they would be seeing an 80% haircut.

Relevant: <https://twitter.com/finansakrobat/status/316813023639646208>

~~~
uvdiv
_Cyprus's finance minister said Tuesday that large deposit holders at Cyprus
Popular Bank PCL (CPB.CP), the island's second biggest lender, could face
losses of as much as 80% on their deposits as the government moves to wind
down its operations._

 _Speaking in a television interview with state broadcaster RIC, Michalis
Sarris indicated that it could also take years before those depositors see any
of their money returned._

 _"Realistically, very little will be returned," Mr. Sarris said._

[http://www.foxbusiness.com/news/2013/03/26/cyprus-finance-
mi...](http://www.foxbusiness.com/news/2013/03/26/cyprus-finance-minister-
uninsured-laiki-depositors-could-face-80-haircut/)

------
radicaldreamer
I'm not sure why people think investing above the insured deposit ceiling in a
badly rated bank is risk free. If you have that much cash, you certainly can
do (or pay someone to do) some due diligence and store your assets in a safer
way.

~~~
gregsq
Very true I think. When the banks started to fold in the UK I split my cash
into units of up to £35000 each into different banks. The guarantee was per
institution, not individual. It certainly made more sense to me to fit within
the guarantee limits, though there was no absolute guarantee that even those
limits would hold.

~~~
ansgri
Is the EU EUR100k guarantee per person and not institution?

~~~
ptaipale
Per person depositing in an institution. On European level, it would be futile
to try to limit it to EUR100k per person, for many reasons, for instance
because lots of people can have multiple identities -- expect perhaps in the
Big Brother societies in the northern EU countries, where you can actually do
a census by saying SELECT COUNT(id) FROM population WHERE alive=1;

Moreover, how would you treat accounts that are not owned by a person, but
e.g. companies?

------
Guthur
It amazes me how many people mention tax evasion, and other excuses for
apportioning of liability.

The liability should lie with the people who bought the Cypriot/Greek debt in
the first place. They are the ones that in essence lent the money to these two
tiny countries when it was obvious it was out of control and would blow up.

But where is the incentive not too when the liability is offloaded to people
who had no part in the debt transaction; either the citizens or other third
parties.

To me these risk balances are way out of whack and are just asking for the
irresponsible fiscal activities we are seeing.

~~~
Paradigma11
the cypriot banks bought the greece dept, that is the problem.

~~~
Guthur
And the Greeks bought the Cypriot debt maybe; humour attempt.

This doesn't really change my assertions, the Cypriot debt holders should take
the hit first, let the pain filter through the whole rotten trail.

------
jbellis
Looks to me more like 700k was blocked as part of the capital controls to
prevent a bank run. The actual amount to be seized will be much smaller. Cold
comfort, I know.

~~~
SoftwareMaven
Doesn't sound like it[1]. It looks like it is 700k gone.

1\. [http://greece.greekreporter.com/2013/03/27/cyprus-finance-
mi...](http://greece.greekreporter.com/2013/03/27/cyprus-finance-minister-
uninsured-laiki-depositors-could-face-80-haircut/)

~~~
jbellis
Oops, you're right, this is CPB. He's screwed.

------
jcr
In one sense, this submission really is politics and I feel bad about up-
voting it, since politics are against the HN site guidelines.

In another sense, this is also about tech, specifically, bitcoin. The
desperate people in Cypress may turn towards alternative currencies as a way
to escape their situation.

I know there are a lot of folks around here who vocally support bitcoin or
other alternative currencies. For me the _idea_ is very interesting, but the
_reality_ makes me nervous. There are one of two possibilities; either (1) I
know bitcoin well enough to never trust it, or (2) I don't know bitcoin well
enough to make an informed decision.

I'm still betting on the latter. ;-)

None the less, there's a lot of negative bitcoin news that never makes the
front page of HN, and I wonder why. The most recent was:

<https://news.ycombinator.com/item?id=5459304>

<http://www.youtube.com/watch?v=7fvSYT7vhQY>

The _worst_ part of the above could the sensationalism, but in my opinion,
it's my inability to verify the veracity of the claims. Are they just
muckraking to (successfully) cause "Fear, Uncertainty, and Doubt" (FUD)?
--Sadly, stuff like this makes us already skeptical and squeamish folks even
more nervous about it.

Market manipulation is a very real problem in all markets, so even if the
above is entirely true, it's merely one instance of graft against bitcoin,
when there are countless instances of corruption in all the other markets.

------
calleskonto
The EU has nothing to do with it it's cyprus that can't keep it's economy
afloat.

If i got to decide the EU should have let your contry go bankrupt fall in to
civil war, but hey we decided to lend you money to stop that.

But yes blame the very people that helped you from loosing all your money.
That seems like a good idea....

------
nateabele
One possible upshot of this is that maybe people will actually start paying
attention to how their home banks are capitalized. What's their reserve ratio?
What are their major investments? Have those investments been rated by
_independent_ agencies?

Schemes like the FDIC (which, as mentioned in a previous comment, can change
the rules at any time) only serve to dumb us down and encourage bad behavior;
firstly by lulling depositors into a false sense of security, and secondly by
eliminating the incentive to be prudent and appropriately risk-averse.

~~~
bayesianhorse
People don't actually need to pay attention to that. Most banks in the
European Union are already watched and have regulations up their collective
funnels to avoid exactly these kinds of problems. The only mitigation strategy
neccessary is to split your cash assets in multiple accounts...

And of course, if you partake in a well-functioning state, which protects your
rights against all sorts of problems, educates your workforce, regulates your
food and healthcare, you might consider the taxes a bargain.

------
mbreese
So, the system worked and he gets to keep €100K? Because his bank is insolvent
and that is the amount of money that was insured?

I'm not saying this doesn't suck for him and his company, but €100K is better
than €0.

~~~
fsniper
Keeps €100K but can not withdraws or transfers €300 daily.

~~~
trhtrsh
That's effectively a 1 year freeze.

------
wladimir
AFAIK that's already more than was lost in any of the bitcoin heists...

------
vvllddrr
I don't really see how the EC is robbing when it's actually lending Eur 10bln.
Without the loan, _all_ banks would have collapsed and you'd have lost the
first 100K as well.

The initial proposal was to only tax a percentage of the saved amount. That
was rejected by the cypriotic people/govt.

------
Samuel_Michon
By the by, doesn't that bank logo look kind of familiar? Engadget's logo was
inspired by the RSS logo, but this one doesn't even try to be original.

<http://i.imgur.com/WKZEMiQ.png>

~~~
pbhjpbhj
It's not an especially unique form
<http://www.gnsegroup.com/images/logo/TelemedLogo02_News.jpg>. Do you think
Engadget did it first?

------
edwinjm
The alternative is that the bank goes bankrupt and you lose everything. Be
glad.

------
jacquesm
If and when those banks reopen there will be a bankrun and they will both go
bust. It's only a matter of time.

------
dgregd
Could someone please tell me, who is going to make money during this fuss?

------
cinquemb
I wonder if the FDIC can cover US deposits with leverage of 371:1… :P

~~~
niggler
The unlimited FDIC protection ended December 31 2012. It's back to the 250K

~~~
cinquemb
Correct, and since MF global showed us where deposits lie on the totem pole
compared to derivative exposure, i'm quite excited to see whats next when
[insert bank here] needs to meet its margin calls :P

------
InclinedPlane
It's your fault for using such a bad bank. Just use paypal instead.

/s

