24 March 2013

It's Risk Back On as Sources Cite Draft Deal on Cyprus - Heavy Losses for Large Depositors

The futures are rallying on this news.

I find it interesting that gold is also higher with stocks.

Now that is a bit different.

It *could* just be a correlation with the euro rally.

Let's see if this lasts.

Postscript: Here are some details of the arrangement.
Cyprus and EU agree on draft proposal to rescue banks
BRUSSELS | Sun Mar 24, 2013 8:05pm EDT

(Reuters) - Cyprus, the European Union and the International Monetary Fund have agreed a new plan to resolve the island's bank and finance a rescue of the country, an EU official said early on Monday.

The proposal, which will now be presented to euro zone finance ministers for discussion, will involve setting up a "good bank" and a "bad bank" and will mean that Popular Bank of Cyprus, known as Laiki, will effectively be shut down.

Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt. It remains unclear how large the writedown on those funds will be.

The EU spokesman said there would be no "levy" imposed on any Cypriot banks, with the package requiring a full "bail-in" of uninsured depositors, which is likely to mean heavy losses for those with large holdings in Laiki and potentially Bank of Cyprus, where many Russians hold bank accounts.

(Reporting by Annika Breidthardt and Jan Strupczewski; Writing by Luke Baker)