One of my clients who is a financial expert (Stockbroker, Analyst, Blogger/Reporter), is currently writing a very lengthy article, a few snippets which add to this situation that I found useful.
Let's look first at what actually transpired. Cypriot banks held deposits of roughly €68 billion, four times the size of the total national GDP, while the total size of the banks was roughly eight times GDP. The "Troika" seemed to feel that Cyprus needed €17 billion in bailout money to be able to handle the crisis.
There are (were) 370,000 bank accounts, with 360,000 of those containing fewer than 100,000 euros (per Dennis Gartman)... "only" €5.8 billion is needed for the bailout, so the 10,000 or so accounts holding more than €100,000 will be docked an average of €580,000.
Basel III standards require European banks to increase their deposit ratios. This European response to Cyprus is going to make that harder for banks in smaller European countries to accomplish. Very tiny Luxembourg has banking assets 13 times the country's GDP. Yes, I know that Luxembourg's banks are the very epitome of solid banking and that the majority of those assets are loans to central banks and other credit institutions, but there is no way on God's green earth that Luxembourg as a country could even begin to think about backing its banks.
Looked at another way, the three big French banks have combined footings of about $6 trillion compared to France's GDP of $2.2 trillion. So the Big Three French banks are 3X their dirigisme-ridden GDP... By contrast, the top three U.S. banks which are no paragon of financial virtue - JPM, BAC, and C - have combined footings of $6 trillion or 40% of GDP. The French equivalent of that number would be $45 trillion for the U.S. banks. Can you say train wreck!
It is only a matter of time before these French and other European banks, which are stuffed with sovereign debt backed by no capital due to the zero risk weighting of the Basel lunacy, topple into the abyss of the shadow banking system where they have funded their elephantine balance sheets. And that includes Germany, too. The German banks are as bad or worse than the French. Did you know that Deutsche Bank is levered 60:1 on a TCE/assets basis, and that its Basel "risk-weighted" assets are only $450 billion, but actual balance sheet assets are $3 trillion? In other words, due to the Basel standards, which count sovereign and other AAA assets as risk free, DB has $2.5 trillion of assets with zero capital backing!
...the law of unintended consequences is at work: the eurocrats will end up with exactly the opposite of the financial system they wanted. Either that, or the European banks will end up having to be nationalized in great numbers. These two possible outcomes seem to be the logical consequence of the EU's very unfriendly financial sector policies.
No one knows exactly how much money has left Cyprus' banks, or where it has gone. The two banks at the centre of the crisis - Cyprus Popular Bank, also known as Laiki, and Bank of Cyprus - have units in London which remained open throughout the week and placed no limits on withdrawals. Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians were among Cypriot banks' largest depositors.
There is loopholes to get money out. Wither it works for you now, or at all, I don't know.
But there is evidence it is occurring simply because the blockade was not done in full, get it out indirectly it appears and you can get to it.
So about 10,000 very successful people are about to get screwed if they can't get their money out.
Trust me, they intend to get what they need, so if you can find a way, take it out, or you risk losing more than expected, as this becomes more known.
