Osborne vows to protect Britain’s armed forces in Cyprus as cash machines are EMPTIED and 60,000 British savers face losing millions in 10% bank account tax

One disgruntled customer

After the savings the banks are going to come for the pensions. They won’t be happy until they’ve bled everyone dry and reduced them to complete servitude.

Via the Daily Mail:

George Osborne vowed today that those serving in Britain’s military or government in Cyprus will be protected after European finance chiefs ordered an unprecedented raid on personal bank accounts.

Up to 60,000 British savers are to lose thousands of pounds each as expats in Cyprus have their savings decimated in part of a painful bid to bail out the bankrupt island.

The Chancellor said the financial situation in Cyprus was ‘an example of what happens if you don’t show the world that you can pay your way’, adding: ‘We are not part of the bailout.’

 Panic: A move by Cypriot authorities that could see up to ten per cent of bank deposits seized to bail out the bankrupt sparked panic and violent protests. One disgruntled customer parked a bulldozer in front of a bank in the coastal town of Limassol in protest

Queues: People withdraw money from a cash-point machine in the Cypriot capital of Nicosia todayQueues: People withdraw money from a cash-point machine in the Cypriot capital of Nicosia today

However he told BBC One’s Andrew Marr Show: ‘The Cypriot banks in Britain are not going to be included in this bank tax. It’s a very difficult situation for people who live in Cyprus.

‘But for people serving in our military and government out in Cyprus, we’re going to compensate anyone who is affected by this bank tax – people who are doing their duty for our country.’

Britons have about £1.7billion of deposits in Cyprus and could lose up to £170million. The Cypriot government has agreed to seize up to ten per cent of savings and use the money to bail out the island’s crisis-hit banking system.

The move sparked panic and violent protests yesterday as crowds desperately tried to withdraw their money at cash machines.

Warning: Chancellor George Osborne said today on BBC One's Andrew Marr Show that the situation in Cyprus was 'an example of what happens if you don't show the world that you can pay your way'Warning: Chancellor George Osborne said today on BBC One’s Andrew Marr Show that the situation in Cyprus was ‘an example of what happens if you don’t show the world that you can pay your way’

Restrictions have been imposed to stop  people emptying their accounts or moving their money out of the country following the deal with other eurozone finance ministers, under which ordinary  citizens’ deposits will be directly raided for the first time.

One furious expat said: ‘This is plain theft. I’d love to hear someone explain to me why it isn’t.’

Furious: Shirley Brooks, 61, who is originally from Manchester, said she stands to lose £18,600 of her retirement money Furious: Shirley Brooks, 61, who is originally from Manchester, said she stands to lose £18,600 of her retirement money

And one of the 3,000 British service personnel based on the island said: ‘I stand to lose €4,000 [£3,500] We’ve tried to save quite hard while we are here – that’s been thrown back in our faces.’

Cypriot president Nicos Anastasiades, who agreed to the raid following ten-hour talks with European finance chiefs, said it was necessary because Cyprus was in a ‘state of emergency’ and failure to enact the Brussels plan would be ‘catastrophic’.

Under the deal, all bank deposits over €100,000 will be hit with a levy of 9.9 per cent. Those with smaller savings will pay 6.75 per cent.

The raid will raise €5.8billion, which will be added to a €10billion bailout from Brussels.

But financial experts said the move – designed to stop Cyprus crashing out of the euro, potentially destroying the currency – would send shock waves through the eurozone.

If savers in other troubled nations fear their accounts might be next, they could withdraw their money and spark a catastrophic run on the  banks.

Economist Howard Archer from IHS Global Insight said: ‘It is an alarming precedent to hit the man in the street. As much as they say this is a one off, people will say if they can do it once they could do it again.’

Tory MP Douglas Carswell added: ‘We should all be extremely worried about this. It shows that ordinary Europeans are being fleeced by the Continent’s elite in order to rescue foolish banks. Why would you risk putting your money in Greek, Spanish or Portuguese banks after this?’

Panic: People queue withdraw their money from an ATM machine outside in Larnaca, Cyprus, after learning that the terms of a bailout deal includes a one-time levy on bank depositsPanic: People queue to withdraw their money from an ATM machine in Larnaca, Cyprus, after learning that the terms of a bailout deal includes a one-time levy on bank deposits

The European Central Bank said Britons have £1.7billion deposited on the island. British expats were stunned by the news, with many left high and dry by the restrictions on accounts.

Cash machines had been working, but many ran out of notes because of the panic withdrawals. Tomorrow is a public holiday in Cyprus, too, so savers will have to wait until Tuesday until they can access their money.

Worry: Steve Carr, a financial advisor originally from York, has been living in the coastal city of Limassol for 24 years. He said the solution could make the situation worse and personally stands to lose ¿2,000 Worry: Steve Carr, a financial advisor originally from York, has been living in the coastal city of Limassol for 24 years. He said the solution could make the situation worse and personally stands to lose ¿2,000

Andy Georgiou, 32, who grew up in Liverpool, said: ‘We are struggling. We can’t access money and we need it to buy petrol and food. It’s appalling. All without any warning.’

Sean Chamberlain, a 39-year-old writer from Devon who now lives in Cyprus, said: ‘There are a lot of  people who are very angry. Everyone was furious, feeling absolutely betrayed by yet another apparently incompetent government.

‘And now they’ve done it once, what’s to stop them deciding to do it again next week? If there’s a run on the bank, that’s a terrifying thing.’

Shirley Brooks, 61, originally from Manchester, stands to lose €18,600. She said: ‘I am extremely angry. This is our retirement money, and there was no warning that this was coming. I don’t think we should have to pay anything as we did not cause the problems in the economy.’

Her sentiments were echoed by former Army officer Graham Smith, who moved to Cyprus from Dundee five years ago. ‘I don’t believe we Brits should have any money taken,’ he said. ‘We have not contributed to the bankruptcy. If anything, all we’ve done is contribute to the economy.’

He stands to lose about €2,000, as does financial adviser Steve Carr, who is originally from York but has  been living in the coastal city of Limassol for the past 24 years.

He said the supposed solution to the island’s woes could make matters worse: ‘When the banks reopen,  people will start moving their money out of Cyprus because they don’t want this happening again. This could create a run on banks, which would be a very bad thing for Cyprus.’

Rescue package: The island national has been bailed out by European partners and the International Monetary Fund in a bid to prevent it entering a bankruptcy which could rekindle the region's debt crisisRescue package: The island national has been bailed out by European partners and the International Monetary Fund in a bid to prevent it entering a bankruptcy which could rekindle the region’s debt crisis
Cypriot televisions shows angry reaction to bailout news

Angry crowds gathered to demonstrate outside the presidential palace in the capital of Nicosia yesterday.

President Anastasiades held emergency talks with his cabinet and other party leaders last night and is expected to make a televised address today explaining the situation.

Cyprus' Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdownCyprus’ Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown

Because of tomorrow’s public holiday, he has two days to pass a law  to enact the Brussels deal in time to seize the cash from bank accounts before Tuesday morning.

In a statement he said: ‘We either choose the catastrophic scenario of disorderly bankruptcy or the  scenario of a painful but controlled management of the crisis.’

An official said today that Cyprus’s parliament had postponed the debate and vote on the controversial levy on all bank deposits that the country’s creditors demanded in exchange for €10billion [£8.7million] in rescue money.

Parliamentary official Antonis Koutalianos said the vote that was scheduled for the afternoon today has been pushed back to tomorrow, but the exact hour of the vote has yet to be fixed.

It is understood savers will be offered shares in Cyprus banks as compensation for the raid on their savings, but it is unlikely to appease those who have lost hard cash.

A spokesman for the Cypriot government said yesterday the agreement with Brussels was ‘serious but not tragic’ and said that the EU had wanted a much higher levy, but the government had fought hard against it.

He said: ‘The dilemma is whether we would have a functioning economy or total collapse on Tuesday .  .  . whether to give in at the 6.75 per cent mark or lose 100 per cent.’

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