Cyprus is a casino economy that was on the brink of bankruptcy

Money fled Cyprus as president fumbled bailout

BRUSSELS/NICOSIA (Reuters) As new President Nicos Anastasiades hesitated over an EU bailout that has wrecked Cyprus offshore financial haven status, money was oozing out of his country closed banks.

Cyprus’ President Nicos moncler outlet prices Anastasiades addresses the nation with a televised moncler uk outlet speech from the presidential palace in Nicosia March 25, 2013. REUTERS/Petros Karadjias/Pool

In banknotes at cash machines and exceptional transfers moncler womens jackets for supplies large amounts best moncler jackets of discount moncler jackets euros fled the east Mediterranean island before and after Cypriot lawmakers stunned Europe by rejecting a levy on uk moncler sale all bank deposits.

EU negotiators knew something was wrong when the Central Bank of Cyprus requested moncler outlet sale more banknotes from the European Central Bank than the withdrawals it was reporting to Frankfurt implied were needed, an EU source familiar with the process said. amount the Cypriots mentioned. on a daily basis was much less than it was in reality, the source said.

Confusion over just how much money was pulled out of Cyprus banks is illustrative of the confusion surrounding the negotiations as a whole. Representing just 0.2 percent of the euro zone economy, Cyprus nevertheless threatened to reignite the bloc debt crisis. Cyprus problems began in Greece it is heavily exposed to the euro zone first bailout casualty.

No one knows exactly how much money has left Cyprus banks, or where it has gone. Bank of Cyprus also owns 80 percent of Russia Uniastrum Bank, which put no restrictions on withdrawals in Russia. Russians moncler sale online were among Cypriot banks largest depositors.

While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card cheap moncler jackets transactions stopped, other depositors used an array moncler outlet woodbury of techniques to access their money.

Companies that had to meet margin calls to avoid defaulting on deals were granted funds. Transfers for trade in humanitarian products, medicines and jet fuel were allowed.

Chris Pavlou, who was vice chairman of Laiki until Friday, said while some money was withdrawn over a period of several days it was in the order of millions of euros, not billions.

German Finance cheap moncler jackets womens Minister Wolfgang Schaeuble said the bank closure had limited capital flight but that moncler sale the ECB was looking closely at the issue. He moncler online store declined to provide figures.

BIG DEPOSITORS BURNED Big depositors, including wealthy Russians and Britons, whom the Cypriot president had sought to shield from a levy of any more than 10 percent on their holdings, will end up being far more severely burned if their money is still there.

Under a bailout deal sealed early on Monday morning in snowy Brussels, Cyprus will have to shut its second largest bank and inflict heavy losses on large account holders the two biggest.

Deposits over 100,000 euros in both will be frozen and used to resolve the debts of the defunct Laiki and recapitalise Bank of Cyprus. Both banks were hurt by their exposure to Greek sovereign debt when bondholders were forced to take writedowns last year.

By Sunday, one participant in the negotiations said, there was almost no capital uk moncler outlet left in Laiki, a bank whose market value peaked at 8.1 billion euros in November 2007. Laiki former vice chairman Pavlou disagreed, estimating there had been 2.5 billion euros in cheap moncler jackets mens foreign deposits alone.

No figure cheap moncler coats mens was announced for the scale of the on big depositors, but it will be nearer to 50 percent than to the 15 percent that Anastasiades rejected on March 15, participants in the cheap moncler sale negotiations said, speaking on condition of anonymity.

To enable him to negotiate with politicians of his own protocol rank, European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso conducted the talks with Anastasiades, elected last month.

At one point on Sunday afternoon, the conservative president threatened to resign in an emotional exchange with the heads of the EU institutions and the International Monetary Fund.

The troika of lenders called his bluff, saying that if he quit they would continue negotiations with the speaker of the Cypriot parliament, next in line constitutionally, a participant in the talks said. Anastasiades stayed.

For months, bailout talks with his Soviet educated Communist predecessor, Demetris Christofias, had gone nowhere due to his refusal to privatise moncler usa state assets. didn want to be the president who moncler outlet had signed a bailout with the troika, an EU official said.

The cost of a rescue kept on mounting. By the time the new leader was ready to do moncler outlet store a deal, the IMF and Germany were demanding a 40 percent across the board bail in of creditors and depositors in the two main banks.

German Finance Minister Wolfgang Schaeuble said Berlin had achieved exactly what it sought in exchange for the 10 billion euro financial rescue that creditors and uninsured depositors in the two biggest Cypriot banks should share the load.

is bitter for Cyprus but we now have the result that the (German) government always stood out for, he said.

An moncler outlet store EU source said the IMF and Germany had initially wanted to go further and wind down both Laiki and Bank of moncler outlet online Cyprus.

European politicians, anxious to deflect criticism for having been party to an initial deal 10 days ago that would have imposed a levy on all small savers in Cyprus, rushed to say that Nicosia had only itself to blame.

all those who say that we are strangling an entire people. Cyprus is a casino economy that was on the brink of bankruptcy, French Finance Minister Pierre Moscovici said.

He said he had always opposed taxing deposits smaller than 100,000 moncler sale outlet euros, which are subject to an EU guarantee. Yet neither he nor other ministers or European Commission officials spoke out against the idea at the March 15 meeting, participants said.

Only when a firestorm of protest erupted in Cyprus and it became clear the Cypriot parliament would not endorse the plan did they belated call for accounts under the 100,000 euro threshold to be left untouched.

MIDNIGHT IN MOSCOW Perhaps the most disastrous episode in a week of blunders and miscalculation was the Cypriot attempt to persuade Russia to provide alternative finance in return for future access to the island untapped offshore gas reserves.

Cypriot lawmakers overplayed their hand in rejecting the deposit levy in the misguided belief that Moscow would come to the island aid. Cypriot Finance Minister Michael Sarris was dispatched to Moscow without any clear gameplan or mandate the day after the 56 member legislature voted 36 0 to reject the levy, a source close to his delegation said.