Apr 12

Cyprus Central Bank In Shambles Following Third Board Member Resignation (ZeroHedge, April 12, 2013):

Perhaps the most underfollowed story of the day is the blatant takeover of the Cypriot Central bank by the ECB, which as we reported earlier, has been ordered to sell their gold by the ECB’s Mario Draghi, even though the disposition decision of the “independent” central bank of the now insolvent nation is supposedly theirs. First it was this:

  • PANICOS DEMETRIADES SAYS CYPRUS CENTRAL BANK INDEPENDENCE UNDER ATTACK,
  • DEMETRIADES SAYS GOVT WANTS TO SELL GOLD WITHOUT CONSULTATION.

And now we learn that not one, not two, but three board members of the central bank have called it a day:

  • THIRD BOARD MEMBER OF THE CYPRUS CENTRAL BANK RESIGNS – CYBC

We are sure there are at least a few more board members who can resign topped off by Panicos himself bailing, before the entire central bank implodes, and there is nobody left in charge of the now obsolete monetary policy apparatus. What happens then: will Goldman appoint a new “technocratic” Board and governor, or will the country finally confirm that all European lies about member bank Independence is just one big lie?

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Apr 12

EMU plot curdles as creditors seize Cyprus gold reserves (Telegraph, April 11, 2013):

First they purloin the savings and bank deposits in Laiki and the Bank of Cyprus, including the working funds of the University of Cyprus, and thousands of small firms hanging on by their fingertips.

Then they seize three quarters of the country’s gold reserves, making it ever harder for Cyprus to extricate itself from EMU at a later date.

The people of Cyprus first learned about this from a Reuters leak of the working documents for the Eurogroup meeting on Friday.

It is tucked away in clause 29. “Sale of excess gold reserves: The Cypriot authorities have committed to sell the excess amount of gold reserves owned by the Republic. This is estimated to generate one-off revenues to the state of €400m via an extraordinary payout of central bank profits.”

This seemed to catch the central bank by surprise. Officials said they knew nothing about it. So who in fact made this decision?

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Apr 12

Mario Draghi Orders Cyprus To Sell Gold To Cover Bailout “Shortfall” (ZeroHedge, April 11, 2013):

Update, and sure enough:

  • PANICOS DEMETRIADES SAYS CYPRUS CENTRAL BANK INDEPENDENCE UNDER ATTACK,
  • DEMETRIADES SAYS GOVT WANTS TO SELL GOLD WITHOUT CONSULTATION.
  • CYPRUS CENTRAL BANK GOV DEMETRIADES SAYS HE AND HIS FAMILY RECEIVED DEATH THREATS

As a reminder, Panicos holds the now obsolete position of head of the Cyprus Central Bank.

* * *

As was noted two days ago (so certainly not the news catalyst for today’s gold sell off as some are trying to make it appear) as part of its bailout expansion by 35%, Cyprus announced, then refuted, then re-admitted, it would need to fund a portion of the incremental €7 billion in cash demands by selling €400 million, or nearly all 13.9 tons, of its central bank gold. Today, we learn that this demand came from none other than the head of the ECB Mario Draghi. Bloomberg reports: “European Central Bank President Mario Draghi said the profits of any gold sales by the Cypriot central bank must be used to cover losses it may sustain from emergency loans to Cypriot commercial banks.”

Of course, to make it seem that the Cyprus central bank is “independent”, the “European creditors today left a possible gold sale in the hands of the Cypriot central bank, which manages 13.9 metric tons of the metal, according to the World Gold Council.” Naturally, it would not be very politically correct to give the impression that it is none other than the collateral and asset-starved European central bank that is effectively running local monetary policy of its member states, and certainly would not make Cypriots, already devoid of their uninsured bank deposits, happy that the next demand by the ECB for the privilege of staying in the EUR is for them to hand over the only real asset their country has.

More from Bloomberg:

“The decision is going to be taken by the central bank,” Draghi said after a meeting of euro-area finance officials in Dublin. “What’s important, however, is that what is being transferred to the government budget out of the profits made out of the sales of gold should cover first and foremost any potential loss that the central bank might have from its ELA.”

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Apr 11

Cyprus Bailout Size Increases By 35% In One Month To €23 Billion, 120% Of GDP (ZeroHedge, April 11, 2013):

As was reported in the previously presented Cypriot Debt Sustainability Analysis, which among other things had this stunner inside of it, things in Cyprus have gone from bad to worse in the brief span of a month. 35% worse to be exact, because this is how much the total bailout of Cyprus has grown by in a few shorts weeks, from €17 to €23 billion, which happened because just as we predicted the stealth outflow from banks was much worse (read bigger) than previously reported, leaving banks with a far bigger hole to plug. This is problematic because at least previously the bailout as a percentage of GDP was in the double digits. No longer so, as the latest (and soon to be re-revised higher) bailout figure now stands at over 120% of the country’s €18.8 billion GDP (which itself is about to tumble following the collapse of the economy).

From the Guardian:

Crisis-hit Cyprus will be forced to find an extra €6bn (£5.1bn) to contribute to its own bailout under leaked updated plans for the rescue.

In total, the bill for the bailout has risen to €23bn, from an original estimate of €17bn, less than a month after the deal was agreed – and the entire extra cost will be imposed on Nicosia.

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Apr 11

Before:

Here We Go: Cyprus To Sell €400 Million In Gold, About 75% Of Its Total Holdings, To Finance Part Of Its Bailout

Cyprus Denies Gold Sale (ZeroHedge, April 11, 2013):

The Central Bank of Cyprus (CBC) said last night however that selling the island’s gold had not been on the table.

“Such an issue has not been raised, has not been discussed and is not being discussed at the moment,” CBC spokeswoman Aliki Stylianou said.

Stylianou added that sale of the gold was a matter handled exclusively by the CBC board.

A spokesperson for the Central Bank of Cyprus told the Cyprus News Agency (CNA) that reports of the $523 million gold sale have not been, “raised, discussed or debated,” with the bank’s board of directors.

The Central Bank of Cyprus denied the gold sale after reports on Reuters said that Cyprus officials had agreed to sell around 400 million euros in excess gold reserves to contribute to the country’s bailout. Stylianou, the spokesperson for the Central Bank of Cyprus said that the gold sale was, “never discussed nor are there current or future plans to do so on the board’s agenda.” Reuters based its story on a draft report from the European Commission which assessed the nation’s financing needs.

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Apr 05

Investigators Hit Brick Wall; Bank Of Cyprus CEO Hard Drives Wiped (ZeroHedge, April 5, 2013):

As the investigation into unusual loan write-downs and the ‘premature’ movement of capital away from Cyprus by the elites of that nation progresses, Cyprus Mail reports that the investigators – Alvarez and Marsal (A&M) – have found that the information provided by Bank of Cyprus (BoC) was incomplete and data deleting software were found on the computers of two senior executives. “Our computer forensic technologists have found that the computers of two employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC.” Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer – “we had significant gaps in the e-mail data received from BoC for the period 2007 to 2010, a key period for our scope of investigation,” and no email backups were performed. A&M is looking into how BoC accumulated €2.4bn worth of Greek government bonds (GGBs), later suffering huge losses because of that, and into BoC’s expansion to Romania and Russia. We are sure this is all above board and normal IT protocol for the bank… or not.Via Cyprus Mail,

Deletion of data allegedly took place on computers belonging to senior Bank of Cyprus (BoC) executives, according to the leaked findings of a probe into the circumstances that forced the island’s biggest lenders to seek state assistance.

Alvarez and Marsal, the firm tasked with investigating why Bank of Cyprus and Laiki sought state assistance, said the information provided by BoC was incomplete and data deleting software were found on the computers of two senior executives.

“Our computer forensic technologists have found that the computers of two employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC,” A&M said. “Mass deletion of data appears to have been undertaken on the Patsalides computer on October 18, 2012.”

A&M’s findings were handed over to parliament on Wednesday.

Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer.

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