Cyprus: curiouser and curiouser

First, one of the EU’s finance ministers suggested that the bank raids are not going to end with Cyprus.

Savers in the eurozone could see their bank accounts raided in the struggle to shore up the single currency, a senior EU official warned last night. The Cyprus rescue package – under which bank customers will have a chunk of their cash seized to bail out troubled lenders – could become a template for dealing with other creaking banking systems, Jeroen Dijsselbloem suggested. The remarks from the head of the eurozone’s finance ministers contradicted days of assurances that the Cyprus bank deposit raid was a ‘one off’.

Second, it appears that the news of the big 40% cash grab from uninsured depositors, (those with over EUR 100k in the bank), may be more than a little misleading, which may account for the strange silence from Russia over the last few days.  Zerohedge notes a Reuters report and postulates that the hot money which is supposedly the focus of the heist may already be well off the island.

As it turns out, these same oligrachs may have used the one week hiatus period of total chaos in the banking system to transfer the bulk of the cash they had deposited with one of the two main Cypriot banks, in the process making the whole punitive point of collapsing the Cyprus financial system entirely moot.

From Reuters: “While ordinary Cypriots queued at ATM machines to withdraw a few hundred euros as credit card transactions stopped, other depositors used an array of techniques to access their money.”

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.

So while one could not withdraw from Bank of Cyprus or Laiki, one could withdraw without limitations from subsidiary and OpCo banks, and other affiliates?

In other words, the idea that the situation has somehow been successfully resolved is not only ludicrous from a structural perspective- at most it would amount to one more round of successful can-kicking – but may not even be the case with regards to postponing the inevitable crisis and crackup.