No doubt you have been following the Cyprus drama. So what is the latest from the sunny lands plagued by the recent economic misery? To give the latest round up on this fast evolving story:
- The Cypriot finance minister Michalis Sarris stated that banks will remain closed until Thursday;
- Strict capital controls will be placed such as on the amount of cash people will be allowed to take out when the banks reopen;
- Numerous sources report that the Cyprus government is planning to put a weekly limit on cash withdrawals;
- Further controls to prevent money leaving the country have been already implemented and will include a ban on cashing cheques and export limits on euros;
- Deposits of fixed-term nature will have to be kept until they mature;
- Cypriot depositors with less than 100,000 euros in their accounts “will not be hit”;
- Lastly, until the restructuring of the banks is complete, major depositors will not be able to access accounts exceeding the 100,000 euro limit . A government spokesman said “the losses on uninsured depositors would be under or around 30%”.
What about the unfathomable that is seemingly on everybody’s mind? Could Cyprus be forced out of the Eurozone? Politicians do not even wish to contemplate it, it would certainly be disastrous politically and economically but watch this space.
So what does this all mean for the UK?
The government department responsible for Work and Pensions has advised British expats to open UK accounts stating that pensions will not be transferred into Cypriot bank accounts for the time being.
Chancellor George Osborne has said that the Treasury was working on a “British solution”. Just the Cyprus Popular Bank alone, which forms part of Laiki Bank, has 13,000 British customers who could lose a part of their savings above the 100,000 euros (£85,000) cut-off limit.
Ultimately, the final size of the loss which will have to be digested by the investors will depend on how the government decides to protect pension savings so more news will be forthcoming.
Worried about your savings in the midst of this economic misery? Call one of our financial advisors to explore your possible options.