Raid on Cypriot deposits shakes Europeans' faith in savings

By Harry Papachristou and Sonya Dowsett ATHENS/MADRID
Sun Mar 17, 2013 5:01pm EDT

(Reuters) - Europeans' faith in the safety of their savings has been shaken by a levy on Cypriot bank deposits to pay for a bailout, even though there was no sign of a rush to withdraw cash in Madrid or Dublin.
People told Reuters they were angered but unsurprised that politicians should dip into citizens' deposits. And as bankers expressed concern the proposed terms of Cyprus's bailout could unnerve savers elsewhere, some leftist leaders voiced outrage.

Euro zone finance ministers want Cypriots to pay up to 9.9 percent of their deposits in return for a 10 billion euro ($13 billion) aid package. If approved by the island's parliament on Monday, it will be the first time savers have had to foot part of the bill for a European bailout.

"What they did to the Cypriots was a disgrace," said Maria Spyrou, 57-year-old Athens housewife who says she must support a daughter, a nurse, who hasn't been paid for nine months.
"We won't pull our money from the bank here," she said. "In Greece, they have found other ways to rob us, more ingenious and sly ways -- with fuel taxes, property poll taxes, you name it."

The chief of Greece's main opposition, anti-bailout Syriza party, leftist Alexis Tsipras, blamed the move on German Chancellor Angela Merkel.
"We must all together raise a shield to protect the peoples (of Europe) from Ms Merkel's criminal strategy," said Tsipras, who wants a pan-European debt conference to forgive debt.

In Lisbon, Joao Semedo, leader of Left Bloc, one of the country's smaller left-wing parties, warned Portuguese deposits would be at risk if European creditors insist on more austerity.
"The Portuguese government will not hesitate in resorting to bank deposits," said Semedo.
Greece and Portugal, like Ireland and Spain, have received European aid to shore up their economies, in return for painful cuts to spending and tax hikes.

In northern European countries, concerned at how much they might have to pay for bailing out indebted states, there was little sign of anxiety on Sunday. Finnish Prime Minister Jyrki Katainen said the levy was fair.
European officials have been at pains to stress that Cyprus is a special case - with terms not applicable to other bailouts because of the size of Cyprus's banking sector and its large foreign deposits.

NO SAVINGS TO WITHDRAW

But in Madrid, Ana Garcia, a 62-year-old worker at a mental health centre who was attending a protest against the privatization of the health service on Sunday, thought Spaniards could also face a hit on their savings.

"European countries are very calm thinking it could never happen to them. But we'll all get involved sooner or later," said Garcia, who added she had no savings to take out of the bank even if she wanted to.
News of Cyprus's bailout added anxiety to St Patrick's Day celebrations in Dublin.

"It's outrageous" said Carmel Madden, an Irish 54-year-old former businesswoman. The news from Cyprus made her worry about holding proceeds from a house sale on deposit in a local bank.
"I'm more concerned now than I was eight months ago when I sold the house. I just don't know where my money would be safe."
She said she was not planning any withdrawal in the short term, mainly because she had not found a less risky alternative.

Despite the assurances that Cyprus is an exception, the tax on bank deposits risks unnerving savers elsewhere in Europe, according to the chief executive of one Greek bank.
"It's an extreme move, Cyprus may be a tiny state but this will injure the fragile sentiment in the euro zone's south," said the banker, who declined to be named.

Another senior Greek banker said: "What timing, just when the crisis seemed to be stabilizing. How can savers not worry that this may happen again elsewhere as part of bailouts?"

In Italy, where media and political parties are focused on the quagmire following last month's deadlocked election and support for an anti-establishment party has soared, many turned to social media to express their concerns.

"After Cyprus I suggest we find a way to protect our savings from possible forced levies ... the solutions exist!!," read a tweet by Giovanni Cuniberti, independent financial analyst and lecturer at the University of Turin.

(Writing by Jason Webb; Additional reporting by Conor Humphreys in Dublin, Andrei Khalip in Lisbon, Antonella Ciancio in Milan, Jussi Rosendahl in Helsinki and George Georgiopoulos and Renee Maltezou in Athens; Editing by Matthew Tostevin)

Greece may still have to quit euro - Merkel ally

BERLIN | Sat Mar 9, 2013 6:22pm GMT (Reuters) - Greece remains the biggest risk for the euro zone despite a calming of its economic and political crisis and may still have to leave the common currency, a senior conservative ally of German Chancellor Angela Merkel said. Alexander Dobrindt, general secretary of the Christian Social Union (CSU), the Bavaria-based sister party of Merkel's Christian Democrats (CDU), has long argued that Greece would be better off outside the euro zone. But German conservatives' criticism of Greece has eased since the conservative-led government of Prime Minister Antonis Samaras accelerated harsh austerity measures demanded by Germany and the EU as part of its bailout programme. FREE GUIDES AND REPORTS FROM DIANOMI "The greatest risk for the euro is still Greece... I still believe that Greece's exit would be a possible long-term alternative, for Europe and for Greece itself," Dobrindt told Die Welt am Sonntag newspaper, according to advance excerpts of the interview released on Saturday. "We have created a situation that gives Greece a chance to return to stability and restore competitiveness. But I still hold that, if Greece is not able or willing to restore stability, then there must be a way outside the euro zone." Dobrindt urged the European Commission, the EU's executive arm, to prepare the legal ground to allow for the legal bankruptcy of a euro zone member state and its exit from the currency union. Dobrindt's comments contrasted with those of the CSU chairman and Bavarian state premier, Horst Seehofer, who expressed solidarity with Greece and said it was on the "right path" when Samaras visited Munich last December. Seehofer's conciliatory tone echoed that of Merkel who, for all her frustration with the slow pace of Greek reforms, has decided that a "Grexit" would be far more costly for Germany and Europe than pressing on with the bailout programme. Merkel is also keen to avoid renewed market turbulence in the euro zone ahead of Germany's federal election in September. Bavaria also holds a state election in the autumn which the CSU is tipped to win. Dobrindt made headlines last summer when he suggested Greece should start paying half of its pensions and state salaries in drachmas - the national Greek currency before the euro - as part of a gradual exit from the euro zone. With Athens now enjoying relative political stability, German lawmakers have recently been more focused on how to rescue Cyprus, which is negotiating a bailout after its banks suffered big losses due to their heavy exposure to Greece. Italy, the euro zone's third largest economy, also poses a bigger challenge after a majority of voters there rejected German-backed austerity policies in an election last month that has left no party with a clear majority to govern. (Reporting by Gareth Jones; Editing by Mark Heinrich)