Our Beloved Hellenic Bank Has Been “Bailed Out” by the Citizens of Cyprus
“Let the Fleecing Continue”
Rejoice money launderers, the charade can continue unimpeded for at least another decade. Hooray!! Our beloved Hellenic Bank got the bail out they have been asking for. Due mostly to the EU changing financial reporting standards with IFRS 9 (which we discussed in Part III, “Wargaming: From Tanks to Banks”), that began in 2018 the Cyprus banks had little choice but to bail out two of their banks.
“The Co-op was heading towards privatization via capital raise, however because of the large capital requirements resulting from the continuously changing European framework, capital needs increased,” he said.”
Hellenic Bank will take ownership of the troubled Cooperative bank in Cyprus, absorbing its assets and some of its debt with government approval.
“Hellenic, which also is based in Cyprus, will also absorb 10.3 billion euros ($12 billion) in assets — including loans, bonds and cash — and operate 72 Cooperative Bank branches while employing 1,100 of its approximately 2,600 workers.
Georgiades says another 8.3 billion euros ($9.62 billion) of Cooperative Bank’s assets will be taken over by the state. The sum includes 7 billion euros ($8.12 billion) worth of bad loans.”
Who will pay for all of this?
The Cypriot taxpayers will absorb some of the costs as we mentioned as being one of the advantages of owning a bank in Part II, “Wargaming: From Tanks to Banks.” If you fail as a business or gut the bank of all assets through fraud, it doesn’t matter. The Cyprus government will hide this shell game and just dump the costs on its taxpayers.
“Taxpayers are also expected to foot the bill relating to the compensation granted to staff who will be made redundant.”
“The government said in its stability programme, submitted to the European Commission in April, outlining its general economic policy framework for 2018 to 2021, that it expected public debt to increase by 12 percentage points of gross domestic product as a result of the €2.4bn issue of government bonds in favor of the Co-op, increasing public debt to 105.6 per cent of the economy this year from 97.5 per cent in 2017. This is not taking into account the additional €1bn deposit announced on Friday.”
Isn’t that precious? The government transferred debt from the bank to the people by issuing bonds. You read that correctly. As you remember from Part III, “Wargaming: From Tanks to Banks, Hellenic had 2.4bn Euros in bad debt. What a coincidence. The entirety of that 2.4bn was considered written off with the issuance of the government bonds mentioned in the paragraph above.
They privatized the gains and socialized the losses.
The Cyprus government condones fraud and failure (not unlike the US and worldwide bank bailouts from a decade ago) and will reward banks by having their own citizens pay for it. They will even blame the “continuously changing European framework” and also their own citizens because they weren’t paying their loans back.
But, forget about all of that. IT’S TIME TO CELEBRATE !!! For our beloved Hellenic Bank will continue to live for at least another decade thanks to the bail out and government guarantees which will all be funded by the Cypriot taxpayer. We knew it was coming, and now WE CAN ALL DRINK AND BE MERRY !!!
Disclaimer: My name is John Smith but you can call me Bubba. Everything I have said and will say in this series is only my opinion and is for entertainment purposes only. My current location is on a small boat docked next to a small island (not Cyprus) in a yet undiscovered island chain which lies in a large body of water.