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Who knew about the Cypriot bank holiday and took capital flight beforehand?

A friend sent me an article from a fairly credible German news source about capital flight in Cyprus before the bank holiday. This is the first I have heard of pre-bank holiday capital flight by insiders. And given this is a German news source, I am going to be sceptical until I see further credible verification. Nonetheless, the gist here is that 4.5bn euros in funds were alleged to have been shifted out of Cyprus just prior to the announcement of the country’s bank holiday. The article alleges that government officials were prominent amongst those sending their money to safety outside of Cyprus.

Here’s a rough translation:

At the last minute: Cypriot politicians plundered their bank accounts

In the week prior to the EU decision for a compulsory levy in Cyprus, almost 4.5 billion euros left the country. Members of the government and people close to the government are suspected in particular.

The head of the Cypriot Central Bank estimates that in the first days after the introduction of the compulsory levy, about 10 percent of deposits in banks in Cyprus will leave the country (here). But as the Italian news agency Ansamed reported with reference to local media, capital flight has long since reached epic proportions. Just in the week before the weekend deciding the compulsory levy, hundreds of bank customers took capital of nearly 4.5 billion euros abroad. 4.5 billion euros in just one week.

Some unnamed sources suggest that the capital refugees had been warned of the tax on deposits. Allegedly, mainly government officials and people close to the government transferred their capital abroad. Overall, since the beginning of the year, 20 billion euros have been transferred abroad.

The Greek central bank, however, is to have sent between four and five billion euros to Cyprus to their own banks to help in dealing with the massive withdrawals by depositors.

Source: DWN

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

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