The great EU bank robbery: British taxpayers to bail out victims of outrageous raid

UK taxpayers will have to compensate thousands of Britons hit by a shock raid on bank accounts in Cyprus.

The debt-stricken island, which is home to around 3,000 British military personnel and civil servants, is being given an £8.7billion EU rescue package.

But – in a move condemned as ‘robbery’ – Germany says it will not fund the emergency deal unless every saver with a deposit account contributes via a bank tax.

Account holders will lose 9.9 per cent of all deposits over 100,000 euros (£85,000), with a 6.75 per cent levy on smaller amounts.

George Osborne said last night the Treasury will help out military staff and officials. But it is thought 60,000 other Britons, including holiday homeowners and expats, will lose out.

They are thought to have about £1.7billion in Cyprus’s banks – exposing them to a potential levy of at least £115million – or an average of £1,900 each. In yet another eurozone crisis:

Cypriot banks banned online transfers and emptied cashpoints to stop withdrawals; The levy could be automatically taken from accounts as early as Wednesday; British tourists were told to ensure they had multiple sources of money; The chief minister of the euro area refused to rule out similar levies elsewhere; Analysts said the raid could fall foul of the European Convention on Human Rights; Traders are braced for turbulence on international stock markets today.

In response to cries of outrage, Cypriot president Nicos Anastasiades was last night trying to amend the bailout tax to limit the pain for small depositors.

But Angela Merkel insisted it was right that all depositors in Cypriot banks should share the responsibility of bailing out the state.

Addressing an election rally, the German chancellor insisted: ‘Anyone having their money in Cypriot banks must contribute in the Cypriot bailout. That way those responsible will contribute in it, not only the taxpayers of other countries, and that is what’s right.’

But economists warned the move would fatally undermine confidence in the safety of money being held in banks in other countries, risking bank runs across the eurozone.

And there was uproar in Cyprus, where furious residents attempted to smash into banks closed for a long bank holiday weekend using JCBs.


Fiona Mullen, a British economist living on Cyprus, said: ‘We knew there was a possibility they would take the deposits above the insured threshold – so above 100,000 euros – but nobody thought they would take it down to someone with five euros in the bank.

‘I was trying to take money out of the ATM but I couldn’t.’

David Symonds, another expat, predicted violence when banks reopened: ‘Tempers could get frayed. Those frayed tempers could well lead to violence.’

Amid mounting chaos, the Cypriot parliament postponed a vote approving the deal and was reported to have announced a further bank holiday on Tuesday – and possibly another on Wednesday – to keep banks closed.

Mr Anastasiades needs to get the legislation ratifying the deal through parliament before banks reopen or face a run on accounts.

But the scale of revolt against among MPs has thrown his efforts into disarray. If the government cannot win support for the package, the country is expected to crash out of the single currency.

Archbishop Chrysostomos, the country’s religious leader and a former government supporter, was reported to have called for calm, but insisted Cypriots would never forget Europe’s behaviour. In his Sunday sermon, he thundered: ‘This is a villainy of Europeans. Cyprus must as soon as possible leave the eurozone.’

Mr Osborne said that because David Cameron had extracted Britain from an EU fund agreed by Labour, British taxpayers would be spared a huge bill.

But the Chancellor said the UK Treasury would reimburse military and government personnel with money in Cyprus banks.

Britain has military bases on the island with a sizeable presence, and the bill to taxpayers will run into hundreds of thousands of pounds.

‘Anyone doing their duty for our country in Cyprus will be protected from this bank tax,’ Mr Osborne said.

But the rest of the 60,000 British citizens with money there will lose out.

‘That is an example in Cyprus of what happens if you don’t show the world that you can pay your way.

'That is why in Britain we’ve got to retain the confidence of world markets,’ the Chancellor said.

‘It is an extraordinary situation, but frankly – and I remember talking about Greece – and since then we had Ireland and Portugal, problems in Spain, problems in Italy, now in Cyprus.

‘Anyone who thinks that Britain is alone in having these challenges should look on their TV screens, look at tonight’s news, realise that it’s a very tough economic situation out there.

‘And unless we in Britain front up to our own problems – the problems in our banking system, the problems that we’re borrowing so much money, the problems that actually our businesses need more help to create jobs - if we don’t do those things then the difficult economic situation in Britain will get very much worse.’

UKIP leader Nigel Farage said British taxpayers were being asked to pay for a ‘disgraceful euro-larceny’. ‘Outrage is a word overused in political debate, but hardly covers this,’ he added.

Low corporate tax rates and lax financial regulation in Cyprus have led to big influxes of foreign cash, particularly from Russia, and suspicions of money laundering and tax evasion.

But economist Eamonn Fingleton said the bank raid could be ‘worse than Lehman Brothers’ – a reference to the botched response to the collapse of the US bank in 2009.

They have opted for a ‘solution’ that amounts to probably ‘the single most inexplicably irresponsible decision in banking supervision in the advanced world since the 1930s’, he said.

‘They have weakened – perhaps catastrophically – the principal pillar sustaining modern banking.

This pillar is deposit insurance. This raises questions about deposit insurance throughout the EU and invites runs on banks not only in the most financially-challenged nations such as Greece and Spain but even in Italy and France.’

Sebastien Galy, of the bank SocGen, agreed the move could be the ‘trigger’ for a new eurozone crisis: ‘It breaks a cardinal rule – namely, public trust on which money relies.’ Britons who are paying a heavy price

Chris Drake: The former BBC Middle East correspondent, who retired to Cyprus, stands to lose several thousand euros because of the raid.

Mr Drake, 70, said that as a result, no one would trust that their money was safe in a Cypriot bank ever again.

‘I’m furious with myself,’ he said. ‘I had so many opportunities to move my money abroad but was taken in by all the promises that any attempt to raid my savings was a red line not to be crossed.

‘Experts said it was against the law. Now, I’ve lost several thousand euros. As someone who is retired, the money in my account is all I have to live on for the rest of my life.

‘What’s really upset people is that they’ve been lied to. They were told that their money was safe and that they shouldn’t move it and then they announce this.

‘Everyone’s accounts are frozen and the ATMs have no money. Some people are struggling to get enough cash together to buy food and water.

‘Had people been told that the money was essential for bailing out the country, they may have seen things differently. Instead, they just feel that they’ve been robbed by the Government.’

Mr Drake, a bachelor, who retired to Limassol, said that he thought people in Cyprus would be very reluctant to trust banks as a result of the crash and would invest elsewhere.

He added: ‘But there are plenty of other people with hard luck stories worse than mine.

‘I have a London Cypriot friend who just sold his house and after paying off all his debts put the remaining 350,000 euro into a bank here while he decided what to do with it.

‘In the meantime he treated himself to a holiday in Thailand and is still there. He’ll have the shock of his life when he hears the bad news.’

Stella Steward: She stands to lose around £2,000 of her life savings to the ‘disgusting’ levy.

Mrs Steward, 66, a partner in a wedding planning business, moved to the Mediterranean island from St Albans, Hertfordshire, nine years ago.

‘There was no warning that this was about to happen and we are all in shock,’ she said.

‘What irritates the ex-pat community is that there are quite a few islanders who keep their money “under the mattress” and don’t pay the normal taxes.

‘Perhaps if they had played by the same rules as the rest of us the country might not be in the mess it is’.

Mrs Steward, who lives in Paralimni, a town in the south east of the island, spoke to the Daily Mail before joining the annual bank holiday town carnival.

She and her friends were armed with banners to protest at the levy.

One banner proclaimed: ‘Dick Turpin and the Cyprus government have a lot in common’, while a second banner stated: ‘Cyprus government is making clowns of us’.

‘What’s really upset people is that they’ve been lied to.

'They were told that their money was safe and that they shouldn’t move it and then they announce this.

Dee Mannerings: The 64-year-old moved to Cyprus with husband Mick, 65, from Rainham, Kent, in 2002.

Mrs Mannerings, who runs a wedding planning business in Cyprus for Britons with Mrs Steward (see above), said the levy was akin to stealing.

She said: ‘Who gave them the right to take our money?

‘Both of my parents were born in Cyprus. I love the country but I don’t like what’s going on at the moment.

‘A lot of the ex-pats have gone back to Britain because they cannot afford to stay here any longer. They have just left their properties for the banks to repossess.

‘Something needs to be done. Why should the government be allowed to take money out of people’s savings?’

The couple, who live in a three-bedroom villa with a swimming pool at Sotira, near Ayia Napa, said they had tens of thousands of pounds at risk of being seized under the plan.
Read more: http://www.dailymail.co.uk/news/article-2294971/The-great-EU-bank-robbery-British-taxpayers-bail-victims-outrageous-raid.html#ixzz2Nr2IwcjL Follow us: @MailOnline on Twitter | DailyMail on Facebook