(25 Mar 2013)
Brussels, Belgium - 25 March 2013
1. Wide exterior of European Banking Federation (EBF) building in Brussels
2. Close of EBF flag in office
3. SOUNDBITE: (English) Guido Ravoet, European Banking Federation Chief Executive:
"There is this guarantee of 100-thousand euro and we were very critical about the solution we had last week, that also smaller depositors would be submitted to certain taxes or haircuts and we are very happy that now they respected the fact that at least 100-thousand euro in the bank is always safe."
4. Ravoet's hands gesturing
5. SOUNDBITE: (English) Guido Ravoet, European Banking Federation Chief Executive:
"It was a very specific situation in Cyprus because of, let's say, the fact that these banks were very important with regard to the GDP, but that they also had a very simple business model with a vulnerability that depended too much on sovereign, Greek sovereign debt. That was, let's say, the cause of the problem. But, generally speaking, European banks are very solvent."
6. Ravoet's hands gesturing
7. SOUNDBITE: (English) Guido Ravoet, European Banking Federation Chief Executive:
"I understand that there are measures that restrict the withdrawals and also the possibility for Cypriots to make credit transfers between Cypriot banks but also to banks abroad, so there will be no bank run because there are measures to avoid that."
Nicosia, Cyprus - 25 March 2013
8. Wide of Antois Ellinas, Assistant Professor of Political Science at the University of Cyprus, walking in distance, tree blossom in foreground, focus pull to flower
9. SOUNDBITE: (English) Antonis Ellinas, Assistant Professor of Political Science, University of Cyprus:
"So, when you go to a bank to get a loan, the first thing they ask you is 'what job do you do, how much do you earn?' Well, they have asked Cyprus this and Cyprus told them you know, 'I earn a lot of money from financial services, from providing international services to foreign clients'. So, what they decided to do is that, 'okay, you have to lose your job, and then we will lend you some money, you have to quit your job and then we'll lend you some money'. This is exactly what they did, so they have destroyed the financial sector, and now they will lend us the money. And the question is, how will this money be repaid if there is no income?"
10. View through leaves of Cypriot and EU flags in garden of parliament
STORYLINE:
The head of the European Banking Federation (EBF) on Monday welcomed the bailout deal to save Cyprus from imminent financial collapse.
The eurozone countries and the International Monetary Fund early on Monday granted Cyprus a 10 (b) billion euro (13 (b) billion US dollar) bailout that foresees dissolving the country's second-largest bank, wiping out its bondholders and inflicting significant losses - possibly up to 40 percent - on all deposits larger than 100-thousand euros (130-thousand US dollars).
"We are very happy that now they respected the fact that at least 100-thousand euro in the bank is always safe," said Guido Ravoet, European Banking Federation Chief Executive.
EU officials have previously stressed that this measure, a so-called bail-in, was a "unique step" in Cyprus.
That's because of the size of country's banking sector - almost eight times the economy's annual output - and the capital structure of its lenders, which rely almost exclusively on deposits instead of bonds.
"It was a very specific situation in Cyprus because of, let's say, the fact that these banks were very important with regard to the GDP," said Ravoet.
That concern was evident in markets.
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