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Cypriot money turned out to be something totally different from what it seemed to be

28 march 2013, 17:40
0

Kazakhstan’s financier Zhomart Yertayev believes that Cypriot banks’ investors incurred losses well before the scandalous initiative to introduce a one-time tax on deposits. He voiced his opinion in an interview for Kazakhstan’s Kursiv business newspaper.

“Many believe that the fact the money kept with Cypriot banks has shrunk by 20% means that the 20% has reemerged somewhere else. That is not the case. The money has been gone for quite a while: it was channeled into expensive real estate that later plunged; Cypriot banks never reviewed the real estate’s book value. Besides, some money was invested into bonds that also plunged; their book value wasn’t reviewed downwards, either. It seemed the money was all right; however, it has been gone for quite a while. If at one point you estimate a rusted Zhiguly (USSR-made car) at $1 billion and after a series of failed attempts to sell the car you ultimately dump it, it doesn’t mean that you actually owned a million dollars and then lost it; it means your assessment was far from being reasonable and accurate. This is the major shocking thing about the Cypriot money: the money turned out to be something totally different from what it seemed to be”, Mr. Ertayev, Consultant to Bank RBK Board and President of the Eurasian Center for Financial Consulting, said.

According to Mr. Ertayev, depositors keeping more than 100 000 Euros with Cypriot banks may try to rescue their money through turning to Cypriot court, with their bank deposit agreement attached to the law suit papers. However, it is virtually impossible to get the deposits back. Nevertheless, he doesn’t exclude that there might be behind-the-scenes talks between banks and individual large depositors on returning money.

He believes that concerted actions of a number of European nations insisting on introduction of a tax on deposits in Cyprus is an alarming signal confirming it is no longer safe to keep money in Europe and have one’s business registered there. “I believe many will shortly start shifting to Hong Kong and Singapore”, he said.

“Prospects of the Cypriot banking system are obscure and uncertain. Cyprus is a minor country, an underdeveloped economy; it is likely to roll back into the past; with the depositors’ confidence lost, the country will lose all the non-residents’ money”.
When asked if a similar scenario might unfold in Kazakhstan, he said it was technically possible if there is a concerted stance of the Government, the Parliament and international entities such as the EU and the IMF.

“However, Kazakhstan cannot be likened to Cyprus. Kazakhstan is a serious player when it comes to many commodities. We do hold substantial gold and FX reserves and are resilient to external shocks. The country’s banking system has already survived a “shrinking” of its assets. I believe the worst is in the past and the Kazakhstan banking sector is seeing a renaissance which was possible through the Government’s efforts. The country’s economy is eager to and capable of developing further; and local banks are to be deeply involved in the process”, he believes.

Source: Kursiv.kz


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