Cyprus: it's hard to imagine a neater way of undermining confidence in the banking sector.

A PR disaster.

I hold my hands up.  I could not have been more wrong if I had tried.

I did not believe that the banking powers-that-be (the European Union, European Central Bank and International Monetary Fund) would be so dumb as to sanction a levy on consumers savings to bail out banks.

It has been a PR disaster. It is hard to imagine a neater way of undermining confidence in the banking sector.

That the leading banks in Cyprus are in a mess is not in dispute. The sector is reckoned to need a bailout of €17 bn; that is probably a conservative estimate. But the proposal to raise €5.8 bn from depositors of Cypriot banks sets a dangerous precedent, in particular the notion that the levy apply to all savers.

There is, or rather there was, an EU-wide guarantee that small savers’ deposit balances up to €100,000 were protected. That assurance has been given to savers in Cyrus as elsewhere in the EU. That promise is now seen to be complete and utter bunkum. It gets worse. The EU and the European Central Bank are not merely allowing the authorities in Cyprus to rip up the €100,000 guarantee; the EU and ECB are the very bodies pressing Cyprus to levy a charge on all depositors.

The latest in this Cypriot pantomime is that the country’s president Nicos Anastasiades is considering a levy on deposits below €100,000 of 3 per cent. That, I suppose, is an improvement on a levy of 6.7 percent proposed over the weekend. The revised act of larceny would witness account holders with balances of between €100,000 and €500,000 forfeiting 10 percent, while deposit balances above €500,000 would be cut by 15 per cent.

It is no wonder that share prices have tumbled at the Eurozone’s largest banks. It can be argued that Cyprus is a special case as regards the size of its banking sector relative to the country’s GDP. It is not however far-fetched to imagine consumers in countries such as Spain, Greece and especially Italy fearing that their savings may be under threat in the future.

Just to add to the gloom, Jeroen Dijsselbloem, the Dutch president of the group of euro area ministers, on Saturday refused to rule out taxes on depositors in countries beyond Cyprus. There remains time for the Cyprus government and the EU authorities to re-work their sums in an attempt to rebuild trust among small depositors. They could, for example, apply a tax-free threshold of €100,000 while raising the threshold on savings above €100,000; it is the least the government ought to do.

A PR disaster for the IMF, ECB, and EU. Photograph: Getty Images

Douglas Blakey is the editor of Retail Banker International

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New Digital Editor: Serena Kutchinsky

The New Statesman appoints Serena Kutchinsky as Digital Editor.

Serena Kutchinsky is to join the New Statesman as digital editor in September. She will lead the expansion of the New Statesman across a variety of digital platforms.

Serena has over a decade of experience working in digital media and is currently the digital editor of Newsweek Europe. Since she joined the title, traffic to the website has increased by almost 250 per cent. Previously, Serena was the digital editor of Prospect magazine and also the assistant digital editor of the Sunday Times - part of the team which launched the Sunday Times website and tablet editions.

Jason Cowley, New Statesman editor, said: “Serena joins us at a great time for the New Statesman, and, building on the excellent work of recent years, she has just the skills and experience we need to help lead the next stage of our expansion as a print-digital hybrid.”

Serena Kutchinsky said: “I am delighted to be joining the New Statesman team and to have the opportunity to drive forward its digital strategy. The website is already established as the home of free-thinking journalism online in the UK and I look forward to leading our expansion and growing the global readership of this historic title.

In June, the New Statesman website recorded record traffic figures when more than four million unique users read more than 27 million pages. The circulation of the weekly magazine is growing steadily and now stands at 33,400, the highest it has been since the early 1980s.