Click to enlarge. Hat-tip to the FT’s Kerin Hope and Sigma TV:
Update – Oops, a correction – this seems not to be the final, most up to date version of the report. There was also an even earlier version (from February) circulating on Friday. The one above is from March. We’re working on procuring the actual final document and will update the link when we do. Sorry in the meantime!
_________
You will be reading a document which had attained pretty much mythical status on the island of Cyprus over the last few months. Even before the botched bailout.
As it is, Pimco’s report was used by the central bank on Friday to confirm that the recapitalisation bill for Cypriot banks will be about €8.9bn. That number had already appeared in the blizzard of figures surrounding the costs of the bailout. And of course some ‘recapitalisation’ is already happening, via the bail-in of uninsured depositors in Bank of Cyprus for instance.
What we didn’t know for a long time was the full ‘adverse scenario’ for the Cypriot economy. These backed Pimco’s figures but they would blow up the burden on the sovereign the bigger they became (especially once it turned out none of the €10bn offered by Cyprus’ future lenders would be allowed to go to recapping banks).
Not least, it appears, the scenario had caused official embarrassment behind closed doors…
So, here’s the adverse scenario in a chart from the report (click to enlarge):
And — now that the bailout has come at the cost of capital controls and the depositor haircuts, a credit choke in the making — a couple of other adverse-scenario charts that look a little bit wistful by now.
That’s one projecting that banks’ reliance on emergency liquidity assistance will go down fairly quickly, and another one on Russian depositors pumping in money at a fair rate by Christmas. Yes. Returning. That may need a rethink…