Forex Flash: Cyprus has changed market perception – Deutsche Bank

FXstreet.com (Barcelona) - Regarding continuing fallout from Cyprus, the Cypriot finance minister has warned that uninsured deposits at Laiki could face losses of as much as 80% and that it could take as long as six to seven years before depositors see any of their savings returned. In the more immediate term, he said that the government expects to finalize capital controls by midday today ahead of the reopening of the country's banks tomorrow.

Outside of Cyprus, periphery European banking stocks continued to come under pressure yesterday including names like BBVA (-3.3%), Santander (-2.3%), Banco Populare (-2.1%) and Intesa Sanpaolo (-2%). Not helping sentiment were reports that the EU parliament will push for new bank resolution laws that provide for the bail-in of uninsured deposits. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “This was always in the plan for future bank resolution, however markets probably thought it was unlikely to actually ever materialize. Cyprus has changed this perception and therefore such headlines cause some damage.”