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Could Cyprus be the next domino to fall

In a programme first broadcast on the BBC News Channel earlier today, HARDtalk’s Stephen Sackur asks the former finance minister Michalis Sarris if Cyprus could be the next domino to fall in the Eurozone crisis.

GREECE appears to be inching closer to the Eurozone exit door. If Greece leaves, how far could the contagion spread?

One country which could very soon find itself in the eye of a financial storm is Cyprus – where the banks are paying a heavy price for their investments in Greece.

HARDtalk’s Stephen Sackur speaks to Michalis Sarris, chairman of the Cyprus Popular Bank and former minister of finance. A mountain of banking debt, a weak government, an angry public – could Cyprus be the next domino to fall in this eurozone crisis?

When asked if he had a “growing sense of alarm in Cyprus” at the developments in Greece, Dr Sarris said: “Absolutely; we are heavily exposed to the Greek economy, we have already paid a heavy price for an investment in Greek sovereign debt – more than any other country and especially our bank (Cyprus Popular Bank), which has suffered a loss of about 2 billion euros.”

(The following programme was first broadcast on the BBC News Channel on 18 May 2012)

Readers' comments

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  • Robert Briggs says:

    @ Mr Adonis_Joannou. To quote that song out of Monty Python’s Life of Brian, “Always look on the bright of life” . Cheers, Bob.

  • Denton Mackrell says:

    @Adonis_Ioannou. Your comments are too deep for me. Please can you express your point in terms that relate to the practical realities we face.

  • Adonis_Joannou says:

    What is certain is that nothing happens without a reason.
    Someone needs to learn something, someone must lose or gain something …
    The fate of EVERY MAN IS IN OUR HAND TO THE CHANGE … Everything happens for a reason

  • George says:

    Due to these predictions , If you guys where selling a property now would you want to get paid in £ or $ instead of the €?

    Sarris seems to possess a rare combination of intelligence and honesty. I was going to say he should enter politics( he was a minister once i think??) and run for president but then he would be an anomaly, just too transparent, intelligent, and long term, a Bee in a Wasp’s nest.

  • George says:

    Due to these predictions, If you guys where selling a property now would you want to get paid in £ or $ instead of the €?

    Sarris seems to possess a rare combination of intelligence and honesty. I was going to say he should enter politics ( he was a minister once i think??) and run for president but then he would be an anomaly, just too transparent, intelligent, and long term, a Bee in a Wasp’s nest.

  • George says:

    Didnt it fall 4 years ago? Anyway lets hope China picks it up.

  • Curmudgeon says:

    In the video clip Michalis Sarris, chairman of the Cyprus Popular Bank said in the first instance they will turn to the government for bailout; if the government cannot assist then they will turn to the EU.

    The financial safety net for your savings provided by the Cypriot Banks is underwritten by the Cypriot Government not the EU.
    If the banks have to apply to the EU for a bailout don’t expect your savings to be protected as they were. A whole new ball game will evolve. You can bet your bottom Euro, Expats will probably be first in the queue to get their money out but I bet will be shoved to the back under some obscure law. The Cypriot Government will see to that by tweaking something.

    As I have said before in these columns, last year I removed my capital out of the Cypriot banking system so my reserves are safe (well safer..). I can afford a small loss of interest but I cannot afford to have my capital at the best frozen or worst seized.

    Scary times ahead but you don’t have to be a loser. Your call on that one.

  • Paul says:

    So many politicians so much doom and gloom but they are all right they are protected by their great wealth.

    It suits them to talk down their economies so that they can make a killing on the respective stock exchanges,buy low by talking down their respective countries finances and sell high when the markets recover.

    What about the oil gas and gold that has just been discovered in and around Cyprus,the copper that is still mined there,the strategic importance of the islands location in the middle east area, it’s reputation as a tourism paradise, the renowned Cyprus early potatoes? Is it possible for all economies to go down together surely when some go down others rise? Is’nt it about time our leaders lead and had some positive proposals for the rest of us?

    Their gloom is the worst example of negative thinking I have seen in a long time.They need to prioritise, re-balance the extreme gap between rich and poor and use some of this money to sort their economies,the major problems are getting everyone employed, restoring family values and destroying crime,including politicians crimes. If everyone was in suitably paid employment then crime would drop as they would be at work and not stealing to survive, they would have self respect in being in a valued job and happy in providing for themselves and family

    I don’t know about you but I am heartily sick of politicians saying we have to cut back, austerity, while they continue to live the good life and do very little for us.

  • Martyn says:

    Many of us have been saying this for months, some of us years. But Cyprus it seems in Euro/Global terms was so small that Nobody really bothered, despite the historic, recent and well known ‘connectivity’ with Greece. And thus the Cyprus government didn’t really bother either!

    Well done the BBC for highlighting all this via their excellent HardTalk series. And a quite ‘Well Done’ to the Bank Chairman, ex-Minister of Finance no less for his clear but measured responses, geared I reckon to avoid Panic but yet clearly stating the problems, origins, proportions and the massive Challenge to start sorting them, emphasis on the ‘start’!

    It seems the newly named Cyprus Popular Bank is not going to be too ‘popular’ for some time to come! And, hey what a time for little ol Cyprus to be taking on the EU Presidency, especially with such a weak – and soon to be retiring! – President itself.

    These are going to be mightily interesting, and scary no doubt, times for us all.

  • Odd_Job_Bob says:

    The selling boat sailed a good year/ year and a half ago. If you can find a buyer in these times, could I borrow your lottery numbers please?

    Paradoxically, I agree with the terrible solicitor’s advice given on this forum a few weeks ago:

    “Swim in your pool and enjoy the sunshine (but don’t pay a penny more in anything)”. OK, she didn’t say the last bit.

    However, the “wring every last bit of benefit from your asset as you can” mantra seems to be a perfectly valid course of action.

    When the axe falls (failing countries CANNOT AFFORD to leave the Euro but the only solvent one CAN afford, leaving a busted, lawless, unregulated mess), simply exit stage right.

  • Gavin Jones says:

    YES.

  • marktyler says:

    If Greece exits Euro it seems likely Cyprus will have to leave too, with much of bank and state assets being in the new drachs…then the last hope of using Europe to bring this rogue-state into line with civilised norms will also be gone i.e. to practice a legal system that provides “justice” for plaintiffs, have a property system that leaves buyers with legal title to the properties they paid for. No chance of this if Cyprus returns to its C pound.

    As much as property prices have fallen already, it suggests the best action now is sell, if you can, while you can.

  • Robert Briggs says:

    “A mountain of banking debt” + the reckless & unaccountable lending to the developers during the “good times”?

    So Folks, watch this space.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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