Letters to the editor

Cyprus levy

[Re: The botched Cyprus bailout was right to hit retail deposits, yesterday]

Technically Andrew Lilico is correct. But this does not mean that it is right to hit retail depositors. Since financial deregulation in the 1980s, savings banks and old fashioned mutuals have been encouraged to demutualise and turn themselves into banks. It was never explained to the public how risky they had become. Deposit accounts do not come with prominent warnings in the same way as shares, and the public has always been encouraged to believe that banks are a safe place to put their money. We now know better – even in Britain. Hopefully we’ll see a revival in 100 per cent backed savings institutions.

Jerome Healy

First, bank bankruptcy losses should fall in the following order: shareholders, bondholders, and then depositors. This hierarchy is reflected in the perceived risks and returns of each asset class. Secondly, it was not only money held in bust Cyprus banks that was going to be taken. Risk was being socialised, meaning that depositors would have no chance of disciplining badly managed banks.

Claire Satow

The problem with Cyprus is not so much that depositors were going to be hit, but that they would have been hit before bondholders. Everyone has to pay for a failed bank, not just those with deposits.

Ike Nwobodo

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