UBS expects Cyprus will need a second bailout

While the ink on a bailout deal for Cyprus has not yet dried, UBS anticipates that another bailout may be necessary. The bank cited the high levels of debt the country still faces.

The agreement came hours before a deadline, set by the European Central Bank, to come up with a deal before today.

The plan will involve winding down Laiki Bank – or the popular bank – and shifting deposits below €100,000 to the Bank of Cyprus to create a “good bank”.

Deposits over €100,000 in both banks will be frozen and used to resolve Laiki’s debts and recapitalise Bank of Cyprus in a move expected to raise around €4.2bn.

(Full article)

Our banking reporter Tim Wallace:

“It is distinctly possible that confidence in the banking sector will not be restored by its imminent restructuring. This loss of confidence sees some very discernible possibility a further banking sector bailout might be required,” said Rabobank’s Richard McGuire. “Even if capital controls are successful in stemming any outflow of funds from the banks they will be powerless to affect the likely dwindling inflows.”

(Full article)

UBS believes Cyprus will need a 2nd bailout... < When the money floods back to Russia, they will probably need a 3rd

— Joe Bond (@Joe_Trading) March 25, 2013