Peter Jones: Cyprus may prove an alarm call
Several, I think, some of which are bad news for Alex Salmond and one, rather surprisingly, which is better news for his independence project.
Let’s go back to the basic problem. Cyprus has three big dominant banks which collectively had assets (loans) of £108 billion, but liabilities (deposits) of £61bn.
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Hide AdA large amount of the loans were in Greek property and government bonds. Much of the property loans have gone sour because of Greece’s economic crisis and, as part of the recent deal to ease Greece’s sovereign debt crisis, Greek government bonds have halved in value. So Cyprus’ banks became insolvent and needed a bailout of £14.5bn.