Cyprus Bailout Shows Expat’s Need for Diversified Assets

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Pryce Warner International Group have over 40 years experience providing expats with international financial services, and advise that the recent bailout in Cyprus shows the need for expats to hold diversified assets.

expats need to be particularly cautious with their savings, and diversify their assets wherever possible

Pryce Warner International Group – According to the Guardian, the bailout crisis in Cyprus has continued to worsen with the suggestion that despite the “bail-in” of local depositors, another €6bn may be required to cover the bailout bill.

Whilst €400m will come from the sale of Cypriot gold reserves, it is now yet clear where the rest of the funds will come from.

Jonathan Loynes, of thinktank Capital Economics, commented: "They don't know where there might be more black holes: I wouldn't be that surprised if there were to be another shock in the next week or so.”

This leaves open the possibility that depositors will face even more losses.

The continued problems in Cyprus, and intimations that similar “bail-ins” may happen elsewhere shows that expats particularly need diversified assets.

According to the Telegraph, Jeroen Dijsselbloem, the Dutch chairman of the Eurozone, commented: "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."

David Retikin, Director of Operations for Pryce Warner International Group, commented: “That individuals with savings over €100 000 in Cypriot banks will have to pay towards the Cypriot bailout, and possibly part of the extra €6bn as well, shows that expats need to be particularly cautious with their savings, and diversify their assets wherever possible. Expats have specific investment options available to them that can help with this, including multi-currency accounts and guaranteed deposit rates . Although the EU will protect sums up to €100 000, it is best practice to only hold several thousand euros in savings accounts for emergencies, and invest the remainder of your savings. This is because investments and managed portfolios offer much higher returns on investment than the interest rates banks offer on savings accounts.”

According to the Financial Times, the present bailout conditions in Cyprus are that anyone with funds over €100 000 in local accounts in either Bank of Cyprus or Laiki will face a loss of up to 60% of their money over that threshold.

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Aneil Fatania
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