Cyprus Bailout a 'Gift' to US Banks...

Veteran bank analyst Dick Bove says the Cyprus bailout is positive for U.S. banks, because fears that European officials may target depositors in other future bailouts will lead to an outflow of money from Europe and into America.

On Monday, Cyprus and its international creditor's reached a deal to fix the country's banking crisis. The plan included a levy on uninsured deposits of over 100,000 euros in Popular Bank of Cyprus, which is also known as Laiki.

  "It's a gift to the American banks because you've converted Europe into Latin America" Bove told CNBC Asia's "Squawk Box" on Tuesday, referring to capital flights from Latin American the past during their own banking crisis. He added that he expects to see "a slow seepage of funds out of Europe to the American banks."

Bove, who is vice president of equity research at Rafferty Capital, said taking money away from depositors is a bad idea because they, along with bond holders, are the people that supply lenders with money that is later used to make loans and help boost the economy.
"You have to protect depositors in a bank, and protect the bondholders who lend money to a bank because if you don't do that then the depositors will take their money out and the bondholders won't make money available," he said.


  Ed Ponsi, Managing Director of Barchetta Capital Management, agreed that the latest Cyprus developments will trigger "capital flow into US banks," adding that he would "short European banks, [and] go long U.S. banks."

When asked about which U.S. financial institutions could profit from a potential inflow of European capital, Bove named Citigroup as a potential beneficiary.

Contact Us:

Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website:  www.cfb.ae Here are some useful links that you can follow:

Here is a CFB blog that gives useful daily trade advice... http://century-financial-brokers-uae.blogspot.ae/

You can also follow CFB on facebook (useful advice on posts regularly)

Here is another blog that provides regular news and information and is very useful to stay updated 
on the markets...   http://centuryfinancialbroker.wordpress.com/

News Source: www.cnbc.com