Some Savers in Cyprus May Lose 60 Percent

The more sizable haircut, coming soon after the imposition of tough capital controls, is the latest and perhaps most profound reminder of the financial punishment being visited upon this small island economy as it struggles to comply with the conditions that Europe is demanding of it before it gets a desperately needed 10 billion euro loan.

Europe has demanded that large depositors in the country’s two largest banks — Bank of Cyprus and Laiki Bank — accept across-the-board losses in order to pay for the 17 billion bailout.

Over the past week, government officials have been saying that depositor losses would not exceed 40 percent — even though bankers and lawyers involved in the negotiations have been warning for some time that the final figure would need to be higher if the bank was to re emerge as a viable entity.

Under the terms of the transaction, large depositors would have 77.5 percent of their savings turned into different forms of equity. 37.5 percent would be direct equity, in the bank with the rest coming in the form of securities that may convert into shares at a certain period. The remaining 22.5 percent would be a frozen, non-interest-bearing deposit that they would be able to access in the future.

As a result of this arrangement, the bank’s largest depositors will initially become its major shareholders.

If the bank does well, depositors would be able to sell their stock. But even in the best case, in which the bank thrives on the back of a quickly recovering economy — a long shot most economists believe — the loss is likely to exceed 60 percent and could well be much more than that.

Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent.

There has been no official announcement of the deal and, given the political sensitivities involved, there could be further changes in the coming days. But news of the terms is already rocketing through Cyprus.

How much of a loss uninsured depositors with accounts of more than 100,000 euros at the bank would have to bear has become a hotly disputed topic in the past two weeks, pitting Cyprus’s creditors — the European Commission, the European Central Bank and in particular the International Monetary Fund, known widely as the troika — against the Cyprus government.

In the past week, as it has become evident that the country’s 18-billion-euro economy was going to enter a tailspin after the controversial move to impose capital controls and freeze bank deposits equal to one half the size of the country’s economic output, it has become increasingly clear that the bank would need a much larger capital cushion if it is to survive the next year.

Projections of an economic slump of 3 percent that were once seen as a worst case now seem wildly optimistic, with most economists expecting the economy to plunge between 5 and 10 percent this year.

While many of the Bank of Cyprus’ largest depositors are wealthy Russians, numerous Cypriot businesses and wealthy individuals also had significant amounts of capital in the bank. Economists believe that wiping out such a large amount of savings will be devastating — not just on the economy but on Cyprus’s future as a center for financial services.

DealBook Column: A Bank Levy in Cyprus, and Why Not to Worry

Never mind.

The last 72 hours have been filled with breathless proclamations of impending disaster after the European Union and International Monetary Fund indicated that they planned to take money directly from depositors with bank accounts in Cyprus as part of a bailout of that country.

Analysts and politicians compared the bailout plan, the first to include a levy on deposits that were considered to be insured, to government-sponsored larceny, and said it would cause a run on banks across Europe, if not a full-fledged global crisis.

“The very nature of banking has been shaken to its roots with this decision, for banking depends upon trust,” Dennis Gartman, the investor, wrote in a note to his clients. “Trust that has now been shattered; torn asunder, broken … destroyed.”

Jim O’Neill, chairman of Goldman Sachs Asset Management, called the decision an “astonishing move” with “little thought of contagion to the rest of the euro zone, and indeed perhaps the world.”

Mark J. Grant, a market commentator who has been predicting an economic apocalypse in Europe for years, went so far as to compare the terms of the bailout with “rape.” He said: “Pay attention please. The European Union and the European Central Bank and the I.M.F. have just advocated the confiscation of private property for their own indulgence.”

Even President Vladimir Putin of Russia got into the debate, given that much of the deposits in Cypriot banks are Russian. “Mr. Putin said that such a decision, if adopted, would be unfair, unprofessional and dangerous,” a spokesman said.

And yet here we are. And, well, nothing bad has happened.

There have been no re-enactments of “It’s a Wonderful Life,” with people lined up around banks in Italy or Spain — considered the next dominoes, if you believe the doomsayers. The stock markets in Europe dropped less than 1 percent. In the United States, investors shrugged their shoulders, too.

Why?

While the bailout of Cyprus is a fascinating case study and raises interesting theoretical questions about moral hazard for policy wonks and talking heads, here is the reality: It is largely irrelevant to the global economy. Cyprus is tiny; its economy is smaller than Vermont’s. And the bailout is worth a paltry $13 billion, the equivalent of pocket lint for those in the bailout game.

Even the larger issue about bailing out a country by taking money from depositors — which quickly created outrage around the world — seems overblown.

The worry is that the European Union and I.M.F. have created a dangerous precedent by making depositors share in the pain of the bailout. Historically, the goal of bailouts has been to raise confidence in banks so depositors don’t flee. The approach in Cyprus is at odds with that notion, raising questions about whether future bailouts in countries like Spain and Italy — if they are needed — could affect depositors.

The alarmist thinking is that depositors will move their money from troubled banks, creating a death spiral.

Even in the United States, some commentators used the Cyprus bailout as a scare tactic about what they speculated could eventually happen here.

“An executive order issued by the president to debit taxpayer bank accounts during a future financial emergency is entirely possible,” Andrew Gause, author of “The Secret World of Money,” said in a news release.

But, in truth, the smart money knows that the bailout of Cyprus says very little about future actions.

“I would assume that anyone in Spain, Portugal or elsewhere who knows about the taxation of Cypriot depositors also would know that the Cypriot banking system is a very different animal than anywhere else in the euro zone,” Erik Nielsen, chief economist at UniCredit, wrote in a note to clients.

Mr. O’Neill of Goldman also acknowledged: “I am sure it will not set a precedent.”

Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled. The issue has been simmering for six months. But those investors left their money in the bank, in part because they were gambling that the banks would be bailed out at no cost to them. If the current plan is approved, depositors will have lost that bet.

Worse, the strategy employed in the bailout of Greece — in which bondholders of its sovereign debt were paid less than face value — will not work in Cyprus. Cyprus’s banks own much of the country’s debt, so any effort to reduce that debt by forcing debt holders to accept less would only make the banks more troubled.

Given the brutal history between Russia and so much of Europe — and speculation that so much of the money is ill gotten — it is clear why it would be so politically unpalatable to countries in the euro zone, Germany in particular, to bail out Russian depositors. And even if the move were to create a run on the banks in Cyprus, the contagion would be limited.

There is very little chance that politicians would ever choose to use the model they developed in Cyprus in a country like Italy or Spain, where a run on the banks would have such profound implications. By the way, if you’re wondering why investors left so much money in troubled Cypriot banks, here’s a trivia question: Would you have been better off leaving your money in a bank in the United States or in Cyprus over the last five years?

The answer: You would have been better off in Cyprus, even after the bailout, when your money was “confiscated.” If you had 100,000 euros in a Cypriot bank account over the last five years, where the interest rate has averaged about 5 percent, you would have about 127,600 euros today. Even after the bailout, which would require you to give up 10 percent of your deposit — 12,760 euros — you would be left with 114,840 euros. The American bank? The $100,000 you deposited at Bank of America five years ago is about $105,100, at the going rate of about 1 percent interest a year.

As Cyprus Crisis Deepens, Wealthy Russians Are Ensnared

Much of that money, it so happens, flowed through Cyprus.

His rapid rise was as typical for a Russian oligarch as is his deep dependence on Cyprus for offshore banking. Working in part through Cypriot trusts, Mr. Rybolovlev, a former doctor, sold his gigantic potash fertilizer mining conglomerate after a tumultuous and lucrative run as owner and spirited the money abroad. Then the good times rolled.

In 2008, Mr. Rybolovlev, now 46, bought a Florida mansion from Donald Trump for $95 million. At the time, this was the most ever paid for a private residence in the United States. Almost as an afterthought, he complained it was in such poor repair that it could not be inhabited.

A few years later, Mr. Rybolovlev bought the most expensive apartment ever sold in New York from the family of the former Citigroup chairman Sanford I. Weill, paying $88 million for the penthouse at 15 Central Park West.

“Anyone who is a Russian oligarch and wants to make sure that, over the long term, his assets are protected wants to make sure those assets are out of Russia,” said David B. Newman, a partner at Day Pitney, a New York law firm representing Mr. Rybolovlev’s estranged wife, Elena, in a long-running divorce case. “If you are a friend of the government, you do very well, but if that relationship turns — and this can happen quickly — you want to be out of Russia.”

Today, this common practice among wealthy Russians like Mr. Rybolovlev — using Cyprus to worm their way into the global financial elite and to protect themselves if they should fall out of favor with the capricious President Vladimir V. Putin — has drawn the Russian government deeply into the negotiations for a bailout of Cyprus’s banking system, whether officials there like it or not.

Russian money flowing into Cypriot banks dwarfs the island’s $25 billion economy. About 25 percent of Russian foreign direct investment moves through Cyprus, according to an estimate by Morgan Stanley, frequently in a “round-trip” process that serves to lubricate the Russian economy. Cypriot entities, often owned by rich Russians, lent $40 billion a year to Russia from 2007 through 2011.

With a fortune estimated at $9.1 billion by Forbes magazine, Mr. Rybolovlev has reasons to worry about his status at home. But he is also the largest Russian investor in the Cypriot banking sector, which has given him a huge stake in preventing its collapse. As far back as July, Mr. Rybolovlev was negotiating to help recapitalize the Bank of Cyprus, according to Alithia, a newspaper based in the Cypriot capital, Nicosia.

At the same time, while Mr. Putin might not mind seeing Mr. Rybolovlev suffer a bit, he has an interest in protecting Russian wealth held abroad because of the role it plays at home and the opportunities it presents to expand Russian influence. If no bailout from the European Union is forthcoming and Cypriot banks collapse, the risk to Russian companies and oligarchs, some of them much closer to Mr. Putin than Mr. Rybolovlev is, would be far graver than the potential loss of deposited funds to the 9.9 percent “stabilization tax” originally proposed by the European Central Bank. At a minimum, capital controls could freeze all funds now in Cyprus.

The stakes are particularly high for wealthy Russians: Moody’s, the rating agency, has estimated that Russian deposits in banks and loans to Cypriot companies total $70 billion, or about 4 percent of Russia’s gross domestic product. Some 42 percent of the value of Cypriot bank deposits is in accounts with more than half a million euros.

As is typical for Russian oligarchs, Mr. Rybolovlev set up corporate trusts in Cyprus with breezy-sounding names like Aries and Virgo. These were little more than post-office boxes monitored by lawyers. But those trust accounts owned vast, gritty mining enterprises deep in the Russian hinterlands and filled up with countless riches as worries about global food shortages in the last decade sent fertilizer prices sky-high.

Cyprus Rejects Bank Deposit Tax, Scuttling Bailout Deal

The lawmakers sent President Nicos Anastasiades back to the drawing board with international bailout negotiators to devise a new plan that might still enable the country to receive a financial lifeline, while avoiding a devastating default that could reignite the euro crisis.

Lawmakers rejected the plan, with 36 voting no and 19 abstaining, arguing that it would be unacceptable to take money from account holders. One member of Parliament who was out of the country did not vote.

Marios Karoyian, the head of the Democratic Party in Mr. Anastasiades’s coalition government, called the bailout terms an “attack” against Cyprus. “The decision for a haircut is unethical and erodes the foundation of the E.U.,” he said. “We’re dealing with raw blackmail that could lead to the collapse of the euro zone.”

Analysts have raised the possibility of a bank run in Cyprus and a cut-off of financing to Cypriot banks from the European Central Bank if the measure did not pass. It is still possible banks might not be able to open their doors Thursday, the day that a scheduled bank holiday was supposed to end.

Michael Olympios, chairman of the Cyprus Investor Association said Parliament’s rejection of the bailout deal “will buy us some time to see if we can come up with a better agreement.”

He said one possibility under active consideration was for a Russian bank to buy Cyprus's biggest troubled lender, Cyprus Popular Bank, in a deal that could reduce the amount of the €10 billion bailout sought by Cyprus. Any such move would very likely be backed by the Kremlin, Mr. Olympios added, and could reduce the tax that Russian depositors might otherwise have to pay.

The Cypriot finance minister headed to Moscow earlier in the day to seek financial assistance from Russia.

The bailout measure failed Tuesday night despite a revision that would have removed some objections by exempting small bank accounts from the levies.

The European Central Bank indicated late Tuesday that it would not immediately cut off emergency cash — without which Cypriot banks probably could not survive. In a terse statement, the E.C.B. said it had taken note of the Cypriots Parliament’s decision and was consulting with the International Monetary Fund and European Commission, its partners in the so-called troika of international lenders that are trying to keep Cyprus financially afloat.

But, in a tacit warning that it would not provide the so-called emergency liquidity assistance forever, the E.C.B. said it would stick to rules that allow lending only to solvent banks. The Cyprus banks, while wobbly, are not yet insolvent. “The E.C.B. reaffirms its commitment to provide liquidity as needed within the existing rules,” the central bank said.

The original terms of the bailout, as reached last weekend, called for a one-time tax of 6.75 percent on deposits of less than €100,000, or $129,000, and a 9.9 percent tax on holdings of more than €100,000. The taxes, a condition imposed by Cyprus’s fellow E.U. members, were meant to raise €5.8 billion of the total €10 billion bailout cost.

Under the revision put forward by Mr. Anastasiades early Tuesday, depositors with less than €20,000 in the bank would be exempt, but the taxes would remain in place for accounts above that amount.

The rejection drew loud cheers and cries of joy from a crowd of more than 500 protesters who had gathered in front of Parliament since late afternoon, carrying banners denouncing what they said was a confiscation of their private funds. Some wielded unflattering posters of Chancellor Angela Merkel of Germany, a day after a demonstrator breached security at the German Embassy and climbed to the roof, throwing down the German flag.

“Today, Germany is engaging in Nazism again, not with the weapon of force, but with money,” said a pensioner, Dimitris, 67, who would give only his first name.

This article has been revised to reflect the following correction:

Correction: March 19, 2013

An earlier version of this article misstated the vote totals in Parliament. The vote was 36 against and 19 abstaining, not 36 against and 19 in favor.

Cyprus Bailout Incites Turmoil as Blame Flies

BRUSSELS — A plan to rescue the tiny European country of Cyprus, assembled overnight in Brussels, has left financial regulators, German politicians, panicked Cypriot leaders and a disgruntled Kremlin with a bailout package that has outraged virtually all the parties.

A Russian market in Limassol, Cyprus. Russia was angry it was left out of talks to aid Cyprus, where it has billions in banks.

In the end, a bailout deal that was supposed to calm a financial crisis in an economically insignificant Mediterranean nation spread it wider. Word of the plan unnerved markets across Europe, raised fears of bank instability in Spain and Italy and sent pensioners into the streets of the island’s capital, Nicosia, in protest.

As markets tumbled and the Cypriot Parliament fell into turmoil, salvos of blame were hurled back and forth across the Continent.

Officials scrambled to explain what went wrong and how best to control the damage of what Philip Whyte, a senior research fellow at the Center for European Reform, called a “completely irrational decision” to make bank depositors liable for part of the bailout. The deal flopped so badly that finance ministers who came up with it shortly before dawn on Saturday were on the phone to each other Monday night talking about ways to revise it. Whatever the outcome, the dispute is a vivid demonstration of why Europe, which until recently was congratulating itself on having weathered the worst of the financial storm, has trouble making decisions with so many different interests represented at the table.

Politics, both domestic and international, get in the way of economics and make it difficult for wealthy countries to line up behind a plan to help the smallest ones. The northern European nations have grown so weary of bailouts for their southern neighbors that they were intent on exacting a hefty contribution from their latest supplicant. Germany in particular, with parliamentary elections looming in September, was set on driving a hard bargain.

A wild card in this instance were the Russians, who have deposited billions in Cypriot banks, extended a $3.25 billion line of credit to Nicosia in 2011 and were in negotiations to help out Cyprus once again. Cypriot leaders apparently were so concerned with keeping their wealthy offshore Russian customers happy that they pushed their own citizens to pay even more than some of the lenders were demanding.

The Russians reacted angrily to a so-called stability tax on deposits in Cyprus, and at being left out of the negotiations. On Monday, Russia’s minister of finance, Anton Siluanov, warned that Russia might not extend the existing credit line because the Europeans had not consulted authorities in Moscow about the deposit levy plan. On Sunday, one Russian official was reported by the Interfax news agency as advising Russians to withdraw funds from Cyprus, saying the banking system was untrustworthy.

The all-night discussions began Friday and ran for 10 hours, ending shortly before dawn on Saturday. Cyprus needed to come up with billions of dollars to help cover the costs of the bailout of the country’s financial sector, or its European allies said they would leave it to face the prospect of collapse alone.

Each of the major stakeholders, which included the International Monetary Fund, the European Central Bank and euro zone finance ministers, entered the room with a conflicting goal. Protecting the small-time saver was at the top of no one’s list. The result was a compromise solution everyone is now unhappy with, officials say, one that stands to cost ordinary Cypriot depositors 6.75 percent of their savings.

The Germans and their northern European allies wanted to exact a maximum contribution from Cyprus to ensure the deal could pass their recalcitrant, bailout-weary parliaments at home. A confidential report by the German foreign intelligence agency, known by its German initials as the B.N.D., was making the rounds, one that painted the island as a haven for money-laundering. The stigma attached to helping the Cypriots — and the political cost in an election year — was rising rapidly.

The I.M.F. was dead set on keeping the debt at what its number-crunchers considered a sustainable level. The Cypriots, meanwhile, wanted to spread the pain around.

Nicholas Kulish reported from Berlin and Andrew Higgins from Brussels. Reporting was contributed by Andrew E. Kramer and David Herszenhorn in Moscow, Jack Ewing in Frankfurt and Andrew Siddons in Washington.

This article has been revised to reflect the following correction:

Correction: March 19, 2013

An earlier version of this article misspelled the surname of a contributor. He is Andrew Siddons, not Siddon.

Wall Street Takes Cyprus Issue Seriously

Wall Street stocks seesawed on Tuesday before ending mixed after Cyprus legislators rejected a tax on savings to help pay for a bank bailout.

The Standard & Poor’s 500-stock index fell 0.2 percent by the close of trading, and the Nasdaq composite index dropped 0.3 percent, while the Dow Jones industrial average gained 3 points.

Investors took advantage of the unease in Europe to cash in some recent gains.

“The market is not acting as if there is a reason to panic, but it is another thing people need to look at,” Doreen Mogavero, chief executive of Mogavero, Lee & Co., said about Cyprus from the floor of the New York Stock Exchange. “It’s enough reason to be cautious.”

The overhanging concern was that account holders in other parts of Europe could make a run on their banks on concerns they will also be taxed to help their struggling economies, although no sign of a bank run or any proposal to tax accounts outside Cyprus appeared.

European bank shares extended their decline on Monday, as the sector’s index fell 2.2 percent. Market indexes overall were down from 0.3 percent to 2.2 percent in Europe.

In the United States, data showed housing starts rose in February and new permits for construction rose to their highest level since 2008.

“The data was good, but at the same time we need to think about, now that the housing market is getting better, will the Fed have to wait longer to get their foot off the gas pedal?” said Joe Saluzzi, co-head of trading at Themis Trading.

Among individual stocks, shares of Citigroup — which agreed on Monday to pay $730 million to settle a class-action lawsuit on behalf of investors who said they were misled by the company’s disclosures — were down 1 percent.

The drug maker Affymax said it was considering selling itself or filing for bankruptcy protection among a range of alternatives, as it struggled to stay afloat after the recent recall of its sole commercial product, the anemia drug Omontys. The stock plunged 63 percent.

Cyprus Rejects Bank Deposit Tax, Scuttling Bailout Deal

The lawmakers sent President Nicos Anastasiades back to the drawing board with international bailout negotiators to devise a new plan that might still enable the country to receive a financial lifeline, while avoiding a devastating default that could reignite the euro crisis.

Lawmakers rejected the plan, with 36 voting no and 19 abstaining, arguing that it would be unacceptable to take money from account holders. One member of Parliament who was out of the country did not vote.

Marios Karoyian, the head of the Democratic Party in Mr. Anastasiades’s coalition government, called the bailout terms an “attack” against Cyprus. “The decision for a haircut is unethical and erodes the foundation of the E.U.,” he said. “We’re dealing with raw blackmail that could lead to the collapse of the euro zone.”

Analysts have raised the possibility of a bank run in Cyprus and a cut-off of financing to Cypriot banks from the European Central Bank if the measure did not pass. It is still possible banks might not be able to open their doors Thursday, the day that a scheduled bank holiday was supposed to end.

Michael Olympios, chairman of the Cyprus Investor Association said Parliament’s rejection of the bailout deal “will buy us some time to see if we can come up with a better agreement.”

He said one possibility under active consideration was for a Russian bank to buy Cyprus's biggest troubled lender, Cyprus Popular Bank, in a deal that could reduce the amount of the €10 billion bailout sought by Cyprus. Any such move would very likely be backed by the Kremlin, Mr. Olympios added, and could reduce the tax that Russian depositors might otherwise have to pay.

The Cypriot finance minister headed to Moscow earlier in the day to seek financial assistance from Russia.

The bailout measure failed Tuesday night despite a revision that would have removed some objections by exempting small bank accounts from the levies.

The European Central Bank indicated late Tuesday that it would not immediately cut off emergency cash — without which Cypriot banks probably could not survive. In a terse statement, the E.C.B. said it had taken note of the Cypriots Parliament’s decision and was consulting with the International Monetary Fund and European Commission, its partners in the so-called troika of international lenders that are trying to keep Cyprus financially afloat.

But, in a tacit warning that it would not provide the so-called emergency liquidity assistance forever, the E.C.B. said it would stick to rules that allow lending only to solvent banks. The Cyprus banks, while wobbly, are not yet insolvent. “The E.C.B. reaffirms its commitment to provide liquidity as needed within the existing rules,” the central bank said.

The original terms of the bailout, as reached last weekend, called for a one-time tax of 6.75 percent on deposits of less than €100,000, or $129,000, and a 9.9 percent tax on holdings of more than €100,000. The taxes, a condition imposed by Cyprus’s fellow E.U. members, were meant to raise €5.8 billion of the total €10 billion bailout cost.

Under the revision put forward by Mr. Anastasiades early Tuesday, depositors with less than €20,000 in the bank would be exempt, but the taxes would remain in place for accounts above that amount.

The rejection drew loud cheers and cries of joy from a crowd of more than 500 protesters who had gathered in front of Parliament since late afternoon, carrying banners denouncing what they said was a confiscation of their private funds. Some wielded unflattering posters of Chancellor Angela Merkel of Germany, a day after a demonstrator breached security at the German Embassy and climbed to the roof, throwing down the German flag.

“Today, Germany is engaging in Nazism again, not with the weapon of force, but with money,” said a pensioner, Dimitris, 67, who would give only his first name.

This article has been revised to reflect the following correction:

Correction: March 19, 2013

An earlier version of this article misstated the vote totals in Parliament. The vote was 36 against and 19 abstaining, not 36 against and 19 in favor.

DealBook: Despite Cyprus Woes, European Capital Markets Show Strength

LONDON – Despite the banking crisis in Cyprus, Europe’s capital markets are still open for business.

On Friday, the British insurance firm Esure raised £604 million, or $917 million, in one of the largest initial public offerings so far this year in Europe. The European banks, Santander and KBC, also pocketed a combined $1.5 billion through a 21 percent share sale in Bank Zachodni, a Polish subsidiary.

The successful offerings come despite growing uncertainty about how the stalemate in Cyprus will affect Europe’s sluggish recovery from its debt crisis.

The Continent’s policy makers are still trying to hammer out a deal that will force the small European country to contribute 5.8 billion euros, or $7.6 billion, toward a 10 billion euro bailout package for Cypriot banks.

Some analysts have warned that the resurgent euro zone crisis could knock investors’ appetite for new listings. Before Cyprus flared up, money raised from new European I.P.O.’s in the first quarter of the year was expected to jump by almost 70 percent compared with the same period in 2012, according to statistics from the accounting firm Ernst & Young.

“Conditions have improved significantly for the region,” said Maria Pinelli, the global strategic growth markets leader at Ernst & Young’s. “However, the euro zone’s political and economic difficulties are casting a shadow across the capital markets.”

The British insurer Esure shrugged off the dark clouds on Friday after the firm secured its listing close to the top of its expected price range. Trading in Esure, which provides home and car insurance across Britain, started on Friday, and gave the British company a market capitalization of around £1.2 billion.

It is the latest firm to tap London’s capital markets. On Wednesday, the British property company Countrywide raised £200 million from its I.P.O., while the insurance firm Direct Line, which is part owned by the nationalized Royal Bank of Scotland, raised £787 million from the capital markets in October.

In Poland, Santander of Spain and KBC of Belgium also raised a combined $1.5 billion from selling shares in their Polish unit Bank Zachodni, though the firms were forced to price the sale below Bank Zachodni’s closing price on Thursday.

Despite uncertainty caused by Europe’s financial difficulties, some global markets remain strong, as investors bet on growing demand from consumers in emerging economies. Singapore and Japan accounted for almost two-thirds of the money raised from new offerings in the first quarter of the year.

A consortium led by the European private equity firm CVC Capital Partners took advantage of this sentiment on Friday by raising $1.3 billion from a share sale in Indonesia’s largest department store operator, according to a person with direct knowledge of the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.

CVC and its partners — a unit of the Indonesian conglomerate Lippo Group and the Government of Singapore Investment Corporation – will retain majority control of the Indonesian retailer Matahari, and secured backing from several global investors, including BlackRock and the asset management units of Goldman Sachs.

Neil Gough contributed reporting from Hong Kong.