NEW YORK (
(C - Get Report)
was the loser among major U.S. financial names on Monday, with shares declining by 2% to close at $44.49.
The broad indices all saw 1% declines, after Cyprus secured 10 billion euros in bailout assistance for its beleaguered banking sector in a deal that allows Cyprus Popular Bank -- the island nation's second largest bank -- to fail, with its performing assets to be folded into the Bank of Cyprus. Depositors in both of the nation's largest banks will take losses initially estimated at roughly 30% on balances above 100,000 euro, while smaller deposit accounts will be unaffected.
The Eurogroup -- made up of the finance ministers of nations that have adopted the Euro common currency -- said in a statement that the bailout deal for Cyprus "will be an appropriate downsizing of the financial sector, with the domestic banking sector reaching the EU average by 2018." The Eurogroup also said the 10 billion euro bailout and the decisions taken by the Cypriot government will allow the nation's "debt to remain on a sustainable path."
So the Europeans have made it clear that they will not bail out the outsized banking sector of a member country that has touted itself as a tax haven, while providing some comfort to savers who keep their deposit account balances under the insured limit of 100,000 euros.
Back home, investors seemed to be concerned that other members of the common European currency, including Spain, Italy, Portugal and Greece, could see some very difficult resolutions of their banking crises.
KBW Bank Index
was down slightly to close at 56.44, with 14 of the 24 index components showing declines.
It's Different in Bailout Land
At the height of the credit crisis in the U.S., Congress and President George W. Bush famously enacted the $700 billion Troubled Assets Relief Program, or TARP, in order to take an aggressive approach in propping up the banking system. TARP begin on Oct. 28, 2008, with the
taking preferred equity stakes in nine of the largest U.S. banks whether they wanted the money or not.