I was right that there would be no panic run in Cyprus, no panic, no riots. I think shorts on SAN were hoping for something much worse. As for Cyprus and the new "bail-in" policy goes, I think the Cyprus solution is about the Europeans disliking Russian business practices and taking this opportunity to get back at them thru their Cypriot accounts, I don't think Cyprus is a template for anything. The policy that would be applied in Italy or Spain or Ireland.
However what Cyprus did for the SAN share price was to reduce it to tangible book value and the idea that you are going to be able to buy SAN at $4 or $5/share is unlikely. You can argue that the European economy is weak now and some economies will double dip and so what? SAN is getting most of its profits from other parts of the world so my guess is that the institutional investors who determine where SAN goes will be buying for the same logic that they buy BAC... because normalized earnings are a lot higher within a foreseeable future and whatever write-downs remain will either be minor or currently doubtful assets will actually improve. Recall that American real estate was never going to recover either according to the doomsters. The world economy is in the process of rebalancing as China's labor rates go up and more manufacturing moves to places like Spain and Mexico and back to the United States. Depressed wage rates in Spain will be a plus as time goes on. Maybe I'll be wrong but that's what I am guessing. I read that auto factories are already moving to Spain.
Anyway I've got half a position in SAN so if folks want to sell it for another 10 or 20% discount to book I'll be happy to take shares off their hands. Cyprus made for a good leg down in SAN which I think institutional buyers will see as opportunity not disaster. The sudden-expert pundits will blather on, people will miss the lows and in the low 7's they'll be chasing it, not selling.
I think the Cyprus solution is more based on politics and an unwillingness to bail out a country who built their economy on being a banking haven. Bailing them out would have sent the message that anybody can do whatever they you want, because the EU will come to the rescue.
Going forward the EU's decision will likely continue to discourage risk taking and moral hazard of their members when it is judged to have limited consequences.
Is SAN to big to fail? Probably
Is this a good entry point to buy or add to SAN? Judge for yourself based on your risk and reward evaluation.
However, buyers beware that the resistance level is around $5, so it could go lower, all that is needed is some more bad news from Europe, which is unpredictable. So if you buy now you have to be willing to hold your position and keep averaging down if needed.