Bank of Cyprus’s Customers May Lose as Much as 60% on Deposits
Details continue to come out about how much of the savings of Cyprus savers will be confiscated by the government in return for the EU bailout that prevented bankruptcy. Bank accounts containing less than 100,000 euros will remain, although there will remain strict limits on withdrawals. But savings above 100,000 euros in the Bank of Cyprus will lose 60% or more of their savings.
Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc accounts exceeding 100,000 euros ($128,000) as part of an aid deal to stop the country from going bankrupt.
Customers will have 37.5 percent of their deposits above this amount converted into shares with full voting rights and access to any future Bank of Cyprus dividend, the Nicosia-based central bank said in an e-mailed statement. A further 22.5 percent will be temporarily withheld to ensure the lender meets the terms of its recapitalization, as agreed under Cyprus’s loan agreement with international creditors, the central bank said.
President Nicos Anastasiades agreed March 25 to impose losses on Bank of Cyprus’s larger depositors in exchange for a 10 billion-euro bailout after failing to get financial aid from Russia, one of the nation’s biggest investors. The agreement also shuttered Cyprus Popular Bank Pcl (CPB), the country’s second- largest lender.
The deposit-loss plan “will make things worse as small and medium-sized companies will run out of liquidity,” Marios Mavrides, a lawmaker for the ruling Disy party, said in a phone interview from Nicosia. The move “does not help to gain back people’s trust, deposits should be free in order to gain that trust,” he said.