Arab Today, arab today cyprus bank savers face bigger than feared losses
Last Updated : GMT 14:02:48
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Cyprus bank savers face bigger than feared losses

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Arab Today, arab today Cyprus bank savers face bigger than feared losses

Nicosia - AFP

Big savers in Cyprus\'s largest bank face losses of up to 60 percent, far greater than originally feared under the island\'s controversial EU-led bailout plan, officials said on Saturday. Lawmakers were meanwhile investigating a list published in Greek newspapers of Cypriot politicians who allegedly had loans written off by the island\'s three biggest banks, two of them at the heart of the financial meltdown. Officials said Bank of Cyprus savers will see at least 37.5 percent of funds over 100,000 euros turned into shares, but a further 22.5 percent will be held until authorities know they can satisfy the terms of the bailout. Under the first eurozone rescue package to punish savers with a so-called \"haircut\" of their money, Cyprus can only qualify for the 10-billion-euro ($13-billion) loan by finding 5.8 billion euros of its own. \"There will be a 37.5 percent haircut on deposits over 100,000 euros that will be converted into shares,\" said Marios Mavrides, a lawmaker from the ruling Disy party. \"Then 22.5 percent will be held from the account for about two or three months, but this sum might be lower if a bigger haircut is needed,\" Mavrides said. Senior Bank of Cyprus official Mario Skandalis confirmed the figures. \"There was a preliminary level reached which was 37.5 percent but this has not been finalised yet,\" he told AFP, adding that if the required amount for the bailout \"cannot be reached then we will change the haircut rate.\" Asked whether the rate that savers with deposits of more than 100,000 euros will lose could be as high as 60 percent he replied: \"It could be a possibility but I would say it is a remote possibility.\" He expected a formal announcement by Monday. Lawmaker Mavrides said the remaining 40 percent would be \"placed in a time deposit for about six months to prevent people drawing all their money out but it creates a problem for businesses who have no access to working capital.\" \"The money is not lost but creates a problem for businesses.\" House finance committee chair Nicolas Papadopoulos told state radio there were questions over the possible extra levy on the held-back 22.5 percent, and said a lack of information had created panic among depositors. The bailout takes the axe to Cyprus\'s prized tax-haven style banking system -- bloated with Russian money and exposed to toxic Greek debt -- and also threatens to deepen the recession the island was already suffering. Bank of Cyprus is set to absorb the island\'s second largest Laiki under the deal with the European Union, European Central Bank and International Monetary Fund. Laiki will be wound up with the loss of thousands of jobs. Lawmaker Mavrides, meanwhile, confirmed that a committee appointed by President Nicos Anastasiades would investigate a list published by Greek media of Cypriot politicians who allegedly had loans forgiven. The Bank of Cyprus, Laiki and Hellenic Bank reportedly forgave millions of euros in loans over the past five years to lawmakers, companies and local company authorities, newspapers in Greece said. The allegations would likely be discussed in parliament next week, Mavrides added. Cyprus has already launched an investigation led by three former supreme judges to probe the banking meltdown, including into whether any criminal activity was involved. Cypriots were hoping for a further relaxation of the eurozone\'s first capital controls, which were imposed on Wednesday to stop a run on banks. The central bank said Friday it would make daily efforts to \"refine or relax\" the restrictions after lifting its 5,000-euro ceiling on domestic credit and debit card payments. Banks reopened on Thursday without the feared panic and resumed normal opening hours on Friday. Draconian controls remain in place, including a daily withdrawal limit of 300 euros and bans on cashing cheques or taking more than 1,000 euros in cash out of the country. Cyprus, facing its greatest crisis since Turkish troops occupied the north of the island in 1974, remains under global scrutiny as the latest test of the eurozone\'s viability.

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