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Saturday, March 30, 2013
Draw money out of your bank !!!! NWN
Big depositors in Cyprus to lose far more than feared
Reuters) - Big
depositors in Cyprus's largest bank stand to lose far more than
initially feared under a European Union rescue package to save the
island from bankruptcy, a source with direct knowledge of the terms said
on Friday. Under conditions expected to be
announced on Saturday, depositors in Bank of Cyprus will get shares in
the bank worth 37.5 percent of their deposits over 100,000 euros, the
source told Reuters, while the rest of their deposits may never be paid
The toughening of the terms will send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island and bring steeper job losses.
Officials had previously spoken of a loss to big depositors of 30 to 40 percent.
President Nicos Anastasiades on Friday defended the 10-billion euro
($13 billion) bailout deal agreed with the EU five days ago, saying it
had contained the risk of national bankruptcy.
"We have no intention of leaving the euro," the conservative leader told a conference of civil servants in the capital, Nicosia.
"In no way will we experiment with the future of our country," he said.
however, are angry at the price attached to the rescue - the winding
down of the island's second-largest bank, Cyprus Popular Bank, also
known as Laiki, and an unprecedented raid on deposits over 100,000
Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.
Bank of Cyprus, about 22.5 percent of deposits over 100,000 euros will
attract no interest, the source said. The remaining 40 percent will
continue to attract interest, but will not be repaid unless the bank
Those with deposits under 100,000 euros will continue to be protected under the state's deposit guarantee.
difficulties have sent jitters around the fragile single European
currency zone, and led to the imposition of capital controls in Cyprus
to prevent a run on banks by worried Cypriots and wealthy foreign
reopened on Thursday after an almost two-week shutdown as Cyprus
negotiated the rescue package. In the end, the reopening was largely
quiet, with Cypriots queuing calmly for the 300 euros they were
permitted to withdraw daily.
imposition of capital controls has led economists to warn that a
second-class "Cyprus euro" could emerge, with funds trapped on the
island less valuable than euros that can be freely spent abroad.
said the restrictions on transactions - unprecedented in the currency
bloc since euro coins and banknotes entered circulation in 2002 - would
be gradually lifted. He gave no time frame but the central bank said the
measures would be reviewed daily.
He hit out at banking authorities in Cyprus and Europe for pouring money into the crippled Laiki.
serious were those authorities that permitted the financing of a
bankrupt bank to the highest possible amount?" Anastasiades said.
president, barely a month in the job and wrestling with Cyprus's worst
crisis since a 1974 war split the island in two, accused the 17-nation
euro currency bloc of making "unprecedented demands that forced Cyprus
to become an experiment".
leaders have insisted the raid on big bank deposits in Cyprus is a
one-off in their handling of a debt crisis that refuses to be contained.
policymakers are divided, and the waters were muddied a day after the
deal was inked when the Dutch chair of the euro zone's finance
ministers, Jeroen Dijsselbloem, said it could serve as a model for
Faced with a market
backlash, Dijsselbloem rowed back. But on Friday, European Central Bank
Governing Council member Klaas Knot, a fellow Dutchman, said there was
"little wrong" with his assessment.
content of his remarks comes down to an approach which has been on the
table for a longer time in Europe," Knot was quoted as saying by Dutch
daily Het Financieele Dagblad. "This approach will be part of the
European liquidation policy."
The Cyprus rescue differs from those in other euro zone
countries because bank depositors have had to take losses, although an
initial plan to hit small deposits as well as big ones was abandoned and
accounts under 100,000 euros were spared.
Warnings of a stampede at Cypriot banks when they reopened on Thursday proved unfounded.
almost two weeks, Cypriots were on a ration of limited withdrawals from
bank cash machines. Even with banks now open, they face a regime of
strict restrictions designed to halt a flight of capital from the
Some economists say those
restrictions will be difficult to lift. Anastasiades said the capital
controls would be "gradually eased until we can return to normal".
government initially said the controls would stay in place for seven
days, but Foreign Minister Ioannis Kasoulides said on Thursday they
could last "about a month".
Friday, easing a ban on cheque payments, Cypriot authorities said
cheques could be used to make payments to government agencies up to a
limit of 5,000 euros. Anything more than 5,000 euros would require
Central Bank approval.
also issued a directive limiting the cash that can be taken to areas of
the island beyond the "control of the Cypriot authorities" - a reference
to Turkish-controlled northern Cyprus which considers itself an
independent state. Cyprus residents can take 300 euros; non-residents
can take 500.
Under the terms of
the capital controls, Cypriots and foreigners are allowed to take up to
1,000 euros in cash when they leave the island.