Clients of Bank of Cyprus could lose up to 60% of their savings

Posted Mar 31, 2013 by Anne Sewell
Depositors with more than 100,000 euros in their Bank of Cyprus accounts could now possibly lose up to 60% of their savings.
Bank of Cyprus in Nicosia  Republic of Cyprus
Bank of Cyprus in Nicosia, Republic of Cyprus
As Cyprus enforces the controversial conditions of a 10 billion euro bank bailout from the eurozone and the International Monetary Fund, officials had said that deposits of over 100,000 euros ($128,225) at the Bank of Cyprus will lose 37.5% of the value. This 37.5% would then be converted into "bank shares."
On top of this, about 22.5% of deposits in excess of 100,000 euros at the Bank of Cyprus will be put into a special fund and will earn no interest.
Marios Mavrides, a politician from the conservative political party of President Nicos Anastasiades, announced, "There will be a 37.5 percent "haircut" on deposits over 100,000 euros that will be converted into shares."
"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," he added.
With the second-largest bank, Cyprus Popular Bank (also known as Laiki) dissolving, anger is growing in the country as Cypriots protest what they are calling a theft of their assets. Under the terms of the current deal, the assets of Laiki bank will be transferred to Bank of Cyprus and account holders are likely to see nearly all of their assets written off.
Banks have limited cash withdrawals to 300 euros a day with local businesses having to limit transactions to 5,000 euros a day. Only 1,000 euros in cash can be taken out of Cyprus. There are also restrictions on the use of credit cards overseas.
People with deposits of less than 100,000 euros will still be protected under the Cyprus deposit guarantee.
Cypriot President Nicos Anastasiades defended the 10-billion euro bailout deal on Friday, stating it would stabilize the country.
"We have no intention of leaving the euro," he said, adding "in no way will we experiment with the future of our country."