Cyprus losses may double

Cyprus losses may double

NICOSIA - Agence France-Presse
Cyprus losses may double

Cyclists gather at Eleftheria square in front of a branch of the Bank of Cyprus in Nicosia March 30. Greek Cyprus was expected to confirm on March 30 that major depositors in its biggest bank will lose around 60 percent of their savings over 100,000 euros, under a bailout that has shaken European banks but saved the island from bankruptcy for now.

Big savers in Greek 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 March 30.

Greek Cyprus meanwhile launched an investigation into a list published in Greek newspapers of Greek Cypriot politicians who allegedly had loans written off by two banks 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 ($128,000) 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, Greek 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 conservative Disy party of President Nicos Anastasiades.

"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.

The remaining 40 percent would be held for six months to prevent the east Mediterranean island's banks being drained.

Senior Bank of Cyprus official Mario Skandalis confirmed the figures, although he said they had not been finalised and a final announcement was expected by April 1.

Asked whether the loss rate could be as high as 60 percent he told AFP: "It could be a possibility but I would say it is a remote possibility." The size of the levies will be a further blow to both Cypriots and foreign investors -- particularly Russians -- with large sums in the island's bloated offshore banking sector.

It will also alarm other struggling eurozone members who fear the "troika" of the European Union, European Central Bank and International Monetary Fund could demand similar terms for future bailouts.

Bank of Cyprus is set to absorb what is salvaged from the island's second largest lender Laiki under the deal, while the rest of it will be wound up with the loss of thousands of jobs.

A panel appointed by Anastasiades will investigate a list published by Greek media of Cypriot politicians who allegedly had loans forgiven during the meltdown, Justice Minister Ionas Nicolaou said.

The president will swear in the commission of three supreme court judges on April 2 with a deadline of three months to report back, said Nicolaou, while a committee of lawmakers will also look at the claims.

Bank of Cyprus, Laiki and third largest lender Hellenic Bank reportedly forgave millions of euros in loans over the past five years to lawmakers, companies and local authorities, newspapers in Greece said.