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Bank of Cyprus' uninsured deposits stand to lose around 30 percent


19:20, March 25, 2013

NICOSIA, March 25 (Xinhua) -- Bank of Cyprus (BoC)'s deposits of over 100,000 euros (about 130,000 U.S. dollars) may lose around 30 percent under a bailout deal for Cyprus which provides for keeping the island's largest lender afloat, the government spokesman said on Monday.

The deal clinched by President Nicos Anastasiades in high-level talks in Brussels and endorsed by the Eurogroup in the early hours of Monday preserved Bank of Cyprus operations but the bank would be required to take on a 9.2-billion-euro debt of the Cyprus Popular (Laiki) Bank.

"Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time. The good bank will be folded into Bank of Cyprus," a Eurogroup statement said.

"It will take 9 billion euros of ELA (emergency liquidity assistance) with it. Only uninsured deposits in BoC will remain frozen until recapitalization has been effected, and may subsequently be subject to appropriate conditions," it said.

Cypriot government spokesman Christos Styllianides confirmed that Bank of Cyprus would take on the 9.2 billion euro debt of Laiki and that it would recapitalize by using part of uninsured deposits.

"The size of the levy has not yet been decided but I expect it to be below or around 30 percent," Styllianides said.

The same figure was also mentioned by parliamentary finance committee chairman Nicolas Papadopoulos, but he said this is only a provisional estimate.

Deposits in all other banks, including about 26 foreign banks operating in Cyprus, will be unaffected by the measure.

Finance Minister Michael Sarris told the state broadcaster from Brussels that it will take a few more days to fix the size of a levy by which deposits of over 100,000 will be turned into capital.

The depositors will be compensated with equity in the bank.

"The new owners of the bank of Cyprus will be the current large depositors in the bank," Sarris said.

Banks are due to open on Tuesday after a prolonged bank holiday decreed by the ministry of finance, but Sarris hinted a possible bank holiday extension.

"Efforts will be made to reopen the banks as soon as possible," Sarris said.

He said Cyprus, by concluding a bailout deal, has averted an uncontrolled bankruptcy and the risk of exiting the eurozone, which would be "catastrophic" by itself.

"We will suffer sacrifices and will go through difficult times, but the economy has the possibility of restarting and of strengthening social cohesion," Sarris added.

He said the Bank of Cyprus has been given the possibility of building up its recapitalization gradually to 9 percent.

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Email|Print|Comments(Editor:Yan Meng、Wang Jinxue)

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