Cyprus
Finance Minister: Uninsured Laiki Depositors Could Face 80% Haircut
26
January, 2013
Cyprus's
finance minister said Tuesday that large deposit holders at Cyprus
Popular Bank PCL (CPB.CP), the island's second biggest lender, could
face losses of as much as 80% on their deposits as the government
moves to wind down its operations.
Speaking
in a television interview with state broadcaster RIC, Michalis Sarris
indicated that it could also take years before those depositors see
any of their money returned.
"Realistically,
very little will be returned," Mr. Sarris said.
Asked
if, like in other bank closures, it could take six to seven years
before depositors get back there money, he said: "maybe yes. And
the amount [returned], could be 20%. Certainly, for depositors above
100,000 euros it could be a very significant blow."
His
remarks come just hours after Cyprus's central bank governor
estimated that the losses facing large depositors at rival Bank of
Cyprus PCL (BOCY.CP), could reach as much as 40%.
Early
Monday, Cyprus agreed to a 10 billion euro ($13 billion) bailout from
its euro-zone peers and the International Monetary Fund in exchange
winding down Cyprus Popular, also known as Laiki, and the merger of
its healthy assets with Bank of Cyprus.
Cyprus's
banks have been closed since March 16 and are scheduled to remain
closed Wednesday as the country raced to complete a deal on the aid
package and avert a meltdown in the island's financial sector. Mr.
Sarris said the banks would reopen Thursday, as scheduled.
Fearing
a mass exodus of deposits when they do, the government of Cyprus is
preparing to implement capital controls--the first euro-zone member
to do so--to keep money from rushing out of the country. Mr. Sarris
said he expected a decree implementing those capital controls to be
ready by midday Wednesday.
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articles on Cyprus:
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