Cyprus

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

Cypriot finance officials say initial losses will be 37.5%, but up to 22.5% more could be taken if bank needs further capitalisation

the Guardian,

30 March, 2013

Savers with the Bank of Cyprus could lose up to 60% of their savings according to officials from the central bank and the finance ministry.

The officials said on Saturday that deposits over €100,000 (£84,000) at the country's largest bank will lose 37.5% of their value after being converted into bank shares.

If the bank were to need further capitalisation the savers could lose as much as 22.5% more, depending on an assessment by officials who will determine the exact figure needed to restore the troubled bank back to health.

Cyprus agreed Monday to make depositors contribute in order to secure a €10bn bailout from the eurozone and the International Monetary Fund.

Banks opened in Cyprus on Thursday for the first time in two weeks, but transactions were subject to new regulations.

Cash withdrawals from banks have been limited to €300 a day, while only €1,000 in cash can be taken out of the country and there are restrictions on the use of credit cards abroad. Cypriot authorities loosened some restrictions on the use of cheques on Friday, but only to allow payments to government agencies of up to €5,000.

Cyprus's central bank has also imposed limits on the money that can be taken "beyond the control of the Cypriot authorities", a reference to the northern part of the island under Turkish control.

After an initial estimate that the capital controls would be in place for a matter of days, the government then warned later in the week they could last for as long as a month. Capital controls in Iceland remain in place more than five years after its economic crisis.