Wednesday April 1, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Shock in Cyprus as bailout brings bank account haircut [update]

The Eurogroup reached on Friday night an unprecedented decision for bailing out Cyprus that dictates a haircut on all bank accounts on the island’s banks with immediate effect, while cash withdrawals are not allowed for the time being, generating unrest.

Along with loans adding up to 10 billion euros from the European Support Mechanism, Cyprus will have to find another 7-7.5 billion euros from privatizations and from a 6.75 percent one-off haircut on all bank accounts with a balance up to 100,000 euros, rising to 9.9 percent on accounts exceeding 100,000 euros.

Already bank customers are gathering outside major and cooperative banks, Skai television reported on Saturday morning, as angry depositors demand their money.

Depositors will get shares of the banks they are clients of in return for the capital lost, of the same value as the haircut their accounts have suffered.

This is estimated to fetch some 6 billion euros to the state, bridging most of the gap between the 10 billion euros the ESM is offering to Cyprus and Nicosia’s requirements of an estimated 17 billion.

This is the first time in the eurozone that a levy has been imposed not on the interest of bank accounts but on the capital itself. In addition to that there is a levy on interest, too, and an increase in the 10 percent corporate tax that has been one of the main driving forces behind Cyprus’s financial progress after the 1974 Turkish invasion, generating growth by attracting foreign direct investment.

Notably, the account haircut does not affect bank accounts in Cypriot bank branches based in Greece, according to sources from the Greek Finance Ministry.

Tax on interest will amount to between 20 and 25 percent.

Changes will have to be ratified by the House of Representatives, the republic’s parliament within the weekend, while an emergency cabinet meeting is taking place on Saturday morning in Nicosia to assess the situation.

Finance Minister Michalis Sarris has postponed his official visit by two days and will now go to Moscow on Wednesday.

Cyprus state broadcaster CyBC reported on Saturday that German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated on Saturday that this had also been the proposal of the International Monetary Fund.

Sarris stated in Brussels that in view of the threat from the European Central Bank for banks in Cyprus to shut down and chaos to ensue, the increase in interest taxation and the haircut to bank accounts became necessary. “A disorderly default, that was a genuine possibility, has been averted,” he said.

“It allows our economy to proceed decisively to a new beginning.”

He also noted that after the dramatic meeting of the eurozone ministers a further slashing of salaries and pensions has been avoided and confidence in Cypriot economy is restored. He qualified the bailout funds loaned to Cyprus as sustainable and manageable and will not constitute an unbearable weight on the next generations. “It spreads the load on this and on the following generations,” he said.

IMF head Christine Lagarde said "the Fund has always said it would support a solution that is viable, and this agreement fulfills this condition, so my recommendation to our board will be for contributing in the funding of the package."

Opposition leader Antros Kyprianou, the General Secretary of leftist AKEL, accused the government of not consulting the other parties, saying that "the government bears full responsibility for developments in the economy as instead of choosing the road of consensus it has decided to go it alone."

ekathimerini.com , Saturday March 16, 2013 (11:28)  
Business sentiment in decline
Ministry headache over T-bills
Lafazanis reaches preliminary energy package deal in Russia
Bank recap cash can’t be used for other purposes
Finance Ministry officials to discuss talks progress as EU pushes for action
After several days of talks between representatives of Greece’s government and its creditors in Brussels on a proposed list of economic reforms, eurozone finance ministry officials are to di...
Trial of suspects in Salamina torture case starts
The trial of four men accused of torturing an Egyptian bakery worker on the island of Salamina in the summer of 2012 is to resume on April 30 after the victim, Walid Talb, and several witnes...
Inside News
BASKETBALL
AEK could get a wild card to the Euroleague
AEK shows capable of climbing as high as third in the Basket League, as its 16-point home win over third-placed Aris on Sunday confirmed it can challenge both Aris and PAOK to the first spot...
SOCCER
Cyprus soccer eyes reunion after 60-year divorce
Turkish Cypriot soccer officials on Monday vowed to press ahead with attempts to reunite with the Cyprus Football Association, (CFA), triggering a political storm on the ethnically-split isl...
Inside Sports
COMMENTARY
Amateur antics or overstepping the mark?
There are 149 plus two reasons why those who have been watching SYRIZA’s progress since its start cannot and never will be able to stomach the leftist party’s coalition with Independent Gree...
EDITORIAL
A pointless debate
Monday’s parliamentary debate between the country’s political leaders left a lot to be desired. There was no information whatsoever about the coalition government’s proposed reforms or the p...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. AEK could get a wild card to the Euroleague
2. Business sentiment in decline
3. Ministry headache over T-bills
4. Lafazanis reaches preliminary energy package deal in Russia
5. Bank recap cash can’t be used for other purposes
6. EIB said to have frozen funding
more news
Today
This Week
1. Amateur antics or overstepping the mark?
2. Parliamentary speaker prompts ND walkout, anger from PASOK, Potami
3. Greece, EU/IMF lenders end round of technical talks without deal
4. Investment guru Mark Mobius rules out Grexit, advises sell-offs
5. A pointless debate
6. Greek government proposes measures worth 3.7 bln
Today
This Week
1. Next Monday is D-Day for state funds
2. Eurogroup unlikely to be held soon to discuss Greek reforms
3. Moscow expects progress from Tsipras visit
4. Some more equal than others
5. Greece to present reforms by Monday, says gov't spokesman [Update]
6. Greece optimistic on deal with euro area next week
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.