Large depositors who kept their money in the two biggest Cypriot banks stand to lose up to 8.3 billion euros through the restructuring of the two institutions, a European Commission document showed on Monday.
It is part of an estimated total 10.6-billion contribution from investors for restructuring the Cypriot banking sector, which also includes wiping out shareholders and bondholders in Popular Bank (known in Cyprus as Laiki) as well as imposing losses on junior bondholders in the Bank of Cyprus and a deposit-for-equity swap.
The Mediterranean island will close Laiki, its second-biggest bank, and restructure its largest, Bank of Cyprus, in return for an international loan of 10 billion euros over three years, without which Cyprus would be unable to pay its debts.
“The bail-in of uninsured depositors of Laiki and Bank of Cyprus will provide an estimated contribution to recapitalization of 8.3 billion euros,” the document, dated April 12 and marked “final” said.
In a footnote, it added: “This is a maximum estimate. The final amount will depend inter alia on the conversion under the debt-for-equity swap in Bank of Cyprus and the recoveries of Laiki Bank.”