Cyprus’s central bank said on Tuesday 47.5 percent of deposits over 100,000 euros in Bank of Cyprus would be converted into shares to recapitalize the troubled lender as part of the island’s international bailout.
The final figure, which confirmed information Reuters obtained from sources at the weekend, was lower than the 60 percent share earlier forecast as being needed to prop up the bank.
Under the program agreed between Cyprus and lenders in March, large depositors in Bank of Cyprus were earmarked to pay for the recapitalization of the bank, heavily exposed to debt-crippled Greece.
Authorities initially converted 37.5 percent of deposits exceeding 100,000 euros into equity, and held an additional 22.5 percent as a buffer in the event of further needs – an unprecedented action in the history of the eurozone crisis.
The Central Bank said in a statement released jointly with the finance ministry that 12 percent of remaining depositor funds which were frozen under the bail-in arrangement would be unblocked.
The remaining frozen funds would be equally divided and placed in 6, 9 and 12-month time deposits with the bank retaining the right to renew the arrangement once more. Interest paid on the time deposits would be higher than the going rates, it said.
“Today’s development puts an end to an extended period of uncertainty,” the bank and ministry said. [Reuters]