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Sun Mar 31, 2013 8:3AM
Big savers in Bank of Cyprus face losses up of to 60 percent under Nicosia’s EU-led bailout plan. (File photo)

Big savers in Bank of Cyprus face losses up of to 60 percent under Nicosia’s EU-led bailout plan. (File photo)

Bank of Cyprus is set to confiscate up to 60 percent of deposits of over than 100,000 euros (USD 128,000) as part of a recent EU-led bailout plan aimed at saving the Cypriot government from bankruptcy. Officials said at least 37.5 percent of savings over 100,000 euros at Bank of Cyprus will turn into shares. Up to 22.5 percent of the deposits will go into a fund attracting no interest and may be subject to further write-offs. The savings will be held for two to three months until authorities make sure they can meet the conditions for the assistance package from the "troika" of the European Central Bank, the International Monetary Fund (IMF) and the European Union. The other 40 percent of savings will attract interest - but this will not be paid unless the bank performs well. Mario Skandalis, a senior official at the bank, confirmed the figures, but said they had yet to be finalized and that a final announcement was expected by Monday. Under the deal agreed in Brussels on March 25, Cyprus can only qualify for the 10-billion-euro (USD 13-billion) loan by raising 5.8 billion euros (USD 7.4 billion) of its own. Bank of Cyprus is set to absorb healthy assets and insured deposits from the island's second largest lender Laiki under the deal, while the rest of it will be wound up, leaving thousands laid off. Cyprus officials say that Laiki will ultimately be merged into the Bank of Cyprus. There are concerns that once the capital controls are lifted, people and the wealthiest will rush to move their deposits abroad. The subsequent loss could also have devastating consequences for large depositors such as schools and universities. Depositors in Cyprus have been allowed to only withdraw 300 euros (USD 383) per person each day. Among other capital controls, payments or transfers to outside Cyprus via debit or credit cards have been capped at 5,000 euros per month. It is anticipated that the move would spread the fear in other indebted eurozone countries that Cyprus might set a precedent. Thousands of Cypriots have been demonstrating in the capital to denounce their government, the EU and the IMF for their austerity plans. MRS/DB/SS/HMV
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