Saturday, 23 March 2013

Cyprus Eyes 25 Percent Levy on Big Savers

THE DAILY TELEGRAPH: Cyprus was threatening to seize up to a quarter of the value of wealthy savers' bank accounts as part of a desperate bid to stave off financial meltdown.

As talks continued to prevent Europe's finance chiefs from pulling the plug on the country's stricken banks, the Cypriot government said it was considering a levy of 25 per cent on deposits of more than €100,000 held in accounts at the Bank of Cyprus, one of the island's most troubled lenders.

The fate of similar high-value deposits in other Cypriot banks has yet to be decided.

The move was among a package of measures designed to persuade eurozone officials to agree to a €10 billion bail-out deal over the weekend. The European Central Bank has said unless an agreement is reached, it will remove financial support for country's banks when they re-open this week, leaving them facing imminent collapse.

Late on Friday night, the Cypriot parliament also backed a revenue-raising levy of less than one per cent on bank deposits below €100,000 - a rate seen as fairer than the 6.75 per cent levy rejected by legislators last Tuesday.

However, the 25 per cent rate on high-value accounts at the Bank of Cyprus is likely to cause further ructions on the island, which has seen widespread protests in the last week. It is expected to particularly hit Russian investors, who make up the bulk of the Cypriot financial sector's high-value clients. » | Colin Freeman, in Nicosia, Graham Ruddick and agencies | Saturday, March 23, 2013