Confirmed: Bank Deposits To Be Seized In Cyprus, Many Cypriots Have No Cash (+video)
The deal with the EU was struck early Monday after days of frantic negotiations that followed the rejection by Cypriot lawmakers of Plan A. That proposal, unveiled little over a week ago, would have imposed a tax on all account holders to raise funds to recapitalize the failing banks.
Now the new bailout plan will protect all deposits of less than €100,000 euros but is likely to mean much bigger losses for account holders with more than €100,000 at the two biggest banks — the Bank of Cyprus and Popular Bank of Cyprus.
Popular Bank will be broken up immediately. Its viable assets will be integrated into the Bank of Cyprus, and its non-performing loans will be moved into a “bad bank” to be wound down.
The “haircut” for Popular Bank depositors will raise about €4.2 billion, while shareholders and bondholders are likely to be wiped out. The scale of depositors’ contribution to the restructuring of Bank of Cyprus has yet to be fixed.
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