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Bank of Cyprus Depositors to Face Up to 60 Percent Losses

March 30, 2013

Nicosia (dpa) - Depositors in Cyprus with savings of more than 100,000 euros ($128,000 ) could face losses of up to 60 percent, under tough conditions attached to an international bailout, Finance Minister Michalis Sarris said Saturday.

The deal would force large depositors at the country's two largest lenders - Bank of Cyprus and Laiki - to take heavy losses, while smaller deposits would be guaranteed.

A mandatory one-off tax on deposits of more than 100,000 euros in return for shares in Bank of Cyprus would bring a 37.5 percent decrease in value.

Depositors could also lose an additional 22.5 percent, Sarris told RIK state television, if it is determined that more funds are needed to save the bank.

The small eurozone member avoided a financial meltdown this week by sealing a 10-billion-euro bailout from the European Union and the International Monetary Fund.

President Nicos Anastasiades on Friday said Cyprus would not leave the eurozone after banks returned to normal opening hours under strict capital controls to prevent a run on deposits.

Desperate to prevent a bank run that would bring its financial system to collapse, the Mediterranean island is the first eurozone member to impose such capital restrictions.

"In no way will we experiment with the future of our country," Anastasiades said, accusing eurozone partners of making "unprecedented demands that forced Cyprus to become an experiment."

The president said that Cyprus had "averted the risk of bankruptcy" and that the situation was contained "despite the tragedy of it all."

He assured that capital controls would gradually be lifted, but gave no further details.

The measures, which include a daily withdrawal limit of 300 euros, a ban on cashing cheques and a 1,000-euro limit on money taken abroad, were implemented on Thursday after banks opened their doors for the first time in nearly two weeks.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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