The bad news just keeps getting worse
for holders of cash in Cypriot banks.
First they were told that they would lose 9.9% of their deposits, then
20%, then 40% and now the figure has risen to potentially 60% or even more.
Bank of Cyprus depositors with more
than 100,000 euros will see 37.5% of their holdings
over 100,000 euros converted into shares, and a further 22.5% invested in a
fund attracting no interest, which may be subject to further write-offs at the
discretion of officials.
The remaining 40% of cash deposits will continue
notionally to attract interest - but it will only be paid if the bank performs
well. At present, this seems a dim and
distant prospect, and fears remain that there will be a run on the banks as and
when the current draconian currency controls are lifted.
Cypriot officials have yet to release
details of what big depositors at Laiki - the country's second largest bank -
could face, but it is feared that they may see even larger sums being lost. Laiki will eventually be absorbed into the
Bank of Cyprus.
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