Large depositors at Bank of Cyprus could face losses of up to 60 percent, far more than originally feared under the EU-led bailout. The crisis marks the first time bank patrons must contribute to a eurozone bailout.
Officials on Saturday said Bank of Cyprus savers will see 37.5 percent of deposits over 100,000 euros ($128,000) turned into shares of the bank. An additional 22.5 percent will be held until authorities know they can fulfill the terms of the bailout.
Senior Bank of Cyprus official Mario Skandalis confirmed the figures, but he said they had not been finalized. A final announcement is due Monday.
The converted bank shares could theoretically allow depositors to eventually recover their losses. However, the shares currently hold little value and with an uncertain future it is difficult to predict when, or if, the shares will regain an equal value to the depositors' losses.
Officials had previously spoken of a loss to big depositors at Bank of Cyprus of 30 to 40 percent.
Officials had also earlier said that large savers at Laiki Bank - which will be absorbed in to the Bank of Cyprus - could lose as much as 80 percent.
Cyprus agreed on Monday to tax big depositors in order to raise the 5.8 billion euros needed to unlock a 10-billion-euro bailout from the "troika" of the European Union, European Central Bank and International Monetary Fund. Parliament had earlier voted down an original bailout package that would have seen a minimum 6.75 percent levy imposed on all Cypriot accounts, no matter the amount of the deposits.
On Friday, President Nicos Anastasiades assured a conference of civil servants in Nicosia that Cyprus "will not leave the euro."
"We have averted the risk of bankruptcy," Anastasiades said. "The situation, despite the tragedy of it all, is contained."
When banks reopened again on Thursday, after remaining shut for nearly two weeks while politicians hammered out a deal, Cypriot authorities had imposed capital controls fearing that savers would pull out all their money in mass.
For the next month, Cypriot bank-account holders – including many wealthy Russians who have money on the island – can withdraw 300 euros ($384) per day for individuals and 5,000 euros for businesses.
The restrictions were the first that any country has applied in the eurozone's 14-year history.
hc/mz (Reuters, AFP, AP)
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