Cyprus works on last-minute deal to soften bank levy

[Eugene]

Source: Reuters

Cyprus works on last-minute deal to soften bank levy

By Michele Kambas
NICOSIA | Sun Mar 17, 2013 6:06pm EDT

(Reuters) - Cyprus was working on a last-minute proposal to soften the impact on smaller savers of a bank deposit levy after a parliamentary vote on the measure central to a bailout was postponed until Monday, a government source said.

In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighboring Greece.

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The originally proposed levies on deposits are 9.9 percent for those exceeding 100,000 euros and 6.7 percent on anything below that.

The Cypriot government on Sunday discussed with lenders the possibility of changing the levy to 3.0 percent for deposits below 100,000 euros, and to 12.5 percent for above that sum, a source close to the consultations told Reuters on condition of anonymity.

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Read more: http://www.reuters.com/article/2013/03/17/us-cyprus-parliament-idUSBRE92G03I20130317

[Ruby the Liberal]

1. Idiots. It isn't the 3% or 6%

it is the fact that this is demolishing the entire principle of having deposit insurance. They shouldn't be touching anything under that 100k limit - or they risk bank runs across the continent.

[dixiegrrrrl]

2. Plus, before the election Cypriot President Nicos Anastasiades swore up and down

he would never, ever, ever, consider a haircut on the bank deposits.
As in , last month..he said that last month!

They should not be touching anything of the bank customers, period.

Many many people are saying ( reading a lot of Tweets from @cyprus) Cyprus is a test run.
If the gov't can successfully force the bank customers to "tithe", with no subsequent riots and pitchforks,
it will encourage other EU countries to do the same.
And, with that thought in mind, since Cyprus banks will still be closed thru Tuesday, maybe even Wed.
I am betting bank runs are gonna happen Monday in Euroland.