Cyprus Bailout Plan Will Include Levy on Individual Deposits: Report
Despite public opposition, the threat of bank runs and a reverberation of financial pain for average Cypriots, officials in Cyprus close to the negotiations on Saturday say that a levy on depositors will remain part of the multi-billion euro bailout deal designed to secure funds from central Europe's financial powers.
Bank workers and others took to the streets on Saturday in the capital of Nicosia to protest the restructuring of major institutions on Friday, fearing that their jobs would be lost and chaos would ensue if the deal goes through.
Cyprus has agreed with EU/IMF lenders a 20-percent levy on deposits over 100,000 euros ($130,000) at leading lender Bank of Cyprus and a 4-percent levy on deposits of the same amount at other lenders, a senior Cypriot official said on Saturday.
The official, who spoke on condition of anonymity, said a Cypriot plan to tap nationalized pension funds, opposed by Germany, would not be part of a plan to raise billions of euros in return for a bailout from the European Union.
Though widely discussed as an oversized financial center for Russian oligarchs and "shady business deals," economist Economist Fiona Mullen tells Agence France-Presse that Cypriot pensioners—who did nothing to cause the crisis—also face being caught up in the bank restructuring plan.
"Everyone thinks this will only affect Russians but people's pensions are involved here," she said.