Cyprus postpones bank bailout debate

Written By Unknown on Minggu, 17 Maret 2013 | 16.50

17 March 2013 Last updated at 05:45 ET

Cyprus's parliament has postponed an emergency session on a controversial bailout deal for the country's banks.

The debate and a presidential address were to happen on Sunday but will now take place on Monday, state media said.

The deal reached with the EU and IMF on Friday has provoked public anger because it would impose a levy on bank deposits of up to 10%.

The president has said that refusing the bailout would lead to the collapse of the country's banks.

Worried investors have been queuing outside banks to withdraw their savings from cash machines.

The 10bn-euro ($13bn; £9bn) deal agreed by the EU and IMF marks a radical departure from previous international aid packages.

Under its terms, people in Cyprus with less than 100,000 euros in their accounts would have to pay a one-time tax of 6.75%.

Those with sums over that threshold would pay 9.9% in tax.

Continue reading the main story
  • Depositors with under 100,000 euros deposited must pay 6.75%
  • Those with more than 100,000 in their accounts must pay 9.9%
  • Depositors will be compensated with the equivalent amount in shares in their banks
  • The levy is a one-off measure

Depositors will be compensated with the equivalent amount in shares in their banks.

On Saturday President Nicos Anastasiades admitted the deal was "painful" but said it was necessary to avoid a "disorderly bankruptcy".

But opposition leaders and savers - including many non-Cypriots - have expressed shock and anger at the proposal.

The deal requires the approval of parliament.

President Anastasiades's Democratic Rally party - which has 20 seats in the 56-member assembly - needs support from other factions to ratify the bailout.

The president has been meeting with members of the parliament's finance committee, his office said.

On Saturday the head of the committee, Nicholas Papadopoulos, expressed shock at the deal, saying it was "much worse than expected".

Opposition leader George Lillikas said the president - who was elected last month - had "betrayed the people's vote".

If it goes ahead, the levy will affect many non-Cypriots with bank accounts, including UK expatriates.

According to Reuters news agency, almost half of the depositors in Cyprus are believed to be non-resident Russians.

The EU decision to impose a levy on bank deposits may have been motivated by a belief that a lot of the money in Cypriot banks belongs to Russian money-launderers, BBC business editor Robert Peston says.

The levy itself would not take effect until Tuesday, following a public holiday, but action is being taken to control electronic money transfers over the weekend.

Co-operative banks, the only ones which were open in Cyprus on Saturday, closed after people started queuing to withdraw their money.


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