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Follow on Google News | Raj Ouellet - Cyprus expected heavy losses for major bank customersCyprus was expected to confirm on Saturday that major depositors in its biggest bank will lose around 60 percent of their savings over 100,000 euros, under a bailout that has shaken European banks but saved the island from bankruptcy for now.
By: Canada DiamondXchange European officials have sought to stress that the island's bailout terms were a one off - after a suggestion by Eurogroup chairman Jeroen Dijsselbloem that the rescue would serve as a model for future crises rattled European financial markets. Initial signs that big depositors in Bank of Cyprus would take a hit of 30 to 40 percent - the first time the euro zone has made bank customers contribute to a bailout - were already enough to unnerve investors in European banks this week. But a source with direct knowledge of the terms told Reuters on Friday that the conditions announced on Saturday would give depositors shares in the bank worth just 37.5 percent of savings over 100,000 euros. The rest of such holdings might never be paid back. The toughening of the terms will send a clear signal that the bailout means the end of Cyprus as a hub for offshore finance and could accelerate economic decline on the island and bring steeper job losses. There is no sign for now, however, that ordinary customers in other struggling euro zone countries like Greece, Italy or Spain are taking fright. "Cyprus is and will remain a special one-off case," said Schaeuble, one of the main architects of the euro zone's response to a debt crisis now in its fourth year. "The savings accounts in Europe are safe." End
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