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South Cyprus still in line for haircut

22 March 2013

The Greek Cypriot government is discussing the introduction of a levy on bank deposits of over 100,000 euro amounting to over 10% with delegates of the Eurogroup. Hemmed in by a short deadline of Monday, 25th March, the re-introduction of a bank levy on higher deposits seemed unavoidable.

A source in the government was quoted as saying:

“We’re trying to safeguard the provident (pension) funds in Cyprus Popular Bank, which are valued at over 600 million euros,”

Meanwhile, mainland Greece Piraeus Bank has bid to take over the branches of the Bank of Cyprus and Cyprus Popular bank (Laiki) bank in Greece.

Chairman of Piraeus Bank, Michalis Sallas said that the bank had responded to the need to offer full protection to depositors of Cypriot banks in Greece, to ensure the stability of the Greek banking system, and to help Cypriot plans to exit the current economic crisis.

The Bank’s move is subject to approval by the European Competition Committee.

The South Cyprus ruling party said a package to raise the 5.8 billion euros demanded by the EU was hours away, spurred by a Monday deadline set by the European Central Bank, which said it will cut off cash for Cypriot banks if no bailout is agreed.

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