Up to a whopping 60% loss on deposits of more than $128K. Who would ever deposit a dime in the Bank of Cyprus after this?
Big depositors at Cyprus' largest bank may be forced to accept losses of up to 60 percent, far more than initially estimated under the European rescue package to save the country from bankruptcy, officials said Saturday
Deposits of more than 100,000 euros ($128,000) at the Bank of Cyprus would lose 37.5 percent in money that would be converted into bank shares, according to a central bank statement. In a second raid on these accounts, depositors also could lose up to 22.5 percent more, depending on what experts determine is needed to prop up the bank's reserves.
The savings converted to bank shares would theoretically allow depositors to eventually recover their losses. But the shares now hold little value and it's uncertain when -- if ever -- the shares will regain a value equal to the depositors' losses.
Europe has demanded that big depositors in the country's two largest banks -- Bank of Cyprus and Laiki Bank -- accept across-the-board losses in order to pay for Cyprus' 16 billion euro ($20.5 billion) bailout.
Cypriot officials had previously said that large savers at Laiki -- which would be absorbed in to the Bank of Cyprus -- could lose as much as 80 percent. But they had said large accounts at the Bank of Cyprus would lose only 30 to 40 percent.
Analysts said Saturday that imposing bigger losses on Bank of Cyprus customers could further squeeze already crippled businesses as Cyprus tries to rebuild its banking sector in exchange for the international rescue package