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'60% levy' possible in Cyprus

Savers with the Bank of Cyprus could be given shares in the bank, a source close to the negotiations has told the news agency Reuters as some initial details of the euro bail out are released.

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Report: Cyprus savers to be offered shares

Savers with the Bank of Cyprus could be given shares in the bank, a source close to the negotiations has told the news agency Reuters.

Under the current proposals depositors with more than €100,000 in the bank would:

  • Be given shares in the bank worth 37.5% of their original deposit, the bank would use this money to improve its financial position.
  • Approximately 22.5% of the remainder of their saving would earn no interest.
  • The remaining 40% would continue to earn interest but it would only be paid if the bank started performing well.
  • Therefore if the bank continued to perform badly, 62.5% of the savers original deposits would not be earning any interest.

Reuters reports that depositors would have no guarantee that any of money over the 37.5% of shares offered, would actually be paid back to savers if the bank collapsed.

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