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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