Cypriot depositors to lose 60-75%

Savers at the Bank of Cyprus may be forced to accept losses on their deposits that exceed 60 percent in order to keep the stricken bank afloat. The more sizable haircut, coming soon after the imposition of tough capital controls, is the latest and perhaps most profound reminder of the financial punishment being visited upon this small island economy as it struggles to comply with the conditions that Europe is demanding. Europe has demanded that large depositors in the country’s two largest banks — Bank of Cyprus and Laiki Bank — accept across-the-board losses in order to pay for the 17 billion bailout.Lawyers and bankers who have analyzed the transaction believe the ultimate loss to the depositor could be anywhere between 60 and 77.5 percent. The European Commission, the European Central Bank and in particular the International Monetary Fund, known widely as the troika are pitted against the Cyprus government.

The moment word broke that Cypriot lawmakers in Parliament had voted down a bailout deal that would have raided everyone’s savings to prop up a collapsing banking sector, a huge cheer rose up from hundreds of demonstrators gathered outside that echoed through the building’s corridors. “Shame on Europe for trying to snatch people’s savings. It’s a mistaken decision that will have repercussions on other economies and banking systems,” said a protester “People have stopped trusting the EU which should be our protector.”

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