Cyprus' savers hit by unprecedented bailout levy
March 17 , 2013
The euro zone agreed on Saturday to offer Cyprus a bailout worth $13 billion but on the basis that depositors in its banks part with some money to counter bankruptcy.
The Mediterranean nation is now the fifth country after Greece, Ireland, Portugal and Spain to turn to the euro zone for financial assistance.
Following the announcement of a one-off levy of up to 10 percent on savings, people were seen queuing at cash machines to withdraw their deposits.
The deal marks a radical departure from aid packages and conditions issued in the past.
People with less than $130,000 in their accounts will pay a one-time tax of 6.75 percent while those with larger amounts will lose 9.9 percent.
The depositors will be compensated with the equivalent amount in shares in their banks.
It is believed that a heavy presence of Russian money in Cypriot banks was a factor behind the levy.
President Nicos Anastasiades, who was elected last month, defended it as a “painful” decision taken to avoid bankruptcy.
He is due to address the nation later today.