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Bank of Cyprus big savers to lose up to 60 percent

March 30, 2013 • Business


Seen through a bus stop bench, a woman passes an empty shop with a sign reading in Greek ‘for rent’ in central capital Nicosia, Cyprus, on Saturday, March 30, 2013. 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. (AP Photo/Petros Karadjias)

NICOSIA, Cyprus (AP) — 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 will lose 37.5 percent in money that will 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 experts will have 90 days to figure that out.

The remaining 40 percent of big deposits at the Bank of Cyprus will be “temporarily frozen for liquidity reasons,” but continue to accrue existing levels of interest plus another 10 percent, the central bank said.

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.

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