People in Nicosia, Cyprus give their reactions to news the
government is imposing a tax on bank savings as part of its
bailout deal. Aside from the long-term financial implications,
the levy announcement sparked a rush on cash machines, meaning
many are unable to withdraw money. The levy – 9.9% on savings
over €100,000 and 6.75% on savings below €100,000 - is expected
to raise €6bn (£5.2bn) as a condition for the bailout.
Posted March 17,
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Cyprus bailout Man threatens bank with bulldozer
Cyprus Shellshocked over Eurozone Bailout
By David Vujanovic
March 16, 2013 "Information
NICOSIA: Residents of Cyprus have reacted with shock after
the government agreed to a 10 billion euros ($12.62 billion)
bailout that includes an unprecedented levy on all bank
The debt rescue package, agreed with the eurozone and
International Monetary Fund early on Saturday morning after
around 10 hours of talks in Brussels, is significantly less
than the 17 billion euros Cyprus had initially sought.
It includes 5.8 billion euros to be raised through the bank
deposit levy of up to 9.9 per cent, which will apply to
everyone from pensioners to Russian oligarchs and tens of
thousands of British expats.
At the same time, a "withholding tax" would be imposed on
interest on bank deposits, and Cyprus will have to hike
corporate tax to 12.5 per cent from 10 per cent and sell off
state assets to help balance the public finances.
Though it was reached too late for Cyprus newspapers the
bailout deal prompted some to queue up outside banks to
withdraw cash from ATMs.
But analyst Sony Kapoor cautioned that there was no point,
tweeting: "Dear Cyprus bank depositors, the time to line
outside ur banks was last week, no point now."
A flood of angry comments flowed on the internet.
"The Cyprus deal is exactly why I don't keep money in the
bank anymore. Brussels can commandeer your cash. Just like
that," one person wrote on Twitter.
Government spokesman Christos Stylianides tried to calm
shell-shocked Cypriots saying: "The situation is serious but
not tragic, there is no reason to panic."
The levy will see deposits of more than 100,000 euros hit
with a 9.9 per cent charge when lenders reopen their doors
after a scheduled public holiday on Monday. Under that
threshold and the levy drops to 6.75 per cent.
Co-operative bank branches, which, unlike the main lenders,
usually open for business on Saturdays, kept their doors
closed as their systems were shut down, officials said.
One furious customer reportedly parked his digger outside
one such branch in the seaside resort of Limassol, claiming
the government had "tricked" him into believing deposits
Cyprus - which accounts for just 0.2 per cent of the
combined eurozone economy - is the fifth country to secure a
debt rescue package from its eurozone partners in the
three-year debt crisis.
The price tag is very small compared with two rescues for
Greece worth some 380 billion euros, Ireland's 85 billion
euros, Portugal's 78 billion and 41 billion for Spanish
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