Bank of Cyprus depositors with more than 100,000 euros ($128,200) could lose up to 60% of their savings as part of the EU-IMF bailout restructuring move, officials say.
The central bank of Cyprus said 37.5% of holdings over 100,000 euros would become shares.
Up to 22.5% will go into a fund attracting no interest and may be subject to further write-offs.
Bank of Cyprus depositors with more than 100,000 euros could lose up to 60 percent of their savings as part of the EU-IMF bailout restructuring move
The other 40% will attract interest – but this will not be paid unless the bank performs well.
Cypriot officials have also said that big depositors at Laiki – the country’s second largest bank – could face an even tougher “haircut”. However, no details have been released.
The officials say that Laiki will eventually be absorbed into the Bank of Cyprus.
Cyprus needs to raise 5.8 billion euros to qualify for the bailout, and has become the first eurozone member country to bring in capital controls to prevent a torrent of money leaving the island and credit institutions collapsing.
On Thursday, banks in Cyprus opened for the first time in nearly two weeks. Queues formed of people trying to access their money, but the mood was generally calm.
By Friday, banks had returned to their normal working hours and there were no longer reports of big queues.
The Central Bank of Cyprus has decided to ease some of the restrictions imposed as the country’s banks reopened, following the bailout deal.
Debit and credit cards can be used normally for domestic payments.
Cyprus’ central bank said it would review the curbs on a daily basis and try to “refine or relax” them when possible.
A 5,000-euro monthly limit per person remains in place for card purchases abroad, to stop the flight of capital from the country.
The Central Bank of Cyprus has decided to ease some of the restrictions imposed as the country’s banks reopened
The central bank said in a statement on Friday: “Each day, we will measure and look to refine or relax these controls with the overriding goal of safeguarding and stabilizing the Cypriot financial system.”
The move appears to be an attempt to make life as easy as possible for the domestic economy, while preventing the outflow of funds from the island, correspondents say.
Cyprus needs to raise 5.8 billion euros ($7.4 billion) to qualify for the bailout, and has become the first eurozone member country to bring in capital controls to prevent a torrent of money leaving the island and credit institutions collapsing.
As well as a daily withdrawal limit of 300 euros, Cypriots may not cash cheques and those leaving the country will only be allowed to take 1,000 euros with them.
Depositors with more than 100,000 euros will see some of their savings exchanged for bank shares.
Foreign Minister Ioannis Kasoulides said on Thursday that such controls could gradually be lifted over the course of the month. But many economists predict the controls could be in place for much longer.
Earlier on Friday, President Nicos Anastasiade said Cyprus had “averted the risk of bankruptcy” following the 10bn-euro bailout deal with the EU and IMF.
“The situation, despite the tragedy of it all, is contained,” the president said.
He accused other members of the eurozone of making “unprecedented demands that forced Cyprus to become an experiment”.
Also on Friday, Greek media published a list of Cypriot politicians who allegedly had loans written off by banks at the heart of the island’s financial crisis.
The Bank of Cyprus, Laiki and Hellenic Bank apparently forgave loans of millions of euros to companies, local authorities, and politicians from some of the island’s biggest parties.
The list has been handed to the ethics committee of the Cypriot parliament and an investigation is said to be under way.
Banks opened on Thursday for the first time in nearly two weeks amid severe new rules imposed as part of the bailout deal.
Queues formed of people trying to access their money, but the mood was generally calm.
By Friday, banks had returned to their normal working hours and there were no longer reports of big queues.
Cyprus banks have reopened after a two-week closure sparked by the EU-IMF bailout negotiations, amid tension over possible large scale withdrawals.
Branches were replenished with cash overnight and police and private security guards deployed amid fears of a run on the banks by customers.
Banks customers face strict controls on the amount they can withdraw each day.
The restrictions on the free movement of capital represent a profound breach of an EU principle.
Cyprus banks have reopened after a two-week closure sparked by the EU-IMF bailout negotiations, amid tension over possible large scale withdrawals
However, the European Commission on Thursday justified the move, saying the “stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest”.
Cyprus is the first eurozone member country to bring in capital controls.
Cyprus needs to raise 5.8 billion euros to qualify for a 10 billion-euro bailout from the EU, ECB and the IMF, the so-called troika.
As part of the bailout plan, depositors with more than 100,000 euros in Cypriot banks will see their savings taxed in exchange for bank shares.
An earlier plan to tax small depositors was vetoed by the Cypriot parliament last week.
Branches began to open at noon local time and will close at 18:00.
Some armed police have been deployed and hundreds of staff from the private security firm G4S are guarding bank branches and helping to transport money.
The stock exchange, shut since March 16, remains closed on Thursday and will not reopen until after Catholic Easter.
In a statement issued on Wednesday, the ministry of finance insisted the capital control measures were temporary and were needed to “safeguard the stability of the system”.
It read: “The Central Bank of Cyprus and the government of Cyprus will review them each day, with a view to progressive lifting of the measures as soon as circumstances allow.”
The severe new rules have been imposed to prevent a torrent of money leaving the island and credit institutions collapsing.
As well as the daily withdrawal limit, Cypriots may not cash cheques.
Payments and/or transfers outside Cyprus via debit and or credit cards are allowed up to 5,000 euros per person per month.
Transactions of 5,000-200,000 euros will be reviewed by a specially established committee, with applications for those over 200,000 euros needing individual approval.
Travellers leaving the country will only be allowed to take 1,000 euros with them.
On Wednesday night, hundreds of protesters rallied outside the presidential palace, chanting: “I’ll pay nothing; I owe nothing,” the Reuters news agency reported.
Many economists predict the controls could be in place for months.
The unprecedented restrictions represent a profound breach of an important principle of the EU that capital, as well as people and trade, should able be to move freely across internal borders.
However, the European Commission said member states could introduce capital controls “in certain circumstances and under strict conditions on grounds of public policy or public security”.
But it added that “the free movement of capital should be reinstated as soon as possible”.
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