Depositors in Cyprus could lose 40% of their money
The Cypriot finance minister Michalis Sarris has revealed that as a consequence of the nations agreed bailout Cypriot and expat depositors with over €100,000 in their accounts could see up to 40% of their cash converted into bank shares.
The final size of the loss faced by investors will depend on how the government decides to protect pensions, Mr Sarris said. He also confirmed that all Cypriot banks will remain closed until Thursday and that capital controls will be placed on the size and the amount of money people will be allowed to withdraw once the banks have reopened.
There is a strong feeling of concern that once the banks do open a bank run will begin as depositors desperately try and shift their money. Expats in Cyprus would be wise to withdraw their cash and send it either to a safe European country or back to the UK.
On Monday the Dutch chairman of the Eurozone Jeroen Dijsselbloem let slip that the Cyprus bailout plan will be used as the template for future Eurozone bailouts, news that should alarm the thousands of British expats living in Spain, France and Italy.
Ditching a three-year-old policy of protecting senior bondholders and large depositors, over €100,000, in banks, Mr Dijsselbloem argued that the lack of market contagion surrounding Cyprus showed that private investors could now be hit to pay for bad banking debts.
Banks in Cyprus will remain closed until Thursday, the nation’s central bank announced. It had said earlier that banks would reopen today after a week-long shutdown, except for Laiki and Bank of Cyprus.