Friday, March 22, 2013

Cyprus: Bank Resolution Bills Passed, Vote Saturday on Tax on uninsured deposits

by Bill McBride on 3/22/2013 09:05:00 PM

From the NY Times: Cyprus Passes Parts of Bailout Bill, but Delays Vote on Tax

Lawmakers took steps late Friday to revise a formula for obtaining a bailout of Cyprus’s banks but faced strong signals that the plan would not pass muster with international lenders.

The Parliament put off until later this weekend a vote on a crucial new proposal that would confiscate 22 to 25 percent of uninsured deposits above 100,000 euros through a new tax on account holders in one of the nation’s most troubled banks.
There will be additional votes tomorrow, and a meeting with the Eurogroup on Sunday.

From the WSJ: Cyprus Adopts Bank Overhaul Plan
[T]he Parliament in Nicosia passed two key bills that would allow it to close down its second largest bank, Popular Bank of Cyprus, and aggressively curtail the free flow of money on the island. The bank restructuring law would see depositors in Popular Bank, also known as Laiki Bank, to lose as much as 40% of their savings above €100,000 ... As details of the latest plan emerged late Friday, there were signs that the country may be forced to also resolve Bank of Cyprus, its biggest lender. ...

[T]he government in Nicosia had proposed to levy a 20% tax on depositors with more than €100,000 in their accounts in Bank of Cyprus. The government hoped that would allow them to protect the lender ... But senior European finance-ministry officials in a call Friday evening expressed doubts that the plan would raise enough money to ring fence the lender ...
Additional resources:

The Telegraph: Cyprus bail-out: live

The CyprusMail: Cyprus Crisis Update, Friday March 22nd