facebook
twitter
rss
account
search
search
 

Haircuts in Cyprus could top 60 percent

March 30, 2013 at 11:35 AM   |   Comments

NICOSIA, Cyprus, March 30 (UPI) -- Losses imposed on larger banks deposits in Cyprus to secure an $18 billion bailout, could exceed 60 percent, various bankers said.

Cyprus must raise $7.5 billion in revenue to secure an international loan of $13 billion under terms set by the so-called troika -- the European Commission, the European Central Bank and the International Monetary Fund. That would bring tot total bailout to $18 billion.

No previous bailouts have included direct losses imposed on bank deposits, and the current deal concentrates all of those losses on deposits larger than $130,000.

The New York Times reported Saturday bankers close to the negotiations have said the losses imposed on larger deposits could go as high as 77.5 percent.

Many details are still unknown, but the terms under discussion include turning savings from large accounts into a combination of direct equity and securities that could be converted to equity at a later date, the Times said.

Government officials have been publicly kicking around the figure of 40 percent losses, but sources say that is shy of what the actual haircut -- slang for losses -- will be.

To recover the losses imposed on the accounts, depositors will have to wait for the bank's shares to rise in value, but some analysts say that may never happen.

The $18 billion bailout is expected to slow Cyprus' economic growth by 3 percent to 5 percent. By some estimates, the island nation's gross domestic product will drop 10 percent before it turns around - which could eliminate its viability as an international financial center, the Times said.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Recommended UPI Stories
Featured UPI Collection
trending
2014: The Year in Music [PHOTOS]

2014: The Year in Music [PHOTOS]

Most Popular
1
Norways Kongsberg to demo missile for U.S. Navy Norways Kongsberg to demo missile for U.S. Navy
2
E-3 Sentry aircraft tipped for digital cockpit, avionic systems makeover E-3 Sentry aircraft tipped for digital cockpit, avionic systems makeover
3
Pizza Hut hoping the "Skinny Slice" will mean big bucks
4
Anheuser-Busch not satisfied with the way NFL has handled recent incidents Anheuser-Busch not satisfied with the way NFL has handled recent incidents
5
Saab producing vehicle protection system for unidentified customer Saab producing vehicle protection system for unidentified customer
Trending News
Video
x
Feedback