Big Accounts in Bank of Cyprus to Suffer a Haircut of around 60%



The central bank in Cyprus confirmed the details of the haircut for big accounts (over 100K) in the Bank of Cyprus. The money will be split to three parts, each with a different treatment.

Depositors will receive bank shares worth 37.5% of their deposits over 100K euros.

A further 22.5% of these deposits will not carry any interest and may be turned into a special instrument that might be used to recapitalize the bank later on. Another 40% will carry interest, but will be locked. A special committee will later decide what to do with this money.

Deposits will probably be offset against any loans the depositor has. The decisive time for the calculations has been set March 26th, 10PM local time.

The head of the Eurogroup, Dutch finance minister Joeren Dijsselbloem, said in interview that what has been done in Cyprus could be done elsewhere. He later backtracked these comments, and other leaders repeated that Cyprus is a special case.

The original plan was to tax deposits of all sizes and at all banks in Cyprus: 6.7% for accounts under 100K and 9.9% for the bigger ones.

Both the original plan and Dijsselbloem’s words haven’t helped the European banking sector nor the euro.

For more about the euro, see the EUR/USD forecast.


About

Yohay Elam – Founder, Writer and Editor

I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

5 Comments

  1. Eric D says:

    Amazing to hear that account holders will be held “partially responsible” for the financial metldown of their country, but desperate times need desperate measures I guess… you gve me and idea, I might even make a cartoon about it and post it on my blog.

  2. Eric D says:

    Hey just wanted to tell you I did as said, made a cartoon about it, check it out if got the time.

  3. Trading says:

    On Thursday the banks opened with 200k payment limitation, yet non of the payments went through. Now let’s hope for Tuesday.

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