Cyprus's finance minister said Tuesday that large deposit
holders at Cyprus Popular Bank PCL (CPB.CP), the island's second
biggest lender, could face losses of as much as 80% on their
deposits as the government moves to wind down its operations.
Speaking in a television interview with state broadcaster RIC,
Michalis Sarris indicated that it could also take years before
those depositors see any of their money returned.
"Realistically, very little will be returned," Mr. Sarris
said.
Asked if, like in other bank closures, it could take six to
seven years before depositors get back there money, he said: "maybe
yes. And the amount [returned], could be 20%. Certainly, for
depositors above 100,000 euros it could be a very significant
blow."
His remarks come just hours after Cyprus's central bank governor
estimated that the losses facing large depositors at rival Bank of
Cyprus PCL (BOCY.CP), could reach as much as 40%.
Early Monday, Cyprus agreed to a 10 billion euro ($13 billion)
bailout from its euro-zone peers and the International Monetary
Fund in exchange winding down Cyprus Popular, also known as Laiki,
and the merger of its healthy assets with Bank of Cyprus.
Cyprus's banks have been closed since March 16 and are scheduled
to remain closed Wednesday as the country raced to complete a deal
on the aid package and avert a meltdown in the island's financial
sector. Mr. Sarris said the banks would reopen Thursday, as
scheduled.
Fearing a mass exodus of deposits when they do, the government
of Cyprus is preparing to implement capital controls--the first
euro-zone member to do so--to keep money from rushing out of the
country. Mr. Sarris said he expected a decree implementing those
capital controls to be ready by midday Wednesday.
Write to Alkman Granitsas at alkman.granitsas@dowjones.com
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