Cyprus' government spokesman said Friday that no new haircut
will be imposed on the island's depositors, after it was revealed
that changes in Cyprus' bailout made last month to win approval
from its parliament increased the rescue's price tag to 23 billion
euros ($30 billion) through the end of 2016 from an originally
estimated EUR17 billion.
"The European Commission assesment...in no way indicates that it
imposes new recapitalization of banks or new burdens on
depositors," Christos Stylianides told reporters in the island's
presidential palace.
The increased figure, which appeared in documents prepared by
the European Commission and the European Central Bank, means Cyprus
is contributing a total of EUR13 billion, most of that from bank
restructuring and the so-called bail-in of big depositors,
according to the draft documents. Cyprus's international creditors,
the euro zone and the International Monetary Fund, are contributing
the remaining EUR10 billion.
"The EUR23.5 billion, which the European Commission assessment
refers to, have already been acknowledged and evaluated in the
final draft of the loan agreement, which is in [Friday's] Eurogroup
decision," Mr. Stylianides said.
Earlier Friday, euro-zone finance ministers approved the
proposed EUR10 billion rescue package for the island.
"The decision reached today at the Eurogroup meeting is a
significant development for Cyprus," the country's finance
minister, Harris Georgiades, said in a statement. "We are looking
forward to a swift endorsement from member states and to the
disbursement of the first tranche by mid-May."
Last month, Cyprus became the first euro-zone country to impose
capital controls to forestall a run on its main banks. Those
measures followed an emergency bank holiday of nearly two weeks
that Cyprus imposed during often-chaotic negotiations with its
international creditors.
As a quid pro quo for the bailout deal with international
creditors, the country has already closed Cyprus Popular Bank PCL
(CPB.CP) and is transferring the lender's healthy assets to Bank of
Cyprus PCL (BOCY.CP), the island's biggest bank, which is
undergoing a major restructuring.
Depositors with over 100,000 euros ($128,474) in the two banks
stand to lose between 40% and 80% of their deposits, according to
initial government estimates.
Write to Nektaria Stamouli at nektaria.stamouli@dowjones.com
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