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Cypriot authorities in revised deal talks

Cyprus' embattled president was on Sunday in talks with Brussels and political rivals to ease the terms of a planned levy on smaller deposit holders as he tried to scrape together a parliamentary majority for a €10bn bailout for the debt-laden island.

(...)

According to senior officials involved in the talks, the German-led group of negotiators who insisted on the bank levy were agnostic as to where the axe fell. They said Mr Anastasiades, with the backing of the commission, had resisted a rate higher than 10 per cent out of fear it would destabilise the financial sector even more.

One senior eurozone official said the ECB and other EU negotiators at one point suggested putting all the burden on larger depositors.

"We had proposed a levy with a rate of zero below €100,000, and a higher one afterwards," said the official. "The Cypriot president did not want to agree to a levy higher than 10 per cent, and if you do the numbers you get the 6.75 and 9.9 [per cent]."

Cypriot officials insisted no levy on smaller depositors was impossible. One senior Cypriot official involved in the talks said that because about 35 per cent of all deposits are below the threshold, exempting them would mean a rate so high for the rest that it would no longer be viewed as a tax.

"If this is successful then it will be used in the future," said the dejected official, predicting Spanish and Italian banks could face similar levies. "If this is not successful then who cares about Cyprus."



Wind power
by Jerome a Paris (etg@eurotrib.com) on Sun Mar 17th, 2013 at 08:34:07 PM EST
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