Cyprus Bank Depositors May Lose 60%

If you have worked hard and saved your money in the bank...how would you feel if the bank closed and then the government took 60% of your savings?

Of course the people with NO SAVINGS would say, "Yes!  Take it from those people with savings!"

Cyprus may imposes losses of as much as 60 percent on Bank of Cyprus Plc accounts exceeding 100,000 euros ($128,000) as part of an aid deal to stop the country from going bankrupt.

Customers will have 37.5 percent of their deposits above this amount converted into shares with full voting rights and access to any future Bank of Cyprus dividend, the Nicosia-based central bank said in an e-mailed statement. A further 22.5 percent will be temporarily withheld to ensure the lender meets the terms of its recapitalization, as agreed under Cyprus’s loan agreement with international creditors, the central bank said.

The deposit-loss plan “will make things worse as small and medium-sized companies will run out of liquidity,” Marios Mavrides, a lawmaker for the ruling Disy party, said in a phone interview from Nicosia. The move “does not help to gain back people’s trust, deposits should be free in order to gain that trust,” he said.

The remaining 40 percent of Bank of Cyprus deposits above 100,000 euros that aren’t subject to the bail-in will be temporarily frozen to ensure the lender’s liquidity. This money, which won’t be used to recapitalize the lender, will receive interest at 10 percent above current levels and be released “within a short time-frame”, the central bank said.

Cyprus Popular Bank (CPB) will be divided into “good” and “bad” banks, according to the statement. Deposits of less than 100,000 euros will be absorbed by Bank of Cyprus and those above that level will be placed in the bad bank.

Here;  http://www.bloomberg.com/news/2013-03-30/bank-of-cyprus-s-customers-may-lose-as-much-as-60-on-deposits.html

We have been saying all along that all of our monetary systems are based on CONFIDENCE.

So how do you suppose this will help Cyprus regain folk's confidence?

Of course this is all still subject to wrangling and negotiating....but the fact that it is even being discussed is going to erode CONFIDENCE.

But of course that could never happen here...BECAUSE THIS IS AMERICA!!