Cyprus' president tries to amend plan to bail out banks

2013-03-18T00:00:00Z Cyprus' president tries to amend plan to bail out banksThe Associated Press The Associated Press
March 18, 2013 12:00 am  • 

NICOSIA, Cyprus - Cyprus' president said Sunday that he is trying to amend a key provision of an unpopular eurozone bailout plan that would tax deposits in the country's banks to reduce its effect on small savers.

But in a nationally televised speech, President Nicos Anastasiades also urged lawmakers to approve the tax in a vote today, saying it is essential to save the country from bankruptcy.

About 25 lawmakers from the communist-rooted AKEL party, the socialist EDEK and the Greens said they won't vote for the tax in the 56-seat Cypriot parliament amid deep resentment over a move some called disastrous. If Parliament rejects the tax, that would put the entire aid package in jeopardy.

The vote was initially set for Sunday but was postponed until today - a national holiday in Cyprus. On Saturday, frightened savers rushed to automated-teller machines to withdraw as much of their cash as they could. Cypriot officials have expressed fears of a full-fledged bank run once lenders reopen their doors on Tuesday.

The announcement of the vote postponement set off an immediate scramble among top European financial officials. One lawmaker told The Associated Press that European Central Bank was pressuring Cypriot authorities to hold the vote without delay.

"I completely share the unpleasant sentiment that this difficult and onerous decision has caused," Anastasiades said. "That's why I continue to give battle so that the decisions of the eurozone are amended in the next hours to limit the effect on small depositors."

In exchange for 1/410 billion ($13 billion) in rescue money, creditors would impose a one-time tax of 6.75 percent on all bank deposits under 1/4100,000 ($131,000) and 9.9 percent over that amount.

The deposit tax is part of a bailout agreement reached early Saturday after talks by finance ministers from euro countries and representatives of the International Monetary Fund and the European Central Bank.

The Cypriot bailout follows those for Greece, Portugal, Ireland and the Spanish banking sector, and it is the first one that dips into people's savings to finance a bailout. Analysts worry the move could roil international markets and jeopardize Europe's fragile economies.

Officials in Spain and Italy tried over the weekend to reassure their citizens by saying the situation in Cyprus is unique, and that bank deposits in their countries will remain safe.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Activate
Get weekly ads via e-mail

Follow the Arizona Daily Star

Featured businesses

View more...

Deals, offers & events

View more...

Drive new customers to your website

Maximize your exposure with FREE registration on the top search engines:

google bing yahoo

Fill out this form and get started today.

First Name:
Last Name:
Phone:
E-mail Address:
Website:
arizona daily star
Search Local Businesses:
Popular Searches