May 19 2013 Latest news:
A view of the Bank of Cyprus UK in Charlotte Street, central London as stock markets fell sharply today on fears that an unprecedented levy on bank deposits in Cyprus will plunge Europe back into crisis. PRESS ASSOCIATION Photo. Picture date: Monday March 18, 2013. See PA story ECONOMY Cyprus. Photo credit should read: Nick Ansell/PA Wire
Catherine Wylie, Press Association
Tuesday, March 19, 2013
Politicians in Cyprus will vote today on a bank account levy which could affect the savings of thousands of British expats.
As part of a £9 billion bailout, European officials said people with less than 100,000 euros (£87,000) in Cyprus-based accounts would have to pay a one-off tax of 6.75% and those with more will lose 9.9%.
Around 3,000 British military personnel and 250 civil servants will be protected should their savings be subject to the levy, the Treasury said.
However, there are 59,000 British residents in Cyprus who have no such guarantee on their cash.
In a televised address last night, President Nicos Anastasiades urged politicians to approve the bailout plan, saying it was essential to save the country from bankruptcy.
But he also said he was trying to amend it to reduce its effect on small savers.
“I completely share the unpleasant sentiment that this difficult and onerous decision has caused,” he 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.”
It has been reported that the Cypriot government is discussing with lenders the possibility of changing the levy to 3% for deposits below 100,000 euros, and to 12.5% for above that sum.
Cyprus has become the fourth euro-area country to get a rescue package to save its banks that suffered significant losses because of their exposure to Greek debt.
The levy will mark the first time the IMF and the 17 eurozone nations have dipped into people’s savings to finance a bailout.
Jeroen Dijsselbloem, the Dutch finance minister who is president of the Euro Group, said that it was fair that account holders contribute to bailing out the nation’s finances, according to the Daily Telegraph.
“As it is a contribution to the financial stability of Cyprus, it seems just to ask a contribution of all deposit holders,” he said.
One investment bank boss warned the decision could jeopardise the existence of the euro itself, The Times said.
Lars Seier Christensen, chief executive of Danish investment bank Saxo, said: “I believe it could be the beginning of the end for the eurozone as this is an unbelievable blow to the already challenged trust that might be left among investors.”
The vote on the levy, which had been expected yesterday, was postponed until today, parliamentary official Antonis Koutalianos said.
Mr Anastasiades had personally requested the postponement but no reason was given, state media reported.
While thousands of British expats wait to hear whether or not their savings will take a hit, British armed forces and civil servants have been told they will receive compensation for any financial loss.
A spokeswoman for the Treasury said: “How much it will cost will be something that will be worked out over the next few days.
“It’s obviously dependent on the number of service personnel who have bank accounts and then, because it’s very personal information, it will depend on how much money they have in their bank accounts.
“And that’s obviously something that takes time to work out.
“Those that will be compensated will be armed service personnel and anyone who is working out there on behalf of the Government.”
Speaking on the BBC’s Andrew Marr Show, Chancellor George Osborne said: “For people serving in our military, for people serving our Government out in Cyprus - because we have military bases there - we are going to compensate anyone who is affected by this bank tax. People who are doing their duty for our country in Cyprus will be protected from this Cypriot bank tax.”
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