Source: WSJ
ATHENS–Large deposit holders at Bank of Cyprus PCL (BOCY.CP) will see
almost half of their deposits turned into equity at the lender as part
of the country’s international bailout, a senior bank official said
Sunday.
After an all day meetings Saturday between President Nicos
Anastasiades and representatives from the country’s creditors–its
euro-zone partners and the International Monetary Fund–it was decided
that 42.5% of all deposits over 100,000 euros ($132,764) will be
converted into shares as part of its recapitalisation plan, the official
said.
Depositors will also have an additional 5% siphoned from their bank
accounts and turned into a contingent convertible bonds, also known as
Cocos, at the lender, the official added. A formal announcement is
expected late Sunday or Monday.
Earlier this year, Cyprus’s government agreed to a sweeping overhaul
of its banking sector in exchange for a EUR10 billion bailout from its
euro-zone peers and the IMF. Under the deal, Cyprus closed its second
biggest lender, Cyprus Popular Bank PCL (CPB.CP), and is merging its
healthy assets with Bank of Cyprus.
Bank of Cyprus, the country’s largest lender, has been stuck in legal
limbo since March when the country sealed its rescue agreement. Its
activities have been suspended as experts assess what percentage of
uninsured deposits–those of more than 100,000 euros–need to be converted
to equity in the bank.
The delay in reopening the bank has cast doubt on the futures not
only of the bank but of the country itself, as it has led to the
extension of capital controls in place since March. No other euro-zone
country has imposed such controls since the common currency was launched
in 2002.
Officials had said in March that Bank of Cyprus savers will see at
least 37.5% of funds over EUR100,000 turned into shares, and that a
further 22.5% will be held until authorities know the exact amount
needed to complete its capital boost.
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