British expats in Cyprus face eurozone raids on their savings
By Bruno Waterfield, in Brussels
9:43PM GMT 25 Mar 2013
A senior eurozone figure on Monday suggested the plan to save Cyprus could serve as a template for rescuing other troubled EU states.
Under the terms of the Cyprus bailout, any savers with more than £85,000 deposited in either of the island’s two main banks – Laiki and the Bank of Cyprus – will lose between 40 and 100 per cent of their money.
In return for levying this ‘haircut’ on deposits, Cyprus will receive the international funds necessary to keep its troubled banks afloat.
Jeroen Dijsselbloem, the Dutch chairman of the eurozone, suggested that this structure could become the model to be applied across Europe, where banks in Spain, Portugal and Italy are also in trouble.
“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’,” he said.
“If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.
“If we want to have a healthy, sound financial sector, the only way is to say, ‘Look, there where you take on the risks, you must deal with them, and if you can’t deal with them, then you shouldn’t have taken them on.”
More than 750,000 British expatriates have money in EU bank accounts, including in countries hit by the eurozone crisis such as Spain, Portugal, Italy and Greece.
Rhiannon Davies, the editor of the Shelter Offshore website for expatriate investors and savers said the latest announcement was “very worrying” after Cyprus, previously seen as safe, had “sent a shiver down everyone’s spine”.
“It is absolutely shocking and disgusting. This will really make people reconsider their position. Nothing and nowhere is safe,” she said.
Dmitry Medvedev, Russia’s Prime Minister, gave a taste of Moscow’s displeasure over the Cyprus rescue plan yesterday when he said: “the stealing of what has already been stolen continues”.
The island’s banks – except for Laiki and the Bank of Cyprus – will reopen on Tuesday.
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