Cyprus has reached a final agreement with its international lenders to confiscate 47.5 percent of the accounts of its biggest bank depositors to help finance the island nation's $13 billion bailout.
The Mediterranean country said Monday the levy would be assessed on accounts with $133,000 or more in the Bank of Cyprus, many of them deposits held by offshore investors, including those of wealthy Russians. The final tax, however, is less than the 60 percent figure that some financial experts had predicted several months ago would be needed to fund the rescue.
It is the first time the eurozone currency bloc has imposed a tax on depositors in a bailout of one of its 17 member countries. In bailouts of Greece, Ireland and Portugal, the European Central bank, the International Monetary Fund and other European nations only hit taxpayers for the funds they needed.
Under the Cyprus bailout, the Bank of Cyprus, the country's largest, will be restructured, and the second largest, Laiki, will be closed. The island's banks faltered in the aftermath of bad investments in debt-ridden Greece, itself struggling with a lengthy recession.
The Mediterranean country said Monday the levy would be assessed on accounts with $133,000 or more in the Bank of Cyprus, many of them deposits held by offshore investors, including those of wealthy Russians. The final tax, however, is less than the 60 percent figure that some financial experts had predicted several months ago would be needed to fund the rescue.
It is the first time the eurozone currency bloc has imposed a tax on depositors in a bailout of one of its 17 member countries. In bailouts of Greece, Ireland and Portugal, the European Central bank, the International Monetary Fund and other European nations only hit taxpayers for the funds they needed.
Under the Cyprus bailout, the Bank of Cyprus, the country's largest, will be restructured, and the second largest, Laiki, will be closed. The island's banks faltered in the aftermath of bad investments in debt-ridden Greece, itself struggling with a lengthy recession.