President Nicos Anastasiades is intending to raise €5.8 billion from Cypriot bank accounts to help fund the bailout, an unprecedented move by the eurozone that could yet spark wider concern about the safety of bank deposits in the bloc.
A revised deal being discussed in Nicosia, with the blessing of the European Commission, would shift more of the burden on to deposits larger than €100,000, according to officials involved in the talks. Under a controversial deal struck with international bailout lenders in the early hours on Saturday, a 6.75 per cent levy would be imposed on all deposits under €100,000 while accounts over that threshold would be hit with a 9.9 per cent levy. The depositor levy was demanded by a German-led group of creditor countries to bring down the bailout’s price tag from €17bn.
The parliamentary passage of the levy is hanging in the balance. Several lawmakers from the Democratic party, the junior partner in the governing coalition, have threatened to vote no. The government controls only 28 of 56 seats in the chamber and is seeking backing from two deputies from a small pro-European party.
Olli Rehn, the European Commissioner in charge of economic affairs, said that bailout lenders would not object to a shifting of the burden. “If the Cypriot political leaders decide on a more progressive scale for the one-off levy for the sake of social fairness, and if this has the same financial impact, the commission is ready to recommend that the eurogroup endorse such a decision.”
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