Jeroen Dijsselbloem (centre), pictured announcing the deal with IMF chief Christine Lagarde (left) and EU Commissioner for Economic and Monetary Affairs, Olli Rehn (right), warned that more Cyprus-style bailouts could be needed
Savers in the eurozone could see their bank accounts raided in the struggle to shore up the single currency, a senior EU official warned last night.
The Cyprus rescue package – under which bank customers will have a chunk of their cash seized to bail out troubled lenders – could become a template for dealing with other creaking banking systems, Jeroen Dijsselbloem suggested.
The remarks from the head of the eurozone’s finance ministers contradicted days of assurances that the Cyprus bank deposit raid was a ‘one off
- Jeroen Dijsselbloem spooked global markets with his comments
- He said that owners and investors must be held responsible for failings
- ALL banks to remain close until Thursday to avert a run on deposits
- Savers with more than £85,000 could lose up to 40% of their money
- Uninsured funds to be frozen and used to pay off debts in bank restructure
- Cyprus will not to need to vote on deal because bank law already in place
- But Germany may have to hold vote before agreement can take effect
- More than 60,000 British expats live on the island, so many face losses
- Furious: Russia’s Prime Minister Dmitry Medvedev has accused the European Union of theft over its bailout of Cyprus which will impose heavy losses on his foreign investors
Relief: Cypriot Prime Minister Nicos Anastasiades gives his reaction to the deal on Twitter
Fears that bank accounts could be raided in any future eurozone bailouts spooked markets on Monday, as Cypriots prepared for their banks to reopen for the first time in over a week on Thursday following a deal to secure a €10bn lifeline.
Markets took fright after the head of the group of eurozone finance ministers indicated that the Cyprus rescue could be a template for similar situations. Cyprus is the first of five bailouts in the eurozone where depositors have been hit.
“What we’ve done last night is what I call pushing back the risks,” Jeroen Dijsselbloem, the Dutch finance minister, told Reuters and the Financial Times after clinching an agreement for Cyprus. “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,” he said.
Bank of Cyprus and Laiki, the two largest domestic banks, will remain shut until Thursday while the latter is split into a good and bad bank and a levy – of potentially 40% – is imposed on accounts of more than €100,000.
Panic buying: Crowds flock to supermarkets for fear of lack of products due to supply shortages in Nicosia
A big percentage of those deposits belong to Russians. On Monday the Russian president, Vladimir Putin, said there would be a deal to rework the terms of a €2.5bn loan to the Mediterranean island, which had become attractive for its low tax regime and lax vetting laws.
Riot police clash with protestors in Greece as Independence Day celebrations are marred by ongoing anger over painful austerity measures
- Anti-austerity protestors turned out at parades in Greek cities
- Athens’ military parade took place amid a heavy police presence
- Police officers struggled with demonstrators in Patras and Agrinio
Parades taking place across Greece to mark the country’s Independence Day have been marred by anti-austerity protests.
Riot police carrying shields and wielding batons struggled to control demonstrators in Patras, while protestors scuffled with plain clothes officers in Agrinio.
Pictures of the scenes across Greece – evidence of ongoing public anger over painful austerity measures imposed by international lenders – emerged as Cyprus agreed a last-ditch 10billion euro EU rescue package to avert financial meltdown.
Athens’ Independence Day parade took place amid a heavy police presence which saw onlookers barred from much of the route.
Armed forces units marched past the country’s president, ministers and other dignitaries in an otherwise empty Syntagma Square in central Athens to commemorate the Greeks’ uprising against the Ottoman Empire in 1821.
In a bow to austerity, no armoured units took part and no planes flew overhead.
Heavy security has been the norm since a military parade in October 2010 in the northern city of Thessaloniki, commemorating Greece’s entry into World War II, was disrupted by anti-austerity protesters. Politicians were insulted and were forced to flee the scene.
Only around 20 protestors turned out to the parade in the capital and were kept at a distance by police.