Cyprus-Run on banks-Tax placed on deposits-People lined up to withdraw savings at ATM machines-Some banks close due to demands for cash
THE LARGE TAX THAT THE GOVERNMENT SAYS THAT IT NEEDS TO KEEP UP ITS SPENDING PROGRAMS IS MET WITH UNHAPPY SAVERS
Nervous depositors in Cyprus rushed to ATM machines on Saturday to drain their accounts following a bailout agreement with international creditors that includes a levy on all the country's bank accounts.
Lines formed at many ATMs as people scrambled to pull their money out after word that the (EURO)10 billion ($13 billion) rescue package Cyprus agreed with its euro area partners and the International Monetary Fund included one-off levy on deposit, an unprecedented step in the eurozone crisis.
The levy is expected to raise (EURO)5.8 billion.
European officials said people with less than (EURO)100,000 in their accounts will have to pay a one-time tax of 6.75 percent, those owning more money will lose 9.9 percent. Cypriot bank officials said that depositors can access all their money except the amount set by the levy.
But that hardly assuaged people who continued to withdraw cash from ATMs until the machines ran out, unsure what or how much would be taxed. Officials said that withdrawing funds on Saturday would not reduce anyone's levy.
The country's cooperative banks also shut their doors after depositors scurried in hopes of protecting their savings.
Unlike commercial banks which remain closed on weekends, cooperative banks customarily open for business on Saturday.
The cooperative banks, which represent about a fifth of the island's banking sector, remained open only for a short time. However, people continued to have access to their funds through ATM machines.
"Politicians and senior bank bosses have covered each other's backs for years, now it's ordinary people who are paying the price and are being punished," said Christos Demetriades, 58, milling outside a shut Nicosia cooperative bank branch.
One disgruntled customer at a branch in the southern coastal town of Limassol briefly parked his tractor in front of its shut doors in a show of fru