Cyprus Delays Vote on Bank Levy
By Menelaos Hadjicostis, Associated Press
NICOSIA, Cyprus -- Cyprus' parliament on Sunday postponed a debate and vote on a controversial levy on all bank deposits that the cash-strapped country's creditors had demanded in exchange for 10 billion euros ($13 billion) in rescue money.
The vote, which had been expected later Sunday, has been pushed back to Monday afternoon, parliamentary official Antonis Koutalianos said.
The announcement set off an immediate scramble among top European officials, with reports that the European Central Bank was pressuring Cypriot authorities to hold the vote without delay.The stakes are high for the tiny island nation of one million people, because a rejection of the levy by lawmakers could push Cyprus into bankruptcy and possibly out of the common euro currency. Officials also fear a massive run Tuesday on Cypriot banks -- after a national holiday on Monday -- no matter which way the voting goes. The state-run Cyprus News Agency said President Nicos Anastasiades had personally requested the postponement, but no reason was given. The decision by Cyprus' 16 eurozone partners and the International Monetary Fund to impose a one-time tax of 6.75% on all deposits less than 100,000 euros ($131,000) and 9.9% over that amount has enraged Cypriot politicians, who have condemned it as unfair and disastrous. That brings into sharp doubt its approval in the 56-seat parliament. It marks the first time that the IMF and the 17 eurozone nations have dipped into people's savings to finance a bailout, a move that analysts worry may roil international markets and jeopardize Europe's fragile economy. "There are two choices, voting in favor which allows the country to avoid a disorderly bankruptcy, or rejection, which will have us face a disorderly bankruptcy with all that that entails," said Averof Neophytou, deputy chief of the ruling Democratic Rally party. It's not only Cypriot depositors who will take a hit but foreign nationals as well, including many Russians who are estimated to have some 20 billion euros ($26.2 billion) sitting in Cypriot banks. At their peak, Cypriot banks had assets totaling eight times the country's 17.5 billion euro economy. Those numbers have prompted accusations from some European countries, primarily Germany, that Cypriot banks serve as money laundries for dirty Russian cash.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV