Bank levy 'least painful' option for Cyprus

NICOSIA: President Nicos Anastasiades says a controversial bank levy on private depositors in Cyprus banks as part of an EU bailout deal was the "least painful" option for the financially embattled island.
"I chose the least painful option, and I bear the political cost for this, in order to limit as much as possible the consequences for the economy and for our fellow Cypriots," Anastasiades said in a televised address to the nation.
As a condition for a desperately-needed 10-billion-euro ($ 13 billion) bailout for Cyprus, fellow euro zone countries and international creditors imposed a levy on all deposits in the island's banks.
Deposits of more than 100,000 euros will be hit with a 9.9 percent charge, while under that threshold the levy drops to 6.75 percent.
Rejecting the EU demands would have seen Cyprus exit the eurozone and bankruptcy, Anastasiades said.
"The first choice would have led to a disorderly default as a result of the ECB (European Central Bank) cutting emergency funding to maintain liquidity in the two largest banks," he said.
"The second choice was very difficult but controlling and managing the situation leading to economic stability of the economy."
Anastasiades urged all political parties in Cyprus to ratify the terms of the EU deal when parliament meets on Monday.
"I urge the parliamentary parties to decide, and I will fully respect their decision, in the best interests of the people and this country," Anastasiades said.
"I hope that together, based on the facts as they have developed, we will take the wisest decision," he said, adding, "the road ahead will not be easy."
"The solution we came to is certainly not the one we wanted, but its the least painful under the circumstances," the president said.
Anastasiades needs to get the legislation ratifying the deal through parliament before banks reopen Tuesday after a long three-day weekend or face a run on accounts.
But Cyprus media reported that the scale of revolt against the agreement among MPs has thrown into disarray his efforts to do so over the weekend, and he may have to declare an additional bank holiday on Tuesday.
Cyprus also postponed until Monday an emergency debate in parliament on the deal that was scheduled for Sunday. — AFP