Bank deposit haircut bank under discussion

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presidential palace meetings 15The government forced the banks to stay closed until next week as it work on a third draft on taxing bank deposits, this time however at a much lower rate in order to minimize the possible drain on deposits. Cyprus has turned to Russia seeking alternative solutions after parliament historical ‘oxi’. According to Neophytou (deputy leader of the ruling Democratic Party) ‘We don’t have days or weeks, we have only hours to save our country’. He explained the importance of finding a solution as soon as possible and highlighted that they will not be the generation of politicians that let Cyprus go bankrupt. It has been suggested that the new proposed haircut may be at lower rates than the previous legislation of a 6.7% tax on deposits under 100,000 Euros and 9.9% over 100,000 Euros. Any shortfall could be covered by nationalizing the provident funds of semi-state companies, which hold between €2 billion and €3 billion. An opposition politician present at yesterday’s crisis talks said: ‘The idea is we can get the pension funds of organizations like the Cyprus Telecoms Organization and the Electricity Authority, maybe some others as well, and raise two to three billion euros. ‘If we raise half of the money then maybe we could top up to the €5.8 billion amount by passing the Cypriot banks into Russian hands.’ He explained. But as of last night there was nothing agreed in Moscow. Bank of Cyprus vice president Xenophontos explained that the government has to be very careful with regards to foreign deposits. According to his words ‘we cannot do it to foreign depositors who trusted us. This could be theft,’ Xenophontos said only Cypriots must foot the bill in exchange for bank warrants, better interest rates, etc. ‘If we protect them, even if they leave, they will come back’ he explained in the press conference yesterday. The extended bank closures have taken its toll on businesses with people reduced to limited withdrawals from cash machines. President Nicos Anastasiades explained last night that a decision would have to be made today at the latest. Everyone would have to rise to the occasion, he warned.