Cyprus government revises bill on bank deposits levy

The Cypriot government has revised a draft bill providing a levy on bank deposits which aims at protecting small deposits by excepting savings under 20,000 euros (25,800 U.S. dollars).The new bill was sent to parliament to be examined by the finance committee prior to its debate at a plenary session, but there is a strong possibility that parliament will postpone for a third day running its session in the face of a lack of support by deputies.Cyprus President Nicos Anastasiades told a Swedish television in an interview that he does not expect the bill to pass through the House of Representatives.Anastasiades also said he was deeply disappointed and annoyed by the lack of solidarity on behalf of Cyprus' European Union (EU) partners.A government minister has said that the government is working on a plan B in case the bill is rejected by parliament and the European Central Bank turns off the tap on emergency liquidity assistance to Cypriot banks."We have to have an alternative plan to deal with the situation," Defense Minister Fotis Fotiou, a top official of DIKO party, the junior coalition partner which has voiced strong reservations over the Eurogroup levy scheme.The new bill prepared by the finance ministry sets a zero percent levy on deposits of up to 20,000 euros, a 6.75 percent rate for savings between 20,000 and 100,000 euros and a 9.9 percent tax on all deposits above that mark.Depositors will be compensated with bank shares backed by government bonds connected to future earnings from the development on natural gas discovered in marine fields of the south shores of Cyprus.The benefit of bond secured stock will apply only to those savers who will keep their money in Cypriot banks for two years.Central Bank governor Panicos Demetriades told the finance committee that by sparing small depositors from the levy the government will not be able to raise the full 5.8 billion euro amount set down by the Eurogroup.He also said that Cypriot banks stand to lose more than 10 percent of their deposit base within a matter of days if parliament passes the levy bill. (1 euro = 1.29 U.S. dollars)