Eurogroup to Tax Bank Deposits in Cyprus

Eurogroup decided to tax bank deposits in Cyprus for return of bank bailout and 16 billion in financing also targeting money laundering.

Measure to exclude Cypriot banks in Greece nevertheless panic expected Tuesday reports say already some took money out before announcement.

The measures include a tax on deposits in Cypriot banks by Eurogroup 10% over 100, 000 euros, below that amount at  6.5%.

Reports say that the taxation of bank deposits in Cyprus will be offset by banking shares of equal value.

The developments in Cyprus are dramatic the Parliament postponed meeting session to vote the controversial bills. It is very well known that Cyprus has many Russian funds deposits and the finance minister of this island – country will visit Russia next week.

Eurogroup also wants corporate tax in Cyprus from 10 to 12.5%. A lack of majority vote in governmental coalition was the reason for postponement of vote. Three Cypriot banks are operating in Greece with total assets of 25 billion, deposits of 14 billion and loans 20 b Euros.

Bank of Greece in search for domestic institution which will assume loans and Cypriot bank networks operating in Greece.

It is Not clear yet which country will be required to fill the funding gap about 2 billion Euros, Greece or Cyprus.

Final decision rests upon the EFSF, the largest shareholder of the systemic banks and responsible for bank institutions restructuring.