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1 Apr, 2013 13:46

Cyprus to gamble through hard times after deposits seizure

Cyprus to gamble through hard times after deposits seizure

Cyprus is planning to allow gambling in a bid to fight the economic turmoil, after the Government slashed the bank accounts of most wealthy depositors by a jaw-dropping 60%.

Up until today casinos have been legal only in the northern part of the island, in Turkish Cyprus. The area has been popular with tourists and domestic gamblers. 

Cyprus authorities hope legalizing casinos will boost tourism to Southern Cyprus, part of the EU, The Guardian reports referring to Cyprus' local Fileleftheros daily. 

The move has already been condemned by the island’s influential Orthodox Church. 

President Nikos Anastasiades announced the decision in an interview published in the Fileleftheros Sunday. The measure comes as part of the new 12-point plan on improving the grave economy of the island state, which is to be applied over the next six months.

Apart from lifting the ban on casinos, Anastasiades also suggested freeing profits of businesses that re-invest in Cyprus of any tax, easing payment terms and interest rates on loans, encouraging banks to lend for longer terms at lower rates and persuading companies to ensure at least 70% of the jobs to Cypriots.

Newly elected President Anastasiades, who came to power in February, introduced the plan ahead of a planned meeting with Greek Prime Minister Antonis Samaras. The Cypriot President is reportedly willing to ask for €2 billion out of Greece’s €48 billion EU rescue loan.

Greece was supportive of the Troika demands to compensate for the €10 billion rescue package by seizing part of large depositor’s savings. 

Cyprus bailout created a dangerous precedent shaving deposits with a much  higher tax, than expected. 

Savers at the Bank of Cyprus with deposits of over €100,000 were informed over the weekend that 37.5% of their savings will be converted into shares in the country's largest bank, which are currently almost worthless, the Guardian reports. Another 22.5% of their savings will be transferred into a fund earning no interest. This money could be seized if the bank needs more funds in the future. The rest, or 40% of large deposits will be "temporarily frozen for liquidity reasons". They will however continue to earn according to the existing interest rates, plus another 10%, according to the central bank.

"We suffered a serious blow without doubt … but we now have a bank which is reformed and ready to assume its role in the Cypriot economy," Cyprus News Agency quoted Cyprus Finance Minister Michalis Sarris as saying.

Last week Cyprus said it is still considering the benefits of leaving the single currency bloc, as the price for the bailout is too high.