Cyprus parliament could ditch plans for bank levy

City A.M. Reporter

THE Cypriot parliament could abandon plans for the controversial bank levy on deposits in a vote scheduled for today.

A weekend announcement that Cyprus would break with previous practice and impose a levy on bank accounts as part of a €10bn (£8.5bn) EU bailout prompted some turmoil on European financial markets yesterday.

Cypriot and Eurozone officials have sought to soften the initially proposed levy of 6.75 per cent on depositors of up to €100,000 and 9.9 per cent above €100,000 to ease the burden on small savers.

The House of Representatives is expected to meet this afternoon in a vote that has been postponed twice already. Rejection of the measure would effectively block a bailout that Cyprus needs to keep its banks afloat and government paying wages and welfare.

Cypriot markets are suspended today and tomorrow. Banks will also stay shut until Thursday to avert panic among savers.