Just a basic point that too many persons do not know. The money in deposit accounts is not stored by the bank but invested because this money is regarded as a short-term loan (very short-term because it can be withdrawn at any moment) from the customer to the bank... So we are the creditors of a bank. The fact is that when you're the creditor and that your debtor goes bankrupt, you often have to face losses... Cyprus banks needed bailout because they owned too much Greek debts whose value is now 0. Their balance sheet is unbalanced and they need to be capitalized again. Germany won't because it did already for Greece and has election soon... The only solution is that the creditors of the bank support the loss, their deposit being converted in new shares. It is a classical process, the only exception in the Cyprus case, is that here it is a forced process... that went through no negotiation.
Here are the details :
Depositors with 20,000 - 100,000 euros deposited must pay 6.75%
Those with more than 100,000 in their accounts must pay 9.9%
Depositors will be compensated with the equivalent amount in shares in their banks
The levy is a one-off measure
Eurozone wants Cyprus to get 5.8bn euros from deposits, in exchange for a 10bn-euro EU/IMF loan
Total of about 68bn euros on deposit in Cypriot banks, foreigners hold about 40% - most of them Russians
