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Cypriots scramble to beat savings levy by moving money

World Business
Cypriots in Britain were scrambling to transfer money out of closed banks in their homeland in an attempt to beat a proposed savings levy.

LONDON — Cypriots in Britain were scrambling to transfer money out of closed banks in their homeland in an attempt to beat a proposed savings levy which has stoked depositor worries across the eurozone.


Cyprus’s proposed tax on bank accounts, part of a ₣10 billion ($13 billion) bailout by the European Union, has angered many of the 300 000 Cypriots and British citizens of Cypriot extraction who live in Britain.

“For sure, from tomorrow morning, my account balance in Cyprus is going to be zero,” said Constantinos Pittas, a 28-year-old owner of a fish shop in London who moved to Britain from Cyprus a decade ago.

“I will send my money to a different country or I have to do something because who tells me now that in six months, they’re not going to do the same,” Pittas said. “I think the UK is the best place.”

The Cypriot government is working to soften the blow to smaller savers by tilting more of the tax towards those with deposits greater than ₣100 000 ($130,700).

Residents on the Mediterranean island emptied cash machines over the weekend and though Cypriot banks were shut on Monday for a bank holiday, British lawmakers warned that they could face a run when they open.

London has been the destination of choice for capital fleeing the sovereign debt and banking crises of the eurozone. British government bonds rallied on Monday.

On the streets of north London, home to one of the world’s biggest Cypriot communities, there was anger mixed with worry about what to do with savings locked inside closed banks.

“My Cypriot constituents are shocked and angered that the much-publicised deposit guarantee system appears to be worthless,” British lawmaker Andrew Love, who represents a constituency in north London, told Parliament.

“They are further outraged about having been (told) the reason for this is that the banks have gone bankrupt, therefore the deposit guarantee doesn’t apply.”

At a bakery making traditional Cypriot cakes and bread, the owner was on the phone discussing how to manage her financial affairs and whether any of her savings would come out of the automatic teller machines on the island.