'Robbing the Savers': Euro Zone Reaches Deal on Cyprus Bailout, deposits at banks in a country are being seized to assist in the rescue.

'Robbing the Savers': Euro Zone Reaches Deal on Cyprus Bailout, deposits at banks in a country are being seized to assist in the rescue. (Spiegel).After fraught negotiations, euro-zone finance ministers reached a deal early Saturday to provide up to €10 billion ($13 billion) bailout funds to Cyprus, which faces bankruptcy in May. For the first time, deposits at banks in a country are being seized to assist in the rescue.

Euro-zone finance ministers and the International Monetary Fund reached a deal with Cyprus early Saturday morning on a bailout package for the country that has been the subject of dispute for months now. It will mark the first time that savers in a country in the euro zone are required to participate in a bailout.

"The Euro Group was able to reach a political agreement with the Cypriot authorities on the cornerstones of this agreement," Euro Group President Jeroen Dijsselbloem said. "The assistance is warranted to safeguard stability in Cyprus and the euro zone as a whole," he said. Dijselbloem added that a letter of intent would be completed next week so that the deal could be approved by national parliaments.

International Monetary Fund chief Christine Lagarde said the fund would contribute to the bailout but did not specify the exact amount.

Initial reports suggest the bailout package, which will be provided by the long-term euro rescue fund, the European Stability Mechanism (ESM), will carry a total value of up to €10 billion ($13 billion). In return, Cyprus has pledged to recapitalize its ailing banks and clean up government spending. Without the bailout, the country would default in May.

The deal followed intense negotiations and the main sticking point during the 10-hours of talks had been the demand that savers at Cypriot banks also be required to contribute to the bailouts of the beleaguered financial institutions. Under the deal, any bank account holder in Cyprus with deposits exceeding €100,000 will be subjected to a one-off levy of 9.9 percent of their savings. Accounts with less than a €100,000 would be required to make a 6.75 percent payment. In total, the deposit tax is expected to generate around €5.8 billion.

Large sums of money have been deposited in Cypriot banks by foreign customers, particularly wealthy Russians and Brits. Russian oligarchs have billions in deposits in the banks, and almost half of the deposits in the country are believed to be from non-resident Russian citizens. Together, the country's banks hold close to €70 billion in deposits. Cyprus also agreed to raise the country's nominal corporate tax rate, the lowest in Europe, by 2.5 percentage points to 12.5 percent. But sources said the country would not be given a debt haircut.

The Cypriot government said Saturday it would cease electronic transfers to prevent savers from wiring money out of the country. And Jörg Asmussen, a German board member of the European Central Bank said that the amount of the one-time levy would immediately be frozen in all accounts in Cyprus. Banks in the country will also be closed on Monday because of a holiday. The Cypriot government is expected to pass a law this weekend approving the levy. "I assume that the levy can be applied before the banks reopen normally on Tuesday," Asmussen said. Hmmmmm.....Ok now we're 'officially' stealing people their savings , which European country is next?Read the full story here.

Updates:  

1. Jeroen Dijsselbloem, president of the Euro Group, declined to rule out that a similar tax scheme was being planned for depositors in other countries besides Cyprus, but he emphasized that such a plan was not being considered at the present time, the New York Timesreported.

2.Europe Does It Again: Cyprus Depositor Haircut "Bailout" Turns Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs

3. REPORT: Germany Told Cyprus They Could Tax Their Depositors, Or Leave The Eurozone