* Central Bank confirms tough terms in bailout
* Streets calm, protest planned for Thursday
* Germany says euro zone deposits are safe
* Cypriot voters say Europe failed them
By Karolina Tagaris
NICOSIA, March 30 Major depositors in Cyprus's
biggest bank will lose around 60 percent of savings over 100,000
euros, its central bank confirmed on Saturday, sharpening the
terms of a bailout that has shaken European banks but saved the
island from bankruptcy.
Initial signs that big depositors in Bank of Cyprus
would take a hit of 30 to 40 percent - the first time the euro
zone has made bank customers contribute to a bailout - had
already unnerved investors in European lenders this week.
But the official decree published on Saturday confirmed a
Reuters report a day earlier that the bank would give depositors
shares worth just 37.5 percent of savings over 100,000 euros.
The rest of such holdings might never be paid back.
The toughening of the terms sends a clear signal that the
bailout means the end of Cyprus as a hub for offshore finance
and could accelerate economic decline on the island and bring
steeper job losses.
Banks reopened to relative calm on Thursday after the
imposition of the first capital controls the euro has seen since
it was launched a decade ago.
The streets of Nicosia were filled with crowds relaxing in
its cafes and bars on Saturday, but popular anger was not hard
"Europe shouldn't have allowed this disaster to happen here.
Cyprus was paradise and they've turned it into hell," said
Tryfonas Neokleous, owner of a clothes shop on a cobbled street
in the centre of the city.
He said he didn't except business to pick up even now that
the banks were open again after an almost two-week shutdown.
"I don't expect anything and I don't hope for anything
anymore. People are going to spend their money on food and
everything else they've been deprived of the last 15 days."
There are no signs for now that bank customers in other
struggling euro zone countries like Greece, Italy or Spain
taking fright at the precedent set by the bailout.
"Cyprus is and will remain a special one-off case," German
Finance Minister Wolfgang Schaeuble told German mass-selling
daily Bild. "Savings accounts in Europe are safe."
European officials have worked hard this week to stress that
the island's bailout was a unique case - after a suggestion by
Eurogroup chairman Jeroen Dijsselbloem that the rescue would
serve as a model for future crises rattled European financial
"Together in the Eurogroup we decided to have the owners and
creditors take part in the costs of the rescue - in other words
those who helped cause the crisis," said Schaeuble, one of the
architects of the euro zone's response to a debt crisis now in
its fourth year.
"Cyprus's economy will now go through a long and painful
period of adjustment. But then it will pay back the loan."
Cypriot President Nicos Anastasiades said on Friday that the
10-billion euro ($13 billion) bailout had contained the risk of
national bankruptcy and would prevent it from leaving the euro.
Cypriots, however, are angry at the price attached to the
rescue - the winding down of the island's second-largest bank,
Cyprus Popular Bank, also known as Laiki, and an
unprecedented raid on deposits over 100,000 euros.
"We're numb. People are numb. But their hidden hope is that
something good will happen eventually," said Pantelis Panayotou,
70, a jeweller whose stands in his shop are half empty.
The island has seen none of the angry street violence that
frequently erupts in Greece but peaceful protests by students
and bank workers have become an almost daily occurrence. At
least 2,000 students protested outside parliament this week.
Etyk, a bank workers' union, called a rally outside
parliament for Thursday to protest against potential job cuts
and a hit on their pension funds.
Under the terms of Saturday's decree, the assets of Laiki
will be transferred to Bank of Cyprus. At Bank of Cyprus, about
22.5 percent of deposits over 100,000 euros will attract no
interest. The remaining 40 percent will continue to attract
interest, but will not be repaid unless the bank does well.
Those with deposits under 100,000 euros will continue to be
protected under the state's deposit guarantee.
The imposition of the capital controls has led economists to
warn that a second-class "Cyprus euro" could emerge, with funds
trapped on the island less valuable than euros that can be
freely spent abroad.
Among other things Cypriots and foreigners are allowed to
take only up to 1,000 euros in cash when they leave the island.
Anastasiades said the restrictions - unprecedented in the
currency bloc since euro coins and banknotes entered circulation
in 2002 - would be gradually lifted. He gave no time frame but
the central bank said the measures would be reviewed daily.