NICOSIA Big savers with troubled Bank of Cyprus BOC.CY will have 47.5 percent of their uninsured money converted into shares, the central bank said on Tuesday, under the terms of an unprecedented international bailout.
The figure, which confirmed information Reuters obtained from sources at the weekend, was lower than the 60 percent share that had previously been forecast to prop up Cyprus's largest bank.
Under the program agreed between Cyprus and its official lenders in March, large depositors must pay for the recapitalization of the Bank of Cyprus, which was heavily exposed to debt-crippled Greece.
Authorities initially converted 37.5 percent of deposits exceeding 100,000 euros ($132,500) into equity, and held an additional 22.5 percent as a buffer in the event of further needs - an unprecedented action in the history of the euro zone crisis.
Sources close to consultations between Cyprus and international lenders said the 47.5 percent conversion was the equivalent of about 8 billion euros in depositors' cash.
They also said the Cypriot government had argued for a 42.5 percent conversion, but were overruled by the central bank and lenders.
The new shareholders' list will be ready within about a week. Chances are high it will include Russians, many of whom lost millions parked in Cypriot banks.
Legacy depositors in Popular Bank, a second lender wound down under bailout terms, would be compensated with shares in Bank of Cyprus representing around 18 percent of share capital.
Bank of Cyprus assumed some assets of Popular when it was wound down in March.
The Central Bank said in a statement released jointly with the finance ministry that 12 percent of the outstanding balance in depositor funds which were frozen under the bail-in arrangement would be unblocked.
The remaining frozen funds would be equally divided and placed in 6-, 9- and 12-month time deposits with the bank retaining the right to renew the arrangement once more. Interest paid on the time deposits would be higher than the going rates, it said.
"Today's development puts an end to an extended period of uncertainty," the bank and ministry said.
(Reporting by Michele Kambas; Editing by John Stonestreet/Ruth Pitchford)