March 15, 2013 / 2:25 PM / in 5 years

Cypriot bank depositors likely to be taxed to help bailout

BRUSSELS, March 15 (Reuters) - Depositors in Cypriot banks are likely to be taxed in some way to help the country shoulder the burden of an international bailout as policymakers have effectively discarded the idea of imposing outright losses on deposit holders, EU officials said.

“Bailing-in” bank depositors would be legally difficult and carry the risk of weakening confidence in banks across the euro zone, the officials said. Germany, Finland and the International Monetary Fund had supported the bail-in idea.

A tax on the total sum of depositors of 5 percent, for example, or a tax of 20-30 percent on interest generated by the deposits would be easier, officials said, and not threaten financial stability.

Euro zone finance ministers meet at 1600 GMT in Brussels to discuss the bailout for Cyprus, now under negotiation among junior finance ministers and treasury officials from the 17 countries sharing the euro.

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