The bail-in process in Bank of Cyprus

This Sunday the Bank of Cyprus, which is the lender of the country, implemented a conversion of the unused cash deposits available in the bank into equity. This was one of the conditions asked for by the international lenders, in order to provide the financial aid to the island. According to Reuters, the process that is known as bail-in makes those people who have deposits be the one that will pay for the recapitalization of the bank. Bank of Cyprus was seriously hit by massive losses, being the largest bank in the country. It was announced that the bank has converted 37.5 percent of the deposits that are exceeding 100 000 Euros in high shares, while additional 22.5 percent of the deposits are still held and might be converted into shares in the future. Other 30 percent of the deposits beyond 100 000 Euros will be frozen and used later if needed. No information was given on the actual cash these percentages stay for. Most probably this information will be given in the mid of the summer.

The process known as bail-in also includes dissolution of the Popular Bank, which is the second largest lender in Cyprus. This is another effort that the country makes in order to collect the 13 billion euros that it needs and to recover its economy. The country is expected to get another ten billion by the International Monetary Fund and the European Union. The parliament of Cyprus will vote on the bailout tomorrow, on 30th April, while the first part of the help from the European Union and from the International Monetary Fund will be received in May.