NICOSIA, Cyprus (AP) ? Big depositors at Cyprus' largest bank may be forced to accept losses of up to 60 percent, far more than initially estimated under the European rescue package to save the country from bankruptcy, officials said Saturday.
Deposits of more than 100,000 euros ($128,000) at the Bank of Cyprus will lose 37.5 percent in money that will be converted into bank shares, according to a central bank statement. In a second raid on these accounts, depositors also could lose up to 22.5 percent more, depending on what experts determine is needed to prop up the bank's reserves. The experts will have 90 days to figure that out.
The remaining 40 percent of big deposits at the Bank of Cyprus will be "temporarily frozen for liquidity reasons," but continue to accrue existing levels of interest plus another 10 percent, the central bank said.
The savings converted to bank shares would theoretically allow depositors to eventually recover their losses. But the shares now hold little value and it's uncertain when ? if ever ? the shares will regain a value equal to the depositors' losses.
Emergency laws passed last week empower Cypriot authorities to take these actions.
Analysts said Saturday that imposing bigger losses on Bank of Cyprus customers could further squeeze already crippled businesses as Cyprus tries to rebuild its banking sector in exchange for the international rescue package.
Sofronis Clerides, an economics professor at the University of Cyprus, said: "Most of the damage will be done to businesses which had their money in the bank" to pay suppliers and employees. "There's quite a difference between a 30 percent loss and a 60 percent loss." With businesses shrinking, Cyprus could be dragged down into an even deeper recession, he said.
Clerides accused some of the 17 European countries that use the euro of wanting to see the end of Cyprus as an international financial services center and to send the message that European taxpayers will no longer shoulder the burden of bailing out problem banks.
But German Finance Minister Wolfgang Schaeuble challenged that notion, insisting in an interview with the Bild daily published Saturday that "Cyprus is and remains a special, isolated case" and doesn't point the way for future European rescue programs.
Europe has demanded that big depositors in Cyprus' two largest banks ? Bank of Cyprus and Laiki Bank ? accept across-the-board losses in order to pay for the nation's 16 billion euro ($20.5 billion) bailout. All deposits of up to 100,000 are safe, meaning that a saver with 500,000 euros in the bank will only suffer losses on the remaining 400,000 euros.
Cypriot officials had previously said that large savers at Laiki ? which will be absorbed in to the Bank of Cyprus ? could lose as much as 80 percent. But they had said large accounts at the Bank of Cyprus would lose only 30 to 40 percent.
Asked about Saturday's announcement, University of Cyprus political scientist Antonis Ellinas predicted that unemployment, currently at 15 percent, will "probably go through the roof" over the next few years.
"It means that (people) ... have to accept a major haircut to their way of life and their standard of living. The social impact is yet to be realized, but they will be enormous in terms of social unrest and radical social phenomenon," Ellinas said.
There's also concern that large depositors ? including many wealthy Russians ? will take their money and run once capital restrictions that Cypriot authorities have imposed on bank transactions to prevent such a possibility are lifted in about a month.
Cyprus agreed on Monday to make bank depositors with accounts over 100,000 euros contribute to the financial rescue in order to secure 10 billion euros ($12.9 billion) in loans from the eurozone and the International Monetary Fund. Cyprus needed to scrounge up 5.8 billion euros ($7.4 billion) on its own in order to clinch the larger package, and banks had remained shut for nearly two weeks until politicians hammered out a deal, opening again on Thursday.
But fearing that savers would rush to pull their money out in mass once banks reopened, Cypriot authorities imposed a raft of restrictions, including daily withdrawal limits of 300 euros ($384) for individuals and 5,000 euros for businesses ? the first so-called capital controls that any country has applied in the eurozone's 14-year history.
The rush didn't materialize as Cypriots appeared to take the measures in stride, lining up patiently to do their business and defying dire predictions of scenes of pandemonium.
Under the terms of the bailout deal, the country' second largest bank, Laiki ? which sustained the most damaged from bad Greek debt and loans ? is to be split up, with its nonperforming loans and toxic assets going into a "bad bank." The healthy side will be absorbed into the Bank of Cyprus.
On Saturday, economist Stelios Platis called the rescue plan "completely mistaken" and criticized Cyprus' euro partners for insisting on foisting Laiki's troubles on the Bank of Cyprus.
____
AP business correspondent Geir Moulson in Berlin and APTN reporter Adam Pemble in Nicosia contributed.
Source: http://news.yahoo.com/bank-cyprus-big-savers-lose-60-percent-135608668--finance.html
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As it already warned, ZTE posted its second-straight quarterly loss, due to vastly trimmed margins in emerging markets, as well as contract delays and falling handset sales in China. It made a net loss of 1.14 billion yuan ($183 million) in the three months ended Dec. 31, compared with its net income of 991.16 million yuan a year prior. Sales in the fourth quarter also fell 16 percent to 23.5 billion yuan ($3.78 billion). In all, this makes it the first time ZTE has posted an annual loss, at 2.84 billion yuan ($456 million). The company blamed the decrease in profit margin on low-margin contracts in emerging markets like Africa, South America and Asia, as well as its home market of China. ZTE has spent the last 20 years aggressively expanding overseas, but often at the cost of profitability because of its slim profit margins as it undercuts European equipment makers in emerging markets such as India. It recently said it will try to cut costs and make a profit in the first quarter by focusing on developed markets, instead. ZTE has been lagging behind fellow Chinese rival, Huawei Technologies. The former recently announced it will increase its investment in 4G infrastructure, in order to catch up with Huawei, as the two compete for most 4G contracts from the three major carriers in China?China Mobile, China Unicom and China Telecom. Huawei is the second largest global maker of telecoms equipment, while ZTE is fifth-largest. As for its handset play, nobody is really staking a claim on the Android market the way Samsung is. According to Gartner’s latest report, Samsung has 42.5 percent of the global Android market, with the next vendor at just 6 percent. And it grew this share in just a year, eclipsing Taiwanese competitor HTC to leave it trailing by 30 percent at the end of 2012. Across OSes, Samsung and Apple have the number one and two slot respectively atop the global share, at 29 percent and 21.8 percent, respectively, according to IDC. Huawei has 4.9 percent, Sony has 4.5 percent, and ZTE is fifth at 4.3 percent. But ZTE has more to worry about than just the Samsung juggernaut. Its general focus on the low to mid-range Android handset market means that thinner and thinner margins make it less worthwhile to duke it out in emerging markets. Its new?plan to attack the high-end market is
