Cypriot Finance Minister Michael Sarris Resigns

on April 02 2013 8:48 AM

The finance minister of euro zone member Cyprus, Michael Sarris, resigned Tuesday as residents and bank depositors take stock of a one-time levy on their bank balances that is expected to range from 40 percent to 60 percent, according to a published report.

Bloomberg News said Sarris, 66, who brokered a rescue of Cyprus' collapsing financial system, told reporters in Nicosia he resigned. Sarris has been the chairman of Cyprus Popular Bank Pcl, also known as Laiki Bank, the second-largest bank in Cyprus and an organization that is being shut down in the restructuring of the island's finances.

"With regret, I received today the resignation of the Finance Minister Michael Sarris," Cyprus President Nicos Anastasiades said in a statement. "I want to thank him."

Sarris -- whose resignation has been rumored for weeks, only to be denied repeatedly -- was instrumental in negotiating with the so-called troika, the International Monetary Fund, the European Central Bank and the European Union, over how to rescue the nation's banks. The upshot of those talks is that accounts at the Bank of Cyprus with deposits of more than €100,000 ($128,225), which are uninsured, will lose between 40 percent and 60 percent of their value after they are converted into a class of bank shares.

In effect, that cash will immediately disappear from depositors' accounts. The Bank of Cyprus will freeze another 22.5 percent in each of these accounts until the restructuring is plan is completed. The money will be placed in a fund that won’t earn interest, and bank customers could end up losing some or all of it, depending on the exact figure needed to restore the troubled bank back to health.

Cyprus agreed late last month to make depositors contribute to secure a €10 billion bailout from the so-called troika: the European Central Bank, the European Commission and the International Monetary Fund.

More News from IBT MEDIA