France says eurozone 'unanimous' on amended Cyprus bailout

PARIS (AFP) - The eurozone unanimously agreed to scrap a controversial one-time levy on bank deposits in Cyprus below 100,000 euros (S$161,600) for a bailout to the debt-hit nation, the French finance minister said on Tuesday.

Mr Pierre Moscovici also said that France had from the very start opposed the tax on smaller bank deposits, which raised a public uproar and sparked fears of a bank run.

Mr Moscovici said the decision was "unanimous," adding that "the principle that bank deposits under 100,000 euros should not be touched is deeply rooted in Europe".

"That justifies that there should be no tax under 100,000 euros," he said. "I pleaded for an exemption right from the start."

The planned levy on bank savings was agreed on Saturday by the eurozone partners in exchange for a 10-billion-euro sovereign bailout deal for Cyprus.

In the original bailout accord agreed early on Saturday with the European Union, the International Monetary Fund and the European Central Bank, Cyprus agreed to impose a levy of 6.75 per cent on bank accounts up to 100,000 euros and 9.9 per cent for larger deposits.

The one-time move was aimed at raising 5.8 billion euros for the government.

But the eurozone finance ministers later said there would be renegotiations to "introduce more progressivity in the one-off levy", in other words increasing the tax rate on bigger holdings to ensure the same 5.8-billion-euro return.

A eurozone source said this would mean preferably removing altogether the mooted 6.75 per cent levy on smaller accounts, which combined amount to more than three fifths of all Cypriot savings, despite some 30 billion euros attributed to large Russian investors.

Join ST's Telegram channel and get the latest breaking news delivered to you.