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Cyprus savings levy not to be repeated: Eurogroup

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(Globalpost/GlobalPost)

The controversial levy on bank savings in Cyprus will not be repeated in other European countries, Eurogroup chairman Jeroen Dijsselbloem said on Tuesday, saying a unique situation had gripped Nicosia.

"It won't happen at all because in other countries banking sectors are not as unbalanced, they are not as loaded with as many risks and the authorities are not in a position where they can't save their own financial sector," Dijsselbloem told the Dutch parliament.

Cyprus was "a situation that can not be compared to any other situation in Europe. They are on the brink of bankruptcy," Dijsselbloem told the Dutch television station RTL7 shortly afterwards.

"They have to be brought back from the brink of the abyss, but that will entail a contribution of six billion euros," the said the head of the group of eurozone finance ministers.

"Either way, it will have to be paid back by the Cypriots," said Dijsselbloem, who is also the Dutch finance minister.

Dijsselbloem deflected criticism for the highly unpopular bailout plan unveiled over the weekend that would impose a once-off levy on bank deposits, sparking outrage in Cyprus and roiling global markets.

"This package has been agreed upon by Eurogroup countries and adheres to all the conditions... but a contribution has to be made as a final outcome to a situation that originated in Cyprus," he said.

Cyprus on Tuesday dropped plans to impose a levy on bank savings below 20,000 euros, sparking a warning by the central bank governor that the crucial eurozone bailout deal was now in danger of collapse.

Cyprus needs to raise 5.8 billion euros ($7.5 billion) to unlock a 10-billion-euro package from the EU and IMF, but the changes mean that figure will no longer be met.

The revised plan, drafted in response to an angry backlash, sees a one-time levy being dropped on bank savings below 20,000 euros but retained at 6.75 percent on deposits of 20,000-100,000 euros and at 9.9 percent for amounts above 100,000.

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http://www.globalpost.com/dispatch/news/afp/130319/cyprus-savings-levy-not-be-repeated-eurogroup