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Big savers in Cyprus's largest bank face losses of up to 60 percent, far greater than originally feared under the island's controversial EU-led bailout plan, officials said on Saturday.
Cyprus meanwhile launched an investigation into a list published in Greek newspapers of Cypriot politicians who allegedly had loans written off by two banks at the heart of the financial meltdown.
Officials said Bank of Cyprus savers will see at least 37.5 percent of funds over 100,000 euros ($128,000) turned into shares, but a further 22.5 percent will be held until authorities know they can satisfy the terms of the bailout.
Under the first eurozone rescue package to punish savers with a so-called "haircut" of their money, Cyprus can only qualify for the 10-billion-euro ($13-billion) loan by finding 5.8 billion euros of its own.
"There will be a 37.5 percent haircut on deposits over 100,000 euros that will be converted into shares," said Marios Mavrides, a lawmaker from the conservative Disy party of President Nicos Anastasiades.
"Then 22.5 percent will be held from the account for about two or three months, but this sum might be lower if a bigger haircut is needed," Mavrides said.
The remaining 40 percent would be held for six months to prevent the east Mediterranean island's banks being drained.
Senior Bank of Cyprus official Mario Skandalis confirmed the figures, although he said they had not been finalised and a final announcement was expected by Monday.
Asked whether the loss rate could be as high as 60 percent he told AFP: "It could be a possibility but I would say it is a remote possibility."
The size of the levies will be a further blow to both Cypriots and foreign investors -- particularly Russians -- with large sums in the island's bloated offshore banking sector.
It will also alarm other struggling eurozone members who fear the "troika" of the European Union, European Central Bank and International Monetary Fund could demand similar terms for future bailouts.
Bank of Cyprus is set to absorb what is salvaged from the island's second largest lender Laiki under the deal, while the rest of it will be wound up with the loss of thousands of jobs.
A panel appointed by Anastasiades will investigate a list published by Greek media of Cypriot politicians who allegedly had loans forgiven during the meltdown, Justice Minister Ionas Nicolaou said.
The president will swear in the commission of three supreme court judges on Tuesday with a deadline of three months to report back, said Nicolaou, while a committee of lawmakers will also look at the claims.
Bank of Cyprus, Laiki and third largest lender Hellenic Bank reportedly forgave millions of euros in loans over the past five years to lawmakers, companies and local authorities, newspapers in Greece said.
Cypriots are meanwhile hoping authorities further ease capital controls -- the first in the eurozone's history -- which were imposed to stop a run on banks when they reopened on Thursday after a 12-day shutdown.
The reopening went smoothly, and the central bank on Friday lifted all limits on domestic card payments while saying it would make daily efforts to "refine or relax" the curbs.
Draconian controls remain in place, including a daily withdrawal limit of 300 euros and a ban on taking more than 1,000 euros in cash out of the country.
Monday will be the third public holiday in a row as Greek Cypriots mark the anniversary of the launch of an armed uprising against British colonial rule in 1955.
But the sense of solidarity as Cyprus faces its greatest crisis since Turkish troops occupied the north of the island in 1974 remains strong.
Around 50 performers will take part in a "concert of solidarity and hope" in Nicosia on Saturday night.
The phone company Cyta meanwhile announced that calls from fixed lines would be free in April while the government has said it is looking for a way to lower the island's high electricity costs.