20 Mar 2013

Cyprus parliament rejects controversial bank plan

10:00 pm on 20 March 2013

Cyprus's parliament has rejected a levy on bank deposits, proposed as part of an EU bailout, that has enraged Cypriots and forced banks to shut.

No MPs voted for the bill, 36 voted against and 19 abstained.

As they debated, thousands of protesters filled the streets outside parliament demanding a "no" vote.

The finance ministry had modified the package, proposing an exemption for savers with smaller deposits, but opposition had remained fierce, the BBC reports.

The levy was to part-fund a €10 billion bailout. EU finance ministers have warned that Cyprus's two biggest banks will collapse if the deal does not go through in some form.

The parliament speaker turned down a request from the ruling party to delay a vote.

Under the original plan savers would be forced to pay a levy of 6.75% and those who had more than €100,000 would pay 9.9%. The new plan had the lower levy being imposed only on deposits over €20,000 and the higher rate staying at the €100,000 threshold.