Cyprus bailout to hurt EU Bank ratings, Moody's says
2013-03-18 15:13:09
Moody's Investors Service on Monday said the Cyprus bailout may hurt the ratings of European banks.
European finance ministers over the weekend agreed to provide a EUR 10 billion bailout package for Cyprus, but depositors in Cypriot banks will have to pay one-off stability levy.
The losses are credit negative for other European bank creditors also, as it limits systemic support for bank creditors in the region, Moody's said.
According to the bailout terms, Cypriot banks will levy a 9.9 percent tax on deposits above EUR 100,000 and 6.7 percent on anything below it.
The rating agency said the bailout reduced the immediate risk of a debt restructuring in Cyprus. While raising the risk of deposit flight out of peripheral banking systems, the agreement reflects euro area policymakers' desire to avoid sovereign defaults in addition to Greece's, it said.