Markets Slide After Cyprus Surprise

MONDAY MARKET UPDATE: Major market indices slid into the red based on concerns over a tax on Cypriot bank deposits

Alanna Petroff 18 March, 2013 | 6:30PM
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All major indices in Asia, Europe, the UK and the US were in the red on Monday because of concerns over a radical, unprecedented plan to impose a tax on Cypriot bank deposits. The proposed bank account tax will be used to help bail-out the nation's large banking sector.

"Under the current plan, those with more than €100,000 in one of Cyprus’s banks will be hit with a 9.9% charge, while depositors with smaller amounts will see a 6.75% one-off tax," explained Gerard Lane, an analyst at Shore Capital. "The move marks the first time in the eurozone debt crisis that depositors in any member country have been required to take a haircut on their bank holdings."

The move prompted a bank run in Cyprus, with people rushing to withdraw as much money from their accounts as possible. Market commentators and investors are now buzzing over the possibility that this proposal will result in bank runs in other weaker eurozone nations.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Marks & Spencer Group PLC155.95 GBX-0.67Rating

About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.

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