Expat Fury at Cyprus ‘Bank Raid’

LONDON - Thousands of expatriates living in Cyprus may be having second thoughts about picking the Mediterranean island as their retirement home.

The government’s plan to tap private bank accounts as part of a €10 billion, or $13 billion, bailout to shore up the country’s banks will affect the island’s many foreign residents as well as native Cypriots.

As Cypriot and euro zone officials sought to soften the blow on small savers by reducing the proposed levy on depositors holding less than €100,000, the Cypriot parliament was preparing to vote on the measures later on Tuesday.

Census figures from 2011 showed that more than 1 in 5 residents were foreigners, representing a doubling of the expat community over the previous decade.

Many of these are retirees, principally British, who decided to swap the gray skies of northern Europe for some Mediterranean sun, a less stressful lifestyle - and tax breaks. The overall British expat population of almost 27,000 was second only to Greeks in the 2011 census.

The Telegraph newspaper, which provides a special online service for its many expat readers, reported fury among the British community at proposals that amounted to the planned “legalized theft” of their savings and an attack on their human rights.

In London, the government temporarily froze state pension payments to an estimated 18,000 British retirees in the former British colony, so that the money stayed safe until the situation in Cyprus was clarified.

The British government had already guaranteed it would compensate its 3,000 military personnel and 250 civil servants in Cyprus if they lost savings because of the levy.

One retiree told the Cyprus Mail, “I think this is a disgusting situation and the entire country has gone to the dogs.”

Yvette Hardman, 68, who lives in the retirement resort of Paphos told the newspaper, “How everyday people can be punished for the fact that the government is unable to run the country properly is beyond me.”

Robert Clayton, a Paphos resident for the past decade, told the Mail, “No one will trust the Cypriot government now and this will have a serious knock on effect.” It would deter future retirees and further damage the declining property market, he said.

There was nevertheless sympathy expressed for the Cypriot government, which was seen as having been pressured by its European partners.

Which Offshore, a not-for-profit advice service for expatriates, said it feared the Cyprus contagion could spread and threaten millions of expat retirees in Spain, Portugal and Italy.

“Expats are always advised to hold funds in a safe jurisdiction such as the Isle of Man where a low proliferation of lending banks means that assets are extremely safe,” it said.

One anonymous expat told the Cyprus Mail that Cypriots and foreign residents should stand together in the crisis, saying, “Only rats leave a sinking ship.”