April 26 (Bloomberg) -- The European Central Bank will publish data today showing how much money savers withdrew from the euro region’s banks after a botched attempt to tax Cypriot savers as part of a European Union-led bailout.
The ECB will publish data for euro-area bank deposits including Cyprus after 10 a.m. in Frankfurt. In February, the month before the rescue, Cypriot deposits decreased 2.2 percent to 46.4 billion euros, down from 47.4 billion the previous month. It was the ninth straight decline.
Cypriot officials, euro-area finance ministers and the ECB agreed mid-March on an unprecedented measure to impose a levy on deposits of less than 100,000 euros ($130,000) under a 10 billion-euro bailout. The plan was ditched after the country’s parliament rejected it, and a new accord was reached where only savings above the insured level of 100,000 euros will be taxed.
“I’m sure Cypriot banks have seen a deposit flight last month and it would be even more interesting to see how much money left the country in the second half of the month,” said Christian Schulz, an economist at Berenberg Bank in London. “The deposit data for other countries will tell us a lot about how much damage the incident in Cyprus has done.”
The episode damaged investor confidence across the currency bloc. The Stoxx Europe 600 Banks Index dropped 6.8 percent between March 15 and March 27, the day before banks reopened in Cyprus with limits on withdrawals.
To impose a levy on insured depositors “was not smart, to say the least,” ECB President Mario Draghi said on April 4. “It was quickly corrected.”
The rescue attempt came at a time when doubts about a recovery of the euro-area economy later this year were growing, and Draghi said on April 19 that he hasn’t “seen any improvement in the situation” since the beginning of April.
Banks including Nomura International Plc, UBS AG and Royal Bank of Scotland Group Plc forecast the ECB will cut its benchmark interest rate to a record low of 0.5 percent when policy makers convene for their monthly meeting on May 2.
The ECB today will also publish data on bank deposits for the other euro-area countries. Last month in Greece, deposits rose, while they were little changed in Spain, Portugal and Ireland.
“I expect non-existent, or just limited contagion,” said Berenberg’s Schulz.
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