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Up to Cyprus to decide structure of bank levy: ECB

By Annika Breidthardt and Michelle Martin

BERLIN (Reuters) - It is for the Cypriot government to decide the structure of a levy on depositors in its banks but the size of its contribution to the bailout must amount to 5.8 billion euros, European Central Bank board member Joerg Asmussen said on Monday.

Under a 10 billion euro rescue agreed in the early morning hours of Saturday in Brussels, savers with deposits in Cypriot banks below 100,000 euros would be hit with a 6.7 percent levy, while those above that threshold would take a 9.9 percent hit.

Ahead of a Cypriot parliamentary vote on the deal later on Monday, the Nicosia government was working on plans to soften the blow to smaller savers by tilting more of the levy towards those with larger deposits.

"It is the Cypriot government's reform program. It is up to the government alone to decide if it wants to change the structure of the ... contribution (from) the banking sector," Asmussen told reporters on the sidelines of a conference in Berlin.

"The important thing is that the financial contribution of 5.8 billion euros remains. It is of course in the hands of the Cypriot government and its parliament to decide on the structure."

The Cyprus deal sent shockwaves through financial markets on Monday, with shares, the euro and the bonds of southern euro zone countries sliding.

German Finance Minister Wolfgang Schaeuble said late on Sunday that it had been the Cypriot government, the European Commission and the ECB that had pushed for the bank levy solution.

But Asmussen deflected blame, saying the deal agreed early on Saturday was the result of negotiations between the parties.

"I want to emphasize that it wasn't the ECB that pushed for this special structure of the contribution which has now been chosen. It was the result of negotiations in Brussels," he said.

"We provided technical help with the calculations, as always, but we didn't insist on this special structure."

Asmussen said there was no easy or risk-free decision in dealing with Cyprus's heavily indebted banking sector and he stressed the importance of the tiny Mediterranean island for the wider euro zone.

"We have always said the country is systemically relevant for the euro zone as a whole. There could be contagion, especially via the banking system to Greece and possible contagion for countries which are currently getting towards the end of their programs like Ireland and Portugal," Asmussen said.

Asked later if the deal might hit depositors in other countries, Asmussen said Cyprus was a special case.

"I do believe that the situation of Cyprus and the Cypriot banking sector is indeed unique," Asmussen said during a panel discussion in Berlin.

(Writing by Annika Breidthardt and Gareth Jones, editing by Noah Barkin)

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