NEW YORK, NY -- (Marketwire) -- 03/19/13 -- The financial sector took a hit Monday after the Mediterranean nation of Cyprus proposed a tax on current bank deposits, sending the Euro to a three-month low of $1.2880. The proposal invoked fears across Europe that deposits in other struggling countries may be also be targeted. Research Driven Investing examines investing opportunities in the Financial Sector and provides equity research on Lloyds Banking Group PLC (NYSE: LYG) and National Bank of Greece (NYSE: NBG).
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The potential tax would see the government seize 6.75 percent of deposits below EUR 100,000 ($130,860), and up to 9.9 percent on those above EUR 100,000. The tax, which was a result of an agreement between Cyprus and its European partners, would make the nation eligible for a EUR 10 billion ($13 billion) bailout from the Eurozone and the International Monetary Fund.
"This sets a worrying precedent for Spain and Italy, but doesn't make widespread bank runs imminent," said Dario Perkins, an analyst at Lombard Street Research.
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Lloyds Banking Group is the largest retail bank in the UK with strong positions in a number of sectors. The Group reported an underlying profit before tax of £ 2,607 million in 2012, a significant increase of roughly £ 2 billion when compared to 2011. Shares of Lloyds Banking Group have fallen over 10 percent in the past month.
National Bank of Greece S.A., together with its subsidiaries, provides diversified financial services primarily in Greece. The company also has operations in Turkey, the United Kingdom, South Eastern Europe, Cyprus, Malta, Egypt, and South Africa. Shares of the company have fallen approximately 45 percent year-to-date.
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