BRASILIA (Reuters) - Brazilian banks agreed on Tuesday to compensate depositors for losses from government plans that tackled hyperinflation in the 1980s and 1990s, potentially settling over a million legal disputes that have hung over the country’s banking system.

Depositors who are owed up to 5,000 reais ($1,510) will be fully reimbursed, the statement said. Liabilities surpassing that value will suffer a haircut ranging from 8 percent to 19 percent.

Around 60 percent of the depositors covered by the agreement are owed up to 5,000 reais, the head of the Brazilian Federation of Banks (Febraban) said in a news conference on Tuesday.

Still, representatives for the central bank, banks, depositors and consumers refused to estimate the total value of reimbursements as that hinged on how many depositors opted into the scheme.

Reuters had reported in November that banks were likely to agree on reimbursing a total of around 10 billion reais, far below initial central bank estimates of up to 342 billion reais.

Fitch Ratings said earlier this month that such an agreement would be beneficial to the nation’s banks, which have made enough provisions to cover the reimbursements.

Lenders Itaú Unibanco Holding SA ITUB4.SA, Banco Bradesco SA BBDC4.SA, Santander Brasil SA SANB11.SA, Banco do Brasil SA BBAS3.SA and Caixa Econômica Federal have signed off on the deal, the solicitor general's office said. Other banks may opt in as much as 90 days.

The agreement, subject to Supreme Court approval, seeks to compensate depositors for money they lost as a result of several measures undertaken in the final decades of the 20th century.

Under former Presidents José Sarney and Fernando Collor, Brazil pursued several unorthodox policies to fight galloping inflation, such as confiscating investments in savings accounts.

Some investors had feared a larger-than-expected compensation could hurt the financial sector just as Brazil’s recovering economy has begun to loosen credit.

Reimbursements will be paid in up to three years in as many as five installments, adjusted for the official inflation index.

($1 = 3.31 reais)