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President Nicos Anastasiades has urged eurozone leaders to revise the terms of Cyprus’ bank bailout, in a highly critical letter.
Nicos Anastasiades said the “haircut” imposed on large deposits under the 10 billion-euro bailout had significantly eroded the capital kept by businesses in banks.
Losses were imposed on big deposits in Bank of Cyprus (BoC) and Laiki Bank. BoC is now in trouble, the letter said.
The letter to Cyprus’s creditors, sent last week, was leaked on Wednesday.
“I urge you to support a long-term solution to Bank of Cyprus’ thin liquidity position,” Nicos Anastasiades said.
Laiki Bank is being wound up and its safe assets transferred to BoC.
For large depositors at both banks the first 100,000 euros is protected, but the government can tap up to 40% of their remaining deposits, to contribute billions towards the bailout.
President Nicos Anastasiades has urged eurozone leaders to revise the terms of Cyprus’ bank bailout, in a highly critical letter
But Nicos Anastasiades complained that “no distinction was made between long-term deposits earning high returns and money flowing through current accounts, such as firms’ working capital”.
“This amounted to a significant loss of working capital for businesses.”
The rescue was agreed in March with the troika of international lenders – the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF).
Capital restrictions imposed to prevent a run on Cypriot banks have been eased, but remain in place. The president said such “artificial” measures “will only aggravate the depositors the longer they persist”.
“Rather than creating confidence in the banking system they are eroding it by the day,” Nicos Anastasiades warned.
The text of his letter appeared on the Open Europe think tank’s blog on Wednesday. His complaints about the bailout were also reported by the Financial Times.
Unnamed eurozone officials quoted by Reuters news agency say there are no plans to alter the terms of the bailout for Cyprus or to supply more funds.
Eurozone finance ministers will discuss the letter at a meeting in Luxembourg on Thursday, Reuters reports.
Cyprus has started receiving installments of the bailout package from international creditors.
Cyprus is to ease its citizenship rules for foreign investors who lost at least 3 million euros under the European Union bailout deal.
Cypriot President Nicos Anastasiades said new measures, mostly affecting the Russian business community, would be approved at a cabinet meeting on Monday.
Russians have billions of euros in Cyprus’ bank deposits.
Investors were angered when it emerged they would lose up to 60% of their savings under the terms of the bailout.
In order to secure the 10 billion euros bailout, agreed by the EU and IMF, Cyprus was forced to wind up one major bank and write-off of a large portion of secured debt and uninsured deposits in the largest bank, Bank of Cyprus.
Cyprus is to ease its citizenship rules for foreign investors who lost at least 3 million euros under the EU bailout deal
Speaking at a Russian business conference in the coastal resort of Limassol, Nicos Anastasiades said the new measures would “mitigate to some extent the damage” Russian investors had endured.
Cyprus has been a member of the EU since 2004. The country sealed the EU bailout last month to save it from bankruptcy.
Nicos Anastasiades said foreign investors who held deposits prior to March 15, and who lost at least 3 million euros would be eligible to apply for Cypriot citizenship.
Cyprus’s existing “citizenship by investment” programme will also be revised to reduce the amount of investment required to be eligible from 10 million euros to 3 million.
Nicos Anastasiades said he would also drop requirements for citizenship applicants to keep 15 million euros in Cypriot banks for five years, saying they would be allowed immediate access to their money.
“These decisions will be deployed in a fast-track manner,” he said.
The Cypriot economy is worth about 18 billion euros, which accounts for less than 0.2% of the eurozone total.
According to a draft document prepared by Cyprus’ creditors, the cost of the bailout for the country has increased to 23 billion euros ($30 billion).
The original cost of Cyprus bailout was put at 17.5 billion euros.
The new total, disclosed in a document seen by news agencies, means Cyprus will have to find 13 billion euros to secure 10 billion euros from the EU and the IMF.
Previously it was thought that Cyprus would have to raise 7.5 billion euros.
A draft document prepared by Cyprus’ creditors shows that the country’s bailout cost has increased to 23 billion euros
Government spokesman Christos Stylianides said: “It’s a fact the memorandum of November talked about 17.5 billion [euros] in financing needs. And it has emerged this figure has become 23 billion.”
“Who is responsible for this? How did we get here? It was the fear of responsibility and indecision of the previous government,” he added.
Analysts are now questioning if Cyprus can raise such a sum.
The winding up of one Cypriot bank, Laiki (Popular), and the writing-off of a large portion of secured debt and uninsured deposits in the largest bank, Bank of Cyprus, should raise a total of 10.6 billion euros.
Cyprus is also set to sell off a large portion of its gold reserves, in a move that will raise another 400 million euros.
“The sheer size of the increase has underlined the extent of the enormous challenges facing Cyprus itself,” said Jonathan Loynes of Capital Economics in an analyst note.
The Cypriot economy is only worth about 18 billion euros and accounts for less than 0.2% of the eurozone total. Several analysts now think the Cypriot economy may shrink by more than 10% this year alone.
“If everything goes according to plan, the growth figures might at least be in a realistic range, if too optimistic,” said Christoph Weil of Germany’s Commerzbank.
“If there are any problems, and there are significant downside risks, then it could be much worse, and a combined contraction of 20% is within the range of the possible.”
Investigators have found that some key data about bond purchases by Bank of Cyprus is missing.
According to Cypriot media, the gaps were found in computer records studied by a financial consultancy, Alvarez and Marsal.
Bank of Cyprus – the country’s biggest bank – bought Greek bonds which turned into some 1.9 billion euros ($2.4 billion) of losses in the Greek debt crisis.
Depositors with more than 100,000 euros in Bank of Cyprus are now facing a big loss.
The “haircut” for such deposits in the bank is expected to be about 60%.
Investigators have found that some key data about bond purchases by Bank of Cyprus is missing
The money taken from those accounts, and from deposits above 100,000 euros at Laiki (Popular) Bank, will be used by the Cypriot government to contribute billions towards the bailout.
Strict capital controls – unprecedented for the eurozone – are in force in Cyprus, limiting cash withdrawals to prevent a run on the banks.
The “haircut” – hugely unpopular in Cyprus – is a condition for the EU and IMF to grant a 10 billion-euro bailout to rescue the country’s economy.
The Cyprus Mail website says information provided by Bank of Cyprus was incomplete and data-deleting software was found on some computers there.
There were significant gaps in computer records for the period 2007-2010. It is not yet clear whether the wiping of records was accidental or deliberate. There were signs of mass deletion of data.
The central bank says that Alvarez and Marsal are now investigating Laiki too – the island’s second largest bank, which is being wound up and folded into Bank of Cyprus.
“The investigation will continue and cover: the purchase of Greek government bonds by Laiki Bank; the expansion of Laiki Bank outside Cyprus; the role and responsibilities of all parties involved,” the Central Bank of Cyprus said on Friday.
The consultancy’s report on Bank of Cyprus has been leaked to local media, but not yet published.
Besides the Greek bond purchases, the consultancy also scrutinized Bank of Cyprus operations in Romania and Russia.
The consultancy’s findings have been handed over to the Cypriot parliament and the attorney-general, Petros Clerides.
The government has appointed a special judicial panel to clarify what happened in Cyprus’ financial crash and pinpoint any wrongdoing.
Cyprus has officially agreed to a set of measures that will release a 10 billion-euro ($12.8 billion) IMF-EU bailout.
The IMF, which is contributing 1 billion euros, says they are “challenging” and will require “great efforts” from its population.
The measures will consist of doubling taxes on interest income to 30% and raising corporation tax from 10% to 12.5%.
The plan, designed to stabilize Cyprus banking system and government finances, was agreed in principle last week.
Cyprus has agreed to a set of measures that will release a 10 bn-euro IMF-EU bailout
Cyprus’s new finance minister Harris Georgiades, speaking on his first day in the post, said he was determined to honor the country’s commitments: “The responsibility is great, and the expectations of our citizens greater. Our promise is that we will make every effort for what is best for the nation. Under your guidance I am sure we will succeed.”
Harris Georgiades appointment followed the resignation of Michalis Sarris on Tuesday.
The plans for the two largest banks, Bank of Cyprus and Laiki, are especially controversial, as they will involve heavy losses for depositors with large balances in their accounts.
The IMF, which is providing 10% of the bailout money, said 95% of account holders would be protected.
The majority of accounts have less than 100,000 euros in them, which will not be affected.
However, depositors with more than 100,000 euros will lose some of their savings. Although the exact amount has still not been decided, reports have said they could lose up to 60%.
Cyprus agreed last week to shut down Laiki and transfer deposits of under 100,000 euros to Bank of Cyprus.
The IMF’s managing director, Christine Lagarde, said Cyprus would need to pull together: “This is a challenging programme that will require great efforts from the Cypriot population.”
Christine Lagarde added that its aim was to spread the pain, and “seek to distribute the burden of the adjustment fairly among the various segments of the population and to protect the most vulnerable groups”.
Cyprus is in recession, with unemployment at around 15% and gross domestic product (GDP) down by 3.5% this year.
The country is already planning to introduce austerity measures equivalent to 5% of GDP between 2013 and 2015 through tax rises and spending cuts, but Christine Lagarde said further measures were needed.
The IMF chief said the corporation tax increase and raising of the tax on interest rates to 30% would help bring in another 2% of GDP.
In order to tackle its debt, additional cuts worth 4.5% of GDP would also be needed over the medium term to reach the target of a budget surplus of 4% of GDP by 2018, the IMF said.
Cypriot President Nicos Anastasiades warned there would be “difficult days ahead” that demanded a collective effort.
The IMF said the reform programme would also lead to changes in banking supervision and transparency.
Cyprus’s banking system has been seen by some as a haven for firms, particularly Russian businesses, who wish to avoid close scrutiny of their affairs.
The IMF said that the international rescue effort, which also involves the EU and the European Central Bank (ECB), would be “well paced”.
The IMF’s contribution will need to be ratified by its board in the coming weeks.
Cyprus Finance Minister Michalis Sarris has decided to resign after completing talks on the controversial IMF-EU bailout deal.
Michalis Sarris will be replaced by Labour Minister Haris Georgiades, reports in the local media suggest.
Cyprus Finance Minister Michalis Sarris has decided to resign after completing talks on the controversial IMF-EU bailout deal
The 10 billion-euro ($13 billion) deal – agreed by the EU and IMF – originally envisaged a levy on all Cypriot bank depositors, triggering public anger.
Under the revised deal, Bank of Cyprus depositors with more than 100,000 euros could now lose up to 60% of their savings.
On Tuesday, Cyprus’ government said that President Nicos Anastasiades had accepted the resignation of Michalis Sarris, who had been under fire for his handling of the bailout deal.
Nicos Anastasiades earlier ordered an investigation into what led Cyprus to the brink of bankruptcy before it was forced to accept tough bailout conditions.
The inquiry will be carried out by a three-judge panel.
The Russian government has announced it will not compensate its citizens who have lost money in the Cyprus banking crisis.
Russian citizens are believed to have billions of euros in Cypriot accounts and deposits above 100,000 euros ($128,200) in the two biggest banks (Bank of Cyprus and Laiki) could be reduced by as much as 60%.
The Russian government has announced it will not compensate its citizens who have lost money in the Cyprus banking crisis
Such losses would be “a great shame”, First Deputy PM Igor Shuvalov said, “but the Russian government won’t take any action in that situation”.
Cyprus now restricts cash withdrawals.
A 10 billion-euro bailout from the EU and IMF – required to keep the debt-laden Cypriot economy afloat – will only be granted if Cyprus itself raises 5.8 billion euros, most of which looks likely to come from depositors with more than 100,000 euros in Bank of Cyprus and Laiki (Popular Bank).
Laiki, the second largest bank, is being wound up and folded into Bank of Cyprus, the biggest bank.
Speaking on the Russian state TV channel Rossiya 1, Igor Shuvalov said Russian money in Cyprus included some that had been taxed and some that had not.
The Russian government would still look at cases where there were “serious losses, involving companies in which the Russian state is a shareholder”, he said. That review would take place in Russia, and “for this it would certainly not be necessary to help the Republic of Cyprus”, Igor Shuvalov added.
Many of the large-scale foreign investors in Cyprus are Russian – and in many cases they have taken advantage of the island’s status as an offshore tax haven. Some politicians have accused Cyprus of acting as a hub for Russian money-laundering – an allegation rejected by Cypriot officials.
After years of large-scale capital flight from Russia there is now a Kremlin drive to repatriate Russian money. The government has introduced tighter monitoring of foreign bank accounts held by Russian state employees.
Bank of Cyprus depositors with more than 100,000 euros could lose up to 60% of their savings as part of the bailout, officials say.
Cyprus’ central bank says 37.5% of holdings over 100,000 euros will become shares.
Up to 22.5% will go into a fund attracting no interest and may be subject to further write-offs.
The other 40% will attract interest – but this will not be paid unless the bank performs well.
The fear is that once the unprecedented capital controls – which are in place for an indefinite time – are lifted, the wealthiest will rush to move their deposits abroad.
Cyprus has become the first eurozone member country to bring in capital controls to prevent a torrent of money leaving the island and credit institutions collapsing.
President Nicos Anastasiades has said the financial situation has been “contained” following the deal.
The president has also stressed that Cyprus has no intention of leaving the euro, stressing that “in no way will we experiment with the future of our country”.
Bank of Cyprus depositors with more than 100,000 euros ($128,200) could lose up to 60% of their savings as part of the EU-IMF bailout restructuring move, officials say.
The central bank of Cyprus said 37.5% of holdings over 100,000 euros would become shares.
Up to 22.5% will go into a fund attracting no interest and may be subject to further write-offs.
Bank of Cyprus depositors with more than 100,000 euros could lose up to 60 percent of their savings as part of the EU-IMF bailout restructuring move
The other 40% will attract interest – but this will not be paid unless the bank performs well.
Cypriot officials have also said that big depositors at Laiki – the country’s second largest bank – could face an even tougher “haircut”. However, no details have been released.
The officials say that Laiki will eventually be absorbed into the Bank of Cyprus.
Cyprus needs to raise 5.8 billion euros to qualify for the bailout, and has become the first eurozone member country to bring in capital controls to prevent a torrent of money leaving the island and credit institutions collapsing.
On Thursday, banks in Cyprus opened for the first time in nearly two weeks. Queues formed of people trying to access their money, but the mood was generally calm.
By Friday, banks had returned to their normal working hours and there were no longer reports of big queues.
Yiannis Kypri, chief executive of Bank of Cyprus, the biggest bank in the country, has been ousted by the central bank, state media has said.
Yiannis Kypri was forced out by central bank governor Panicos Demetriades, who has himself come under fire for his handling of Cypurs’ banking crisis.
Yiannis Kypri’s removal came on the orders of Cyprus’ bailout lenders, the Cyprus News Agency reported.
The authorities are struggling to reopen the country’s banks on Thursday.
Yiannis Kypri, chief executive of Bank of Cyprus, the biggest bank in the country, has been ousted by the central bank
Bank of Cyprus is to be restructured and merged with parts of the failed number two lender, Laiki Bank.
The reasons for Yiannis Kypri’s sudden removal were not immediately clear.
The bank’s chairman Andreas Artemis handed in his resignation on Tuesday, but local reports suggested that the troubled bank’s board had rejected his resignation.
Panicos Demetriades, the central bank governor, was widely criticized on Tuesday for suggesting that Bank of Cyprus was going to be wound up in the same way as is planned for Laiki Bank. The apparently erroneous statement led to demonstrations and calls for his resignation from Bank of Cyprus staff.
On Tuesday, Panicos Demetriades said that “superhuman” efforts were being made to ready the banks for reopening.
They have been shut for more than a week as a controversial bailout was negotiated, which will see many depositors take losses.
“We have to restore the public’s trust in banks,” he said.
Meanwhile, Cyprus is planning to impose a weekly limit on cash withdrawals, among other restrictions on money transfers, even following the banks’ reopening.
The country’s draft capital controls include export limits on euros and a ban on cashing cheques.
In addition, fixed-term deposits will have to be held until maturity.
The restrictions are expected to be tighter for accounts at Bank of Cyprus and Laiki Bank.
Panicos Demetriades has confirmed that “temporary” capital controls will be imposed on the island, without giving details.
Banks have not been open since March 15. Their reopening had been expected after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
The Cypriot authorities had previously said all that but the biggest two banks would open on Tuesday, march 26, but they have remained shut while the finer details of capital controls are handled by the Cypriot central bank.
Cypriot Finance Minister Michalis Sarris has confirmed that the depositors with less than 100,000 euros in their accounts “will not be hit”.
People with more than 100,000 euros in their accounts could see about 40% of their deposits converted into bank shares, Michalis Sarris said.
“The exact percentage is not… yet decided but it is going to be significant,” he said.
The final figure will depend on how the government decides to protect pensions.
The finance minister confirmed that all Cypriot banks will remain closed until Thursday and that capital controls will be placed on the size and the amount of money people will be allowed to withdraw once they have reopened.
Cyprus bank deposits over 100,000 euros could be cut by 40 percent
These restrictions would “probably be a bit stricter” on the country’s two largest banks, Bank of Cyprus and Laiki, and would remain in place until the banking system “stabilizes”, Michalis Sarris said.
The exact details of this “two tier system” would be hammered out with the banks later on Tuesday, he said.
Michalis Sarris is expecting “some bleeding, some outflow” of funds once the banks reopen, but believes that once EU bailout funds begin flowing “in a matter of weeks”, confidence will return.
Although the economy would be badly hit by the economic crisis, Michalis Sarris admitted, he maintained that it could benefit from “an energy boom”, referring to the exploratory Aphrodite gas fields off the southern coast of the island.
“Yes, there will be a problem but we will overcome it in a relatively short period of time,” he said. He also said his government had renegotiated more favorable loans terms with Russia.
The Cypriot authorities had said all but the biggest two banks would open on Tuesday.
Banks have not been open since March 15. Their reopening had been expected after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
It was conditional on Cyprus itself raising 5.8 billion euros, most of which looks likely to come from depositors with more than 100,000 euros in Bank of Cyprus and Laiki or Popular Bank.
The banks remained closed after the country’s first money-raising solution, which would have hit smaller deposit holders as well as larger holdings, was rejected by parliament.
The new deal for Cyprus, unlike previous agreements, does not require parliamentary approval. It will also include austerity measures and tax increases.
Laiki will be shut down, and deposits under 100,000 euros, which are guaranteed by the state under EU law, will move into the Bank of Cyprus to create a “good bank”.
Deposits above that insured amount will be frozen and used to pay Laiki’s debts and recapitalize the Bank of Cyprus, with depositor losses eventually converted into shares.
Major depositors, many of whom are wealthy Russians, will not be able to access accounts exceeding the 100,000-euro limit until the restructuring of the banks is complete.
All Cyprus banks will remain closed until Thursday, March 28, the central bank has announced.
Temporary measures will be placed on transactions when they reopen despite an EU/IMF bailout deal.
Earlier, the Cypriot authorities said all but the biggest two, Bank of Cyprus and Laiki Bank, would open on Tuesday, March 26.
The central bank now says all will remain closed to ensure the whole banking system functions “smoothly”.
The bailout deal will see larger depositors in the two biggest banks, Bank of Cyprus and Laiki, lose money.
All Cyprus banks will remain closed until Thursday, March 28, the central bank has announced
President Nicos Anastasiades said “very temporary restrictions” would be put on capital flows, but gave no details.
Controls to prevent money leaving the country are already in place.
Certain limits on the size of cash withdrawals are expected to continue.
Banks have not been open since March 15. Their reopening had been expected after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
It was conditional on Cyprus itself raising 5.8 billion euros, most of which looks likely to come from depositors with more than 100,000 euros in Bank of Cyprus and Laiki or Popular Bank.
The banks remained closed after the country’s first money-raising solution, which would have hit smaller deposit holders as well as larger holdings, was rejected by parliament.
The new deal for Cyprus, unlike previous agreements, does not require parliamentary approval. It will also include austerity measures and tax increases.
Laiki will be shut down, and deposits under 100,000 euros, which are guaranteed by the state under EU law, will move into the Bank of Cyprus to create a “good bank”.
Deposits above that insured amount will be frozen and used to pay Laiki’s debts and recapitalize the Bank of Cyprus, with depositor losses eventually converted into shares.
Major depositors, many of whom are wealthy Russians, will not be able to access accounts exceeding the 100,000-euro limit until the restructuring of the banks is complete.
A government spokesman said the losses on uninsured depositors would be “under or around 30%”.
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Cyprus banks are to reopen on Tuesday, March 26, although the two at the centre of the crisis, Bank of Cyprus and Laiki, will remain shut until Thursday, March 28.
President Nicos Anastasiades has said temporary limits will be placed on financial transactions after a bailout deal imposing a tax on bank deposits.
He said “very temporary restrictions” would be put on capital flows, but gave no details.
Controls to prevent money leaving the country are already in place.
Certain limits on the size of cash withdrawals are expected to continue.
Cyprus banks are to reopen on March 26, although Bank of Cyprus and Laiki will remain shut until March 28
The banks’ reopening came after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
It was conditional on Cyprus itself raising billions of euros, which it will do by way of a tax on deposits of more than 100,000 euros.
The banks shut a week ago after the country’s first money-raising solution, which would have hit smaller deposit holders as well as larger holdings, was rejected.
On Monday morning, hopes that the deal would solve the crisis lifted shares.
But later, stock markets were rocked after Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers, suggested that the deal for Cyprus model could form a template in any future bailout.
Jeroen Dijsselbloem, the Dutch finance minister who as head of the Eurogroup played a key role in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems.
“If there is a risk in a bank our first question should be <<OK, what are you in the bank going to do about that?>>,” he told Reuters and the Financial Times.
Jeroen Dijsselbloem later added a clarification, saying that Cyprus was “a specific case with exceptional challenges”.
He said the pattern for bank rescues should see shareholders take the first hit, then bondholders, who lend money through financial markets, and only then should depositors with large bank balances be tapped.
The Cyprus deal puts the burden for dealing with problem banks on their shareholders and creditors – in this particular case, customers with large bank balances – rather than the government and taxpayers, or bondholders, who lend through financial markets.
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Eurogroup have agreed a deal on a 10 billion-euro bailout for Cyprus to prevent its banking system collapsing and keep the country in the eurozone.
Laiki (Popular) Bank – Cyprus’ second-biggest – will be wound down and holders of deposits of more than 100,000 euros will face big losses.
However, all deposits under 100,000 euros will be “fully guaranteed”.
The European Central Bank (ECB) had set a deadline of Monday for a deal.
Laiki will be split into “good” and “bad” banks, with its good assets eventually merged into Bank of Cyprus.
The president of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, told a press conference in Brussels the deal had “put an end to the uncertainty” around Cyprus’s economy.
Jeroen Dijsselbloem added he was “convinced” the new deal was better for the Cypriot people than the broader measure rejected by the Cypriot parliament last week, as it focused on two problem banks rather than the entire sector.
Laiki Bank, Cyprus’ second-biggest, will be wound down and holders of deposits of more than 100,000 euros will face big losses after Eurogroup agreed on bailout
The deal is good news for Cyprus’s small account holders.
All deposits under 100,000 euros will be secured. But for those with deposits of more than that amount in the country’s two biggest banks – Laiki and Bank of Cyprus – the deal will come as a bitter blow.
The percentage to be levied on large deposits in the Bank of Cyprus will be resolved in the coming weeks, Jeroen Dijsselbloem said.
One key element of the deposit tax, demanded by the IMF, is that it not require a parliamentary vote.
EU Commissioner for Economic Affairs Olli Rehn said that the “depth of the financial crisis in Cyprus means that the near future will be difficult for the country and its people”.
Asian financial markets rose in early trading on news of the deal.
The deal came after hours of tense negotiations between Cypriot President Nicos Anastasiades and the “troika” of EU, ECB and IMF leaders.
Nicos Anastasiades had reportedly asked the heads of the troika if they wanted him to quit.
“Do you want to force me to resign?” Cyprus News Agency quoted him as saying, citing sources at the presidential palace.
“I am giving you one proposal, and you do not accept it. I give you another and it’s the same. What else do you want me to do?” Nicos Anastasiades was quoted as saying.
In another development on Sunday, Bank of Cyprus – the island’s biggest lender – further limited cash machine withdrawals to 120 euros a day.
With queues growing outside cash machines across the island, the second biggest lender, Laiki, also lowered its daily limit to 100 euros, Cyprus News Agency reported. The bank’s previous limit had been 260 euros per day.
Banks have been closed since Monday and many businesses are only taking payment in cash.
Jeroen Dijsselbloem said that the details of the re-opening of Cyprus’ banks would be discussed on Monday by the Cypriot government and the troika.
There is concern on Cyprus that a levy on large-scale foreign investors, many of whom are Russian, will damage its financial sector.
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A key meeting of Eurogroup (eurozone finance ministers) to finalize a crucial bailout for Cyprus has been delayed as talks to hammer out an agreement overran.
Cypriot President Nicos Anastasiades is locked in bailout talks with EU, European Central Bank and IMF leaders in Brussels.
The finance ministers must decide on Sunday whether or not to approve the bailout.
Cyprus needs to raise 5.8 billion euros to qualify for a 10 billion euro EU bailout and avoid bankruptcy.
A eurozone official said the Eurogroup meeting had been rescheduled for about 20:00 local time from 18:00 because talks with Cypriot officials ahead of those discussions had overrun.
In another development on Sunday, Bank of Cyprus – the island’s biggest lender – further limited cash machine withdrawals to 120 euros a day.
With queues growing outside cash machines across the island, the second biggest lender, Laiki (Popular) Bank, also lowered its daily limit to 100 euros, Cyprus News Agency reported. The bank’s previous limit had been 260 euros per day.
Banks have been closed since Monday and many businesses are only taking payment in cash.
Cypriot President Nicos Anastasiades is locked in bailout talks with EU, European Central Bank and IMF leaders in Brussels
In the run-up to the crunch talks in Brussels, the EU’s commissioner for economic affairs Olli Rehn said Cyprus had only “hard choices left” and must agree terms on Sunday.
According to a source close to the negotiations, the rescue plans – as they stand – involve splitting Laiki Bank into “good” and “bad” banks.
Good assets would be merged with Bank of Cyprus and the toxic assets will stay in Laiki. Administrators will then be appointed to liquidate those assets. The bank will not be closed but will be hugely reduced in size.
The source said a 20% levy would be imposed on deposits over 100,000 euros in Bank of Cyprus in exchange for shares in the bank.
A 4% levy would then be imposed on deposits of more than 100,000 euros in other banks. This would need to be approved by parliament but enough MPs have already given their backing to ensure it would pass.
The changes would cut Cyprus’s banking sector by between a third and a half.
Cyprus’ parliament rejected a bank levy on small and large deposits earlier this week, but a levy limited to large deposits is said to be back in consideration following pressure from Brussels and Berlin.
The levy that was rejected would have taken 6.75% from small savers and 9.9% from larger investors. It caused widespread anger among ordinary savers in Cyprus.
Cyprus needs the approval of the “troika” – the IMF, ECB and European Commission – in order to present a rescue plan to eurozone ministers.
If a deal on an alternative agreement fails, the ECB says it will cut off funds to the banks, meaning they would collapse, possibly pushing the country out of the eurozone.
“The negotiations are at a very delicate stage,” said Cypriot government spokesman Christos Stylianides.
“The situation is very difficult and the time limits are very tight.”
Olli Rehn said: “It is essential that an agreement is reached by the Eurogroup on Sunday evening. This agreement then needs to be swiftly implemented by Cyprus and its eurozone partners.”
“Unfortunately the events of recent days have led to a situation where there are no longer any optimal solutions available,” he added.
He said it was clear that the near future for Cyprus would be “very difficult” but that the EU stood ready to help.
There is concern on the island that a levy on large-scale foreign investors, many of whom are Russian, would damage its financial sector.
But leading Cypriot bankers have urged parliament to accept a levy, with small savers exempted.
Correspondents say Germany has pushed hard for a levy on investors who have benefited from high interest rates in recent years, rejecting a Cypriot plan to use money from pension funds.
Cypriot Finance Minister Michael Sarris recently travelled to Moscow in an unsuccessful attempt to get Russian help.
Banks in Cyprus have been closed since Monday and many businesses are only taking payment in cash.
On Saturday afternoon more than 1,000 bank employees marched to the Cypriot finance ministry, stopping briefly at the presidential palace.
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