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article imageCyprus bailout deal agreed with eurozone ministers

By Katerina Nikolas     Mar 25, 2013 in Business
Brussels - A Cypriot exit from the euro was averted in the early hours of the morning when details of the bailout agreed between Cyprus and the troika were approved by the eurozone finance ministers.
The proposal which was approved by the eurozone ministers had been negotiated between Cyprus President Nicos Anastasiades, IMF chief Christine Lagarde, ECB president Mario Draghi and European Commission Economic and Monetary Affairs Commissioner Olli Rehn. The deal does not need to be voted on in the Cypriot Parliament.
Ekathimerini reported Cypriot Finance Minister Michalis Sarris said: "We did not win a battle but we avoided a disastrous exit from the eurozone.”
The agreement means Cyprus's Laiki Bank will be split in two and wound down. Deposits of less than €100,000 will be transferred to the Bank of Cyprus and will remain protected by the government guarantee insurance scheme. Deposits of more than €100,000 will be frozen and used to pay off debt through a tax levy. Depositors will take big haircuts on deposits of over €100,000 in the Bank of Cyprus and the Laiki, but other banks will escape the deposit tax levy.
President of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, said the percentage to be levied on uninsured deposits will be resolved in the coming weeks, the BBC reported. The levy could be up to 40 percent according to the Cyprus Mail. The Eurogroup released a statement on the Cyprus deal which can be read in full here.
It has yet to be decided if banks on Cyprus will re-open on Tuesday. Businesses are struggling as the island nation has turned into a cash economy over the last week and ATM cash withdrawals have now been limited to €100.
More about Cyprus, cyprus bailout, Nicos Anastasiades, Laiki Bank, bank of cyprus
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