Cyprus leader issues resignation threat amid talks to avoid bankruptcy..Deal reached in Eurogroup talks
CYPRIOT President Nicos Anastasiades has warned he may be forced to quit as he battled Brussels bailout bosses, with the clock ticking on a deadline to avert bankruptcy and a potential exit from the euro.
The development was reported by the Cyprus News Agency, citing sources at the presidential palace, as Mr Anastasiades fought to unlock urgently-needed bailout cash from the big players – the heads of the European Central Bank, International Monetary Fund, European Union and eurozone.
“Do you want to force me to resign?” the agency quoted Mr Anastasiades as telling EU and IMF chiefs in the snow-covered Belgian capital.
“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?” he was quoted as saying.
The crunch meeting was called after the ECB threatened to halt life-support funding for Cyprus later today (AEDT) if there was no deal.
The banks in Cyprus were due to re-open on Tuesday after a 10-day shutdown, although as the talks progressed, the two biggest lenders on the island slashed cash machine withdrawal limits as low as 100 euros per day.
Cyprus has agreed to break up one of these banks and move big deposits into a new “bad” bank that will see a “haircut” forced on investors whose money will likely remain tied up for years.
But Nicosia was resisting the pressure on the biggest one, the Bank of Cyprus, which holds a third of all deposits on the island.
Bailout bosses are demanding what French Finance Minister Pierre Moscovici called a “just” contribution from the very biggest depositors – including Russian oligarchs and Moscow government agencies.
Otherwise, a promised 10 billion euros ($A12.4 billion) of taxpayer loans would not be forthcoming, leaving Cyprus facing default and an ousting from the single currency area.
It was time to put an end to “casino economy” practices on Cyprus, Mr Moscovici insisted.
Protesters slated President Nicos Anastasiades and the “troika” of the European Union, the International Monetary Fund and the European Central Bank as Anastasiades held last-ditch talks with creditors in Brussels.
About 500 members of the communist AKEL party gathered outside the offices of the European Commission offices chanting: “Don’t bow, people of Cyprus, stand up for your rights,” and “Troika prints euros and buys nations.”
“We are protesting against the intentions of the troika who are not considering the people of Cyprus, but only figures and money,” party member Andreas, a pensioner who declined to give his surname, told AFP.
“Their main concern is about Cypriot banks and that goes against the basic principle of the EU, guarding people’s wellbeing,” he said.
Eurozone finance ministers have agreed a deal on a 10bn-euro bailout for Cyprus to prevent its banking system collapsing and keep the country in the eurozone.
Laiki (Popular) Bank – the country’s 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 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.
He added he was “convinced” the new deal was better for the Cypriot people than than the broader measure rejected by the Cypriot parliament last week, as it focused on two problem banks rather than the entire sector.
The deal is good news for Cyprus’s small account holders, the BBC’s Christian Fraser reports from Paris.
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, our correspondent says.
The percentage to be levied on large deposits in the Bank of Cyprus will be resolved in the coming weeks, Mr 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.
they have circumvented the parliament and dont have to vote on this..you may see some accounts lose 100%..i bet they will be russian accounts..bad bank and good bank..yeah we have heard that all before..with this loan it wont change the position cyprus is in..they are finished..it is a default by any other name but the bond and shareholders must get their money!..they may as well tell the IMF and ECB to take a hike..leave the eurozone and deal with it themselves because the pain is only about to start..watch whats coming now..this is the new template now..theft of your savings to bail out the bankers..