CYPRUS – Cyprus said on Saturday it was looking at
seizing a quarter of the value of big deposits at its largest bank, as
it races to raise the funds for a bailout from the European Union and to
avert financial collapse. Finance Minister Michael Sarris said
“significant progress” had been made in talks in Nicosia with officials
from the European Union, European Central Bank and International
Monetary Fund. He confirmed discussions were centered on a possible levy
of around 25 percent on holdings of over 100,000 euros (about $130,000)
at Bank of Cyprus, and expressed hope that a package could be ready by
the end of the day for approval by parliament. Cyprus faces a Monday
deadline to clinch a bailout deal with the EU or the European Central
Bank says it will cut off emergency cash to the island’s over-sized and
stricken banks, spelling certain collapse and a potential exit from
Europe’s single currency. Amid signs of momentum, Cypriot and EU
officials said Cypriot President Nicos Anastasiades was expected in
Brussels on Sunday to meet EU leaders including Council President Herman
Van Rompuy and Commission President Jose-Manuel Barroso, as well as IMF
Managing Director Christine Lagarde and the head of the ECB, Mario
Draghi. Protesters in Cyprus gather outside parliament as government
officials try to strike a bailout deal with the European Union.
NBCNews.com’s Dara Brown reports. Van Rompuy and Barroso canceled a
planned EU-Japan summit in Tokyo to tend to the Cyprus saga and euro
zone officials told Reuters that the bloc’s 17 finance ministers would
meet on Sunday afternoon. “Significant progress has been made in the
direction of getting a deal, at least at the troika level,” Sarris told
reporters. He said a number of issues were still outstanding, but that a
package could be ready “late this afternoon or early evening” for
approval by parliament. Arriving at the troika talks, Andreas Artemi,
chairman of Bank of Cyprus, was asked if a 25 percent haircut was being
considered on uninsured deposits. He replied: “I don’t know that yet.” Extinction Protocol
A senior lawmaker told Reuters earlier on Saturday that
parliament was not expected to convene until after the meeting of euro
zone finance ministers on Sunday afternoon, taking the crisis right down
to the wire. The same legislature on Tuesday angrily threw out a
proposed levy on bank deposits, designed to raise the 5.8 billion euros
the EU wants in return for a 10 billion euro ($13 billion) bailout. The
tax is unprecedented in Europe’s handling of a debt crisis that has
spread from Greece, to Ireland, Portugal, Spain and Italy. It is by no
means certain the tiny legislature will accept the measure this time
around. The turnaround came after Russia rebuffed Cypriot entreaties to
help its banks, where Russian citizens and other foreigners have
billions of euros at stake. Significantly, the latest proposal would
spare small depositors, who were outraged by the original plan to hit
small holdings as well as large accounts, many of them held by rich
foreigners including Russians. Cypriot leaders fear the damage the levy
would do to the country’s offshore banking industry. The tottering banks
hold 68 billion euros ($88 billion) in deposits, including 38 billion
($49 billion) in accounts of more than 100,000 euros – enormous sums for
an island of 1.1 million people which could never sustain such a big
financial system on its own. But much of the banks’ capital was wiped
out by investments in Greece, the epicenter of the euro zone debt
crisis. Racing to placate its European partners, Cypriot lawmakers voted
in late-night session on Friday to nationalize state pensions and split
failing lenders into good and bad banks. They also gave the government
powers to impose capital controls on banks, anticipating a flood of
money from the island when banks are due to reopen on Tuesday after more
than a week of lockdown. The plan to nationalize semi-state pension
funds has, however, met with resistance, particularly from Germany which
made clear that tapping pensions could be even more painful for
ordinary Cypriots than a deposit levy. The pace of the unfolding drama
has stunned Cypriots, who have besieged bank cash machines since the
levy was first mooted a week ago. “Our so-called friends and partners
sold us out,” said Marios Panayides, 65, a protester at the parliament.
“They have completely abandoned us on the edge of an abyss.” –MSNBC
Cyprus debates plan to avert bankruptcy: http://youtu.be/1aL1U5zLOnM via @youtube
Cyprus MPs approve first EU bailout measures: http://youtu.be/LAAYVG7aHu4 via @youtube
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