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Cyprus: President arrives home with bailout deal secured00:49

Cyprus: President arrives home with bailout deal secured

Cyprus, Nicosia
March 25, 2013 at 19:43 GMT +00:00 · Published

Cyprus: President arrives home with bailout deal secured

Cyprus's President Nicos Anastsiades arrived at the country's Presidential Palace in Nicosia Monday evening to deliver a statement about the future of Cyprus and its two largest banks.

The island-nation has just secured a EUR10 billion ($13 billion) bailout, agreeing at a Eurogroup meeting to slap weighty levies on depositors who hold more than EUR100,000 ($130,000) in Laiki Bank. In return for generating EUR5.8 billion ($7.5 billion), Cyprus will receive EUR10 billion from the EU and IMF.

Smaller savers will be shielded under the deal, which saves the country's banking sector from collapse, and averts the danger of Cyprus defaulting and being forced into a disorderly exit from the Eurozone.

However, wealthier depositors, many of them Russian, stand to take a big hit, likely damaging Cyprus's reputation as an offshore tax haven.

As part of the agreement, Cyprus will close down its second-largest lender, Laiki Bank, which is in large part state-owned. Deposits held by Laiki and valued below EUR100,000 will eventually be merged into Bank of Cyprus, the island's largest lender.

Averof Neophytou, deputy president of the ruling Democratic Rally party, said that Cyprus's priority is to rebuild confidence in its banking sector: "People of Cyprus will work hard to strengthen again its economy, and we are very optimistic that even though we'll face a lot of difficulties in short term, finally we'll regain our credibility."

All banks in Cyprus are expected to open Tuesday morning, except the two largest. Financial institutions in the country have been closed for over a week to prevent a run on the banks.

Cyprus: President arrives home with bailout deal secured00:49
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Cyprus: President arrives home with bailout deal secured

Cyprus's President Nicos Anastsiades arrived at the country's Presidential Palace in Nicosia Monday evening to deliver a statement about the future of Cyprus and its two largest banks.

The island-nation has just secured a EUR10 billion ($13 billion) bailout, agreeing at a Eurogroup meeting to slap weighty levies on depositors who hold more than EUR100,000 ($130,000) in Laiki Bank. In return for generating EUR5.8 billion ($7.5 billion), Cyprus will receive EUR10 billion from the EU and IMF.

Smaller savers will be shielded under the deal, which saves the country's banking sector from collapse, and averts the danger of Cyprus defaulting and being forced into a disorderly exit from the Eurozone.

However, wealthier depositors, many of them Russian, stand to take a big hit, likely damaging Cyprus's reputation as an offshore tax haven.

As part of the agreement, Cyprus will close down its second-largest lender, Laiki Bank, which is in large part state-owned. Deposits held by Laiki and valued below EUR100,000 will eventually be merged into Bank of Cyprus, the island's largest lender.

Averof Neophytou, deputy president of the ruling Democratic Rally party, said that Cyprus's priority is to rebuild confidence in its banking sector: "People of Cyprus will work hard to strengthen again its economy, and we are very optimistic that even though we'll face a lot of difficulties in short term, finally we'll regain our credibility."

All banks in Cyprus are expected to open Tuesday morning, except the two largest. Financial institutions in the country have been closed for over a week to prevent a run on the banks.

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