Bailout Deal on Cyprus

(RIA Novosti) - The finance ministers of the 17-nation eurozone agreed in the early hours of Monday on a 10 billion euros bailout deal for Cyprus to prevent the country’s banking system from collapsing and bankruptcy.

The president of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, told a press conference in Brussels, that the plan to recapitalize Cypriot ailing lenders and keep the government afloat was supported unanimously by all finance ministers and the so-called troika of creditors: the International Monetary Fund, the European Commission and the ECB.

Under the plan, the country’s second largest bank, Laiki Bank, will be restructured by splitting it into “good” and “bad” banks. The bank’s good assets will be merged into Bank of Cyprus and toxic assets will be later liquidated.

Holders of bank deposits of more than 100,000 euros will have to take losses as according to Cypriot media sources the levy tax will stand at 30 percent. Deposits below 100,000 euros will be secured.

Dijsselbloem said that the restructuring of the Laiki Bank would contribute a financial aid of 4.2 billion euros for Cyprus.

He also said that the authorities of Cyprus should continue talks with Russia on the financial aid, adding he hoped Moscow would eventually contribute to international assistance for the tiny Mediterranean island nation of about 1 million.

Cypriot Finance Minister Michalis Sarris flew home from the Russian capital Moscow on Friday following an unsuccessful attempt to persuade Russia to grant his country financial aid in return for investments in its national banks and gas projects. Russia said it would consider financial aid to help Cyprus overcome its economic woes only after the EU and the island nation work out a joint plan for its recovery.