Cyprus Mail

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Cyprus Mail www.cyprus-mail.com

Friday, March 22, 2013

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CYPRUS

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Sarris tightlipped about Moscow visit

Universe 80m years older than thought

Catch Anthony Hopkins in Hitchcock which opens today

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A race against time for Cyprus House convenes to fast-track bills under deadline from EU lenders By Elias Hazou

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HE HOUSE will convene extraordinarily today to fast-track nine items of legislation designed to keep the local banking sector afloat and to prevent a mass outflow of deposits, after MPs asked for more time to study the bills. Last night’s plenary session was adjourned for today at 10am, meaning that by that time the House Finance Committee will have to speed-read through hundreds of pages of documents. It’s still not clear whether the bills – some or all – will be put to the vote today. Cyprus has three more days to enact measures aimed at consolidating its banking sector and raising some €5.8 billion on its own, a condition for getting a €10 billion bailout from the EU. The noose tightened a little more yesterday, after the European Central Bank said that come Monday it would cut off emergency liquidity assistance (ELA) to Cyprus’ banks. “Thereafter, Emergency Liquidity Assistance could only be considered if an EU/ IMF programme is in place that would ensure the solvency of the concerned banks,” the ECB said in a statement. The most crucial bills drafted tabled yesterday concerned the creation of a National Solidarity Fund, a bill on the Resolution of

Credit Institutions, and a capital control bill designed to prevent an outflow of deposits from Cyprus when banks reopen. The establishment of a solidarity fund comes in the wake of parliament’s rejection of a controversial tax levy on banking deposits agreed by the government and the Eurogroup last Saturday. The fund would bundle state assets, including real estate, as well as future gas and oil revenues, as the basis for an emergency bond issue. It was agreed during a meeting between President Nicos Anastasiades and party leaders yesterday morning to discuss a ‘plan B’ that would save the economy from collapse. It’s understood the fund would take the form of a private company, so that its debt-issue is not counted toward the public debt. Reports said that pensions of semi-state enterprises would be nationalised, raising anywhere from €1 to €2 billion. The purpose of the fund is to “finance and/or bolster financial credit institutions, to promote and/or contribute to the capitalisation of credit institutions and/or promote and/or contribute to the financing of the Republic.” However, the most controversial bill relates to the resolution of banks, intended to avert the island’s second

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Long queues outside Laiki cash machines lasted all day yesterday

(Christos Theodorides)

Laiki CEO: bank move will be a disaster for the economy By Stefanos Evripidou THE RESTRUCTURING of the island’s second largest bank into a ‘good’ and ‘bad’ bank will mean the end of the Cyprus economy, warned Laiki Bank’s acting CEO Takis Phidias last night. He argued that a small haircut on deposits and an EU bailout would have kept the banks and businesses alive. The option now on the table will lead to loss of deposits and closure of businesses and higher unemployment, said Phidias.

The Laiki management team were last night informed in parliament that the government planned to table a bill proposed by the central bank governor to divide Laiki into a ‘good’ bank with only deposits of €100,000 or under, and a ‘bad’ bank where around €6 billion of uninsured deposits will be placed. Speaking to the Cyprus Mail after his briefing in parliament and on his way to a board meeting, Phidias said the current decision on Laiki “will be a disaster not just for the bank, but for the economy of Cyprus”.

He added: “We’re talking about €6 billion belonging to Cyprus depositors being transferred to the bad bank with little possibility of them recovering their money. We’re talking about a lot of businesses having their assets and accounts frozen. “Who gives anybody the right to say that someone with €100 million will get €100,000 back and someone with €80,000 will get it all? I’m not sure parliament has the right to decide this.” Phidias warned the impact on the

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