CYPRUS MAIL

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Cyprus Mail www.cyprus-mail.com

Monday, March 25, 2013

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CYPRUS

WORLD

SHOWBIZ

Troika pushed to saddle BoC with Laiki debt

Moderate face of Syrian uprising resigns

Bodybuilding guru and Arnold mentor Joe Weider dead 10

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Second chance for BoC in draft deal Anastasiades threatened to quit amid troika pressure on BoC By George Psyllides

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YPRUS and international lenders reached a draft bailout deal in the early hours of this morning, which was yet to be approved by the Eurogroup. Details of the deal were sketchy but involved heavy levies on both of Cyprus’ biggest banks. Other banks appeared to have been spared. And no charges will be incurred against any Cypriot bank account with less than 100,000 euros in them, EU officials said. Reuters reported that the deal involves setting up a “good bank” and a “bad bank” and will mean that Popular Bank of Cyprus, known as Laiki, will effectively be shut down. Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus. Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt. It remains unclear how large the writedown on those funds will be. Some reports suggested it might be as high as 40 per cent. “It should be fairly easy for finance ministers to agree to this,” an EU official told Reuters. “We have been in close contact with all relevant euro zone countries during this negotiation process and there is broad agreement.” The plan is likely to mean very heavy losses for uninsured deposits in Laiki, which has suffered since writing

down the value of its holdings of Greek government bonds last year. Around 35 billion euros is held in Cypriot accounts with more than 100,000 euros in them, but it is not clear how much of that total is held in Laiki bank. If sufficient funds can be found in Laiki to pay off debt and restructure the Cypriot banking sector, uninsured depositors in Bank of Cyprus may not incur any losses, although that remains to be seen. One of the officials said shareholders and bondholders in Bank of Cyprus would be part of the “bail-in”, with those investors receiving equity in the bank in exchange. The draft proposal was agreed by President Nicos Anastasiades in negotiation with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso. The plan was presented to eurozone finance ministers for discussion, a short time later. Cyprus acting President Yiannakis Omirou confirmed in Nicosia that an initial agreement had been reached in Brussels. According to Cyprus News Agency (CNA) sources close to the government, the agreement foresees a 30 per cent “haircut” on Bank of Cyprus deposits over 100,000 euros. But crucially there would be no restructuring of the Bank of Cyprus

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IMF Managing Director Christine Lagarde and German Finance Minister Wolfgang Schaeuble sharing a joke before the start of the protracted and tense meeting in Brussels to decide the financial future of Cyprus

Biggest banks set further limits on ATM withdrawals By Poly Pantelides TRYING to avert a further ATM run on Cyprus’ banks, daily withdrawal limits were further limited yesterday across the two biggest banks. The Bank of Cyprus said on its website that the maximum withdrawal amount had dropped to €120 while the Popular Bank limited daily cash withdrawals to €100 daily from 1pm yesterday. Previously on Thursday, Popular set a daily limit of €260 on ATM withdraw-

als to cope with high demands as customers queued to withdraw funds after rumours that the bank was closing down. A Popular Bank spokesman, who was not named, told Reuters the daily limit would remain in place until the bank reopens as scheduled on Tuesday, or until confirmation of continued emergency funding from the European Central Bank (ECB). It is still unclear what will happen if and when the banks reopen although a legal framework was set on Friday by parliament placing capital controls

to avoid further destabilisation of its banking sector. The finance ministry is expected to issue an announcement clarifying what the restrictions will be and setting any further measures deemed necessary for reasons of public order and safety. Bank customers have no idea what to expect if banks do open tomorrow. Nigel Christodoulou, a 53-year-old married father of three said he did not know whether he would be able to

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