Cypriot leader: deal was the best I could get
THE president of Cyprus has insisted the €10bn bailout agreed with the EU – viewed by many as disastrous for his country's financial sector – was the "best result" he could get.
In a televised address to his nation, Nicos Anastasiades admitted his country had lost its credibility but said the deal was done "to secure the future".
Under the bailout plan, Cyprus will shut down its second-largest bank and inflict heavy losses on large depositors, including Russian investors who have flooded the country with cash in recent years.
The agreement, reached in the early hours of yesterday morning, keeps Cyprus in the euro and staves off the prospect of bankruptcy.
But the tough conditions attached have prompted fears that the cure may end up killing the patient, with unemployment set to spiral as a result of expected mass lay-offs in country's banking sector.
Under the plan, the country's second largest lender, the Popular Bank, more commonly known as Laiki, will be closed. Deposits under €100,000 will be transferred to the larger Bank of Cyprus.
However, deposits above €100,000 will be frozen and used to pay off Laiki's debts and recapitalise the Bank of Cyprus.
So, while small depositors have been spared, big international investors will now be running scared of the country, for years a gateway for investment from Russia, and the Far East into the EU.
None of the country's banks will now reopen before Thursday, having already been closed for the past week to avert a run on deposits.
Anger was growing last night in Cyprus that the deal was concluded without the need for a vote at the Cypriot parliament, with trade unions accusing President Anastasiades of circumventing the democratic process.