Last updated: March 24, 2013 3:42 pm

Cyprus leader in last-ditch bailout talks

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Cyprus President Nicos Anastasiades arrives on March 24,2013 at the European Union headquarters in Brussels©AFP

Nicos Anastasiades, the Cypriot president, and his top advisers flew to Brussels on Sunday in a last-ditch effort to secure a bailout for the island nation as the government acknowledged that talks with international lenders remained uncertain.

“The negotiations are at a very delicate stage. The situation is very difficult and the time limits are very tight,” said Christos Stylianides, a government spokesman.

Mr Anastasiades, accompanied by Michalis Sarris, finance minister, met with the troika of international lenders – the International Monetary Fund, the European Central Bank and the European Commission – while also holding telephone discussions with political leaders in Nicosia.

The group of 17 eurozone finance ministers have been summoned to Brussels later on Sunday for a meeting where they expect to finalise the bailout if the afternoon talks make sufficient progress.

Mr Anastasiades first met with José Manuel Barroso, the European Commission president, Herman Van Rompuy, the European Council chief, and Jeroen Dijsselbloem, the Dutch finance minister who heads the eurogroup.

The leaders were then joined by Mario Draghi, ECB president, and Christine Lagarde, IMF managing director.

Cyprus is racing to conclude a deal before a Monday deadline, after which the ECB has threatened to withdraw support from the country’s teetering financial system.

After a tumultuous week, Cypriot officials believed they had reached a tentative deal with their lenders on Saturday. A centrepiece of that agreement was a 20 per cent levy on deposits of more than €100,000 at the country’s largest bank, Bank of Cyprus, as well as the winding down of the second-largest bank, Laiki.

But those parameters now appear to be in flux, Cypriot officials acknowledged on Sunday. “It seems that every time there’s an agreement on something, the troika opens something else,” one said. “It’s total confusion.”

The troika has now raised the idea of winding down Bank of Cyprus, too, according to officials in Nicosia.

Meanwhile, thousands of bank workers – now expecting to lose their jobs and their pensions as part of the restructuring – have taken to the streets, marching on the presidential palace, the finance ministry and the parliament on Sunday, chanting: “Resign!”

The government on Sunday proposed a blanket “solidarity” levy of 4 per cent on deposits exceeding €100,000 at other banks as a way to restore part of the workers’ pension funds – although the fate of that initiative remained unclear.

Some members of the bank workers’ union suggested going on strike on Tuesday when banks are set to reopen after being closed for more than a week – an event that could plunge the country into chaos. As it is, Cypriots are bracing for the introduction of capital controls to contain an expected stampede of withdrawals.

Those controls, which have not yet been detailed, are expected to limit customers’ ability to withdraw funds or shift them to other accounts. While they may blunt a bank run, Cypriots were worried on Sunday that it would also make it difficult for people to pay bills and conduct even the most basic business.

Additional reporting by Peter Spiegel in Brussels

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