Cyprus Locked in Tough Talks (Update1)
Conflicting reports of progress emerged during the talks Saturday.
Late Saturday night, a finance ministry official said an accord was "very close," and would likely include a hefty tax of a fifth to a quarter of deposits over 100,000 euros at the country's troubled largest lender, Bank of Cyprus. But a banking official with knowledge of the talks said no deal was in the offing and wouldn't likely arrive before Sunday.
Both spoke on condition of anonymity because negotiations were ongoing and they were not authorized to release details.
According to a second finance ministry official, who also spoke on condition of anonymity because he's not authorized to speak about the negotiations, new laws may not be needed if negotiators opt for a "voluntary contribution" from Bank of Cyprus savings accounts above 100,000 euros, which is the insurance limit.Another option being considered is smaller tax on all bank deposits above 100,000 euros. Cyprus took significant steps toward cementing a new plan Friday night, when its lawmakers approved nine bills, including three crucial ones that will restructure ailing banks, restrict financial transactions in emergencies and set up a "solidarity fund" that will act as the vehicle for raising funds from investments and contributions. The bank restructuring will include the country's troubled second largest lender, Laiki, which suffered heavy losses after being exposed to toxic Greek debt. Cypriot banks have been shut this past week while the plan was being worked out, and are not due to reopen until Tuesday. Cash has been available through ATMs, but many run out quickly, and those machines for the troubled Laiki Bank are only dispensing 260 euros a day. Thousands of angry bank employees afraid of losing their jobs marched through the center of Nicosia to the Finance Ministry and Parliament, some with placards around their necks reading: "No to the bankruptcy of Cyprus." "We are protesting for our jobs, and jobs of all in Cyprus," bank employee Zoei Koiachi said. Worried about her job after 36 years at Laiki, Eleni Koutsourdou said lawmakers should have approved the initial plan for the 10% deposit grab for the sake of protecting the financial sector. "It's unfair. They pocketed everything and we end up paying for it," she said.
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