Cyprus weighs big bank levy; bailout goes down to wire

by Karolina Tagaris and Michele Kambas,  |  published on March 24, 2013

Thousands of bank employees protest outside the Finance Ministry in Nicosia

Cyprus conceded on Saturday to a one-off levy on deposits over 100,000 euros in a dramatic U-turn as it raced to satisfy European partners and seal an 11th-hour bailout deal to avert financial collapse.

The island’s finance minister, Michael Sarris, reported “significant progress” in talks with international lenders, with the clock running down to end-Monday deadline for Cyprus to clinch a bailout deal with the EU or lose emergency funding for its stricken banks and risk tumbling out of the euro zone.

His counterparts in Europe’s 17-nation currency union scheduled talks in Brussels for Sunday evening to see if the numbers add up, and the EU’s Economic Affairs Commissioner Olli Rehn said progress was being made towards a solution.

As Cypriot party leaders met, a senior Cypriot official told Reuters that Nicosia had agreed with EU/IMF lenders on a 20 percent levy over and above 100,000 euros at No. 1 lender Bank of Cyprus, and four percent on deposits over the same level at others.

Troika officials could not immediately be reached for comment.

Cypriot President Nicos Anastasiades tweeted: “We are undertaking great efforts. I hope we have a solution soon.”

The conservative leader, barely a month in the job and wrestling with Cyprus’s worst crisis since a 1974 invasion by Turkish forces split the island in two, was due to lead a delegation to Brussels, also on Sunday, to meet heads of the EU, the European Central Bank and International Monetary Fund, in a sign a deal might be near.

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