WorldWay Cyprus Service Center, March 25 report: The Eurogroup meeting has approved the bank bailout agreement reached between Cyprus and the European Union. The EU will provide a €10 billion bailout to Cypriot banks. Depositors with less than €100,000 in savings will not incur losses, and the details regarding the reopening of Cypriot banks are still under discussion.
According to the draft, the Bank of Cyprus, the country's largest bank, will be retained, while the second-largest, Cyprus Popular Bank (Laiki Bank), will be closed and split into a "good bank" and a "bad bank." Under this plan, deposits under €100,000 (approximately $130,000) at Cyprus Popular Bank will be transferred to the Bank of Cyprus to form the "good bank." Deposits exceeding €100,000 will be frozen to address debt obligations. Eurogroup finance ministers will determine the "haircut" percentage for large depositors with over €100,000 in the coming weeks. Media reports have suggested the haircut could reach 40%.
The bailout agreement does not require approval from the Cypriot Parliament. The agreement will shrink the scale of the Cypriot banking system to the EU average, and the necessary legislation for the restructuring of Cypriot banks is already prepared.
On the 24th local time, Cypriot President Nicos Anastasiades and leaders of the "troika" finally reached this draft agreement after difficult negotiations. According to the Associated Press, major Cypriot banks announced on the 24th that they would further lower withdrawal limits to prevent capital flight. Under the new regulations, the daily withdrawal limit for Cyprus Popular Bank has been reduced to €100, while the limit for the Bank of Cyprus and Greek banks has been reduced to €120. Banks in the country have been closed since March 19, though depositors can still withdraw cash via ATMs.
