Thursday, March 21, 2013

Cyprus Parliament expected to vote on new plan Friday

by Calculated Risk on 3/21/2013 10:15:00 PM

Two more articles:

From the NY Times: Mood Darkens in Cyprus as Deadline Is Set for Bailout

President Nicos Anastasiades presented Parliament on Thursday with a plan that scrapped a controversial tax on bank deposits.
...
The central bank said the new package included “consolidation measures” to enable Cyprus Popular Bank, also known as Laiki Bank, to continue operating.

As the country’s most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank and transferring healthy assets to the Bank of Cyprus, the nation’s largest financial institution. ...

But the central bank warned that if Parliament failed to pass the measure, “Laiki will default immediately, causing major consequences to its employees and its clients.”

Lawmakers will also vote on restrictions on taking cash out of banks and out of the country, known as capital controls, when the banks reopen. ...

The central bank said on Thursday that Cyprus had until Monday to reach an agreement ... the group of 17 finance ministers whose countries use the euro issued a statement declaring themselves “conditionally satisfied” with most of the new proposal, which the so-called troika of lenders ... is to assess on Friday after the Parliament vote.
emphasis added
From the WSJ: Clock Ticks on Cyprus
Cyprus ... readied a plan that would restructure its second-largest lender and enforce unprecedented restrictions on financial transactions.

The proposals, if they take effect, would allow authorities to restrict noncash transactions, curtail check cashing, limit withdrawals and even convert checking accounts into fixed-term deposits when banks reopen. ...

Parliament is set to debate the measures on Friday. If Cyprus can't pass them, it could find itself with little choice but to leave the euro zone ...