Cyprus in 11th hour bailout deal with EU

In the end, the Cypriot government caved on every significant issue. They have to shutter their second largest bank, moving the toxic assets to a "bad bank" while taking up to a 40% cut off the top of uninsured deposits - deposits above 100,000 euros. Smaller depositors will have their accounts moved to the Popular Bank, the nation's largest. They will also be forced to raise taxes and reform the banking system, while lowering their budget deficit. Laiki bondholders will be essentially wiped out. The package came after several exhausting hours of negotiations with EU finance ministers. Reuters: The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros, Eurogroup chairman Jeroen Dijssebloem said. Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution. An EU spokesman said no across-the-board levy or tax would be imposed...(Read Full Post)