Cyprus

Cypriot officials gave the first indications of the steep losses facing large deposit holders at the island's two biggest lenders, as hundreds of angry bank workers staged a demonstration outside the central bank and demanded the resignation of its governor, The Wall Street Journal reported. Cyprus's central bank chief said Tuesday that large depositors at the island's biggest lender, Bank of Cyprus Pcl, could lose as much as 40% on their deposits.

Big depositors in Cyprus's two main banks could be separated from their money for a long time, The Wall Street Journal reported. After rejecting a proposal to tax bank depositors to pay for a bailout, Cyprus—with a sharp push from its euro-zone peers and the International Monetary Fund—will instead put one bank through a kind of liquidation and radically restructure the other. As a consequence, even if Cypriot banks reopen from an extended holiday this week, big depositors will likely find they are still stuck.

Reason prevails but the damage is done. With their 11th-hour agreement with Cyprus for a €10bn bailout, eurozone policy makers avoided the worst: a catastrophic implosion of the island’s banking system and a hasty exit from the eurozone, the Financial Times reported. The deal reverses some initial errors. It targets depositors in troubled banks rather than indiscriminately across the sector. Insured deposits under €100,000 are safe. There will be restrictions on deposit withdrawals and transfers tailored to each bank rather than across-the-board capital controls.

Cypriots braced on Sunday for the introduction of strict controls on withdrawing and transferring money from their bank accounts as their president made a last-ditch attempt in Brussels to secure an international bailout to spare the country from a chaotic bankruptcy, the Financial Times reported. The capital controls are expected to be in place on Tuesday morning to prevent a run on the island’s banks if and when they reopen after a 10-day closure that has brought the Cypriot economy to a standstill.

Cyprus, in an 11th-hour bid to unlock international aid, reopen the nation's banking system and preserve membership in the euro, readied a plan that would restructure its second-largest lender and enforce unprecedented restrictions on financial transactions, The Wall Street Journal reported. 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. They have been closed since March 16.

Cyprus on Wednesday was left with narrowing options to rescue its outsize financial-services sector from collapse—something that could end its membership in the euro zone—after international lenders rejected an alternative government plan to secure a €10 billion ($12.93 billion) bailout and Russian officials remained cool to a Cypriot gas-for-cash deal, The Wall Street Journal reported.

Cyprus has thrown its international reputation as an offshore banking hub into peril after considering a bold plan to levy a one-time tax on deposits, The Wall Street Journal reported. The proposed tax—which would have helped Cyprus raise funds as part of a €10 billion ($13 billion) bailout deal from the European Union and International Monetary Fund—was rejected by Cyprus's Parliament on Tuesday. Cyprus is now scrambling to find other ways to raise the funds. Still, much of the damage appears to have been done. The tax proposal provoked outrage in Moscow.

Cyprus’s finance minister arrived in Moscow on Tuesday night to try to wrest vital economic assistance from the Kremlin as his country’s parliament rejected a €10bn EU-led bailout that requires €5.8bn to be seized from Cypriot bank accounts, the Financial Times reported. The 11th-hour attempt to tap funds from Russia as an alternative to the deposit levy stunned leaders in Brussels, who said they were taken aback by the resistance of Cypriot lawmakers to shifting the tax’s burden exclusively on to deposits over €100,000 – many of which are held by wealthy Russians.

Cyprus on Monday put off for another day a debate on a bank-deposit levy in the Parliament—a precondition to receiving a €10 billion ($13.07 billion) bailout—and said its banks would remain closed until Thursday, as the government sought more time to shore up support for the tax and raced to avert a collapse of its banking sector, The Wall Street Journal reported. Cyprus Parliament speaker Yiannakis Omirou said Monday that the debate and vote would be pushed back to Tuesday—now two days behind schedule—amid fears of a meltdown in the island's financial system.

Europe’s surprising decision early Saturday to force bank depositors in Cyprus to share in the cost of the latest euro zone bailout set off increasing outrage and turmoil in Cyprus on Sunday and fueled fears that the trouble will spread to countries like Spain and Italy, the International Herald Tribune reported. Facing eroding support, the new president, Nicos Anastasiades, asked Parliament to postpone until Monday an emergency vote on a measure to approve the bailout terms, amid doubt that it would pass.