EU ministers have approved a deal that Cyprus reached with international bailout negotiators last night, paving the way for the closure of the island’s second-largest bank and forcing big losses on large depositors in the country’s biggest lender.
The 17 eurozone finance ministers signed off on the agreement in the early hours of Monday in Brussels. The agreement will come as a relief, since deals by the so-called troika – the International Monetary Fund, European Central Bank and European Commission – have been unpicked by ministers in the past.
Under the outlines of the deal, depositors with accounts worth less than €100,000 would not be touched. But those above those levels in Laiki Bank, the second largest and most troubled financial institution, would be severely cut, the officials said. The losses on large deposits in Bank of Cyprus, which will survive as a much smaller entity, have yet to be decided, but could be as high as 40 per cent.