Yahoo finance API is not available right now, please try again soon...

ECB Gives Cyprus Funding Deadline as New Plan Sought

*from www.bloomberg.com, Mar. 21, 2013 (To view original article click here.)

Take Away #1: Protests erupt outside Parliament as President Nicos Anastasiades maneuvered at home and in Russia to stave off financial collapse.

Key Facts and Figures:

  • Cypriot police scuffled with protesters, including employees of Cyprus Popular Bank Plc.
  • CYBC Television reported that Cyprus Popular, the country’s second largest bank, would be shut down.
  • The Central Bank of Cyprus denied that the bank is closing.

Take Away #2: The European Central Bank turned up the pressure on Anastasiades and the euro-area finance ministers to deliver a rescue package.

Key Facts and Figures:

  • The ECB said it may cut off emergency funds to Cypriot banks after March 25 unless a plan is in place “that would ensure the solvency of the concerned banks”.
  • The Cabinet is discussing an investment fund intended to help raise the 5.8 billion euros ($7.5 billion) needed to trigger emergency loans.
  • Finance Minister Michael Sarris said in Moscow that while Russia won’t lend money to Cyprus, it’s looking at investment in the energy industry.
  • Cyprus in June became the fifth euro-area nation to request a rescue after Greece’s debt restructuring.
  • Greece’s debt restructuring, the largest in history, trashed the financial health of lenders including the Bank of Cyprus Plc and Cyprus Popular.

Take Away #3: ECB statement is not a threat but a stressing of the urgency of the need to resolve the Cyprus situation.

Key Facts and Figures:

  • Juergan Michels of Citigroup wonders if the ECB will actually follow through with their threat if there’s no deal by Monday.
  • Dutch Finance Minister Jeroen Dijsselbloem believes the ECB has a valid point and concurs that an agreement on a program much be reached very, very soon.

Take Away #4: Euro-area finance ministers on March 16 agreed to an unprecedented tax on Cypriot bank deposits as officials unveiled a 10 billion-euro rescue plan for the country.

Key Facts and Figures:

  • The government amended an initial proposal to exempt deposits of up to 20,000 euros, but failed to win support in parliament as popular dissent mounted.
  • The proposed investment fund would reduce the amount that Cyprus needs to raise from the bank-account tax, ANA reported.
  • It would include bond issuance and future revenue from gas deposits.
  • The Cypriot central bank may contribute 560 million euros using gold reserves, said the ANA.
  • Russia is in talks over its possible role in the fund, the RIA Novosti news agency reported.
  • President Vladimir Putin held talks in Moscow today with Jose Barroso, head of the European Commission.

Take Away #5: There can be no help for Cyprus without full implementation of all the main points.

Key Facts and Figures:

  • Cyprus’s financial turmoil may force Russia to review the share of euros in its international currency reserves, the world’s fourth-largest stockpile.
  • German lawmaker Hans Michelbach said the new Cypriot plan seems to fall 1 billion euros short of the revenue target and would increase state debt.
  • The Cypriot central bank has ordered lenders to remain closed through tomorrow.
  • With a national holiday on March 25, account holders therefore won’t have full access to their money before Tuesday.

Take Away #6: Cyprus continues to look toward Russia for assistance.

Key Facts and Figures:

  • In Moscow, Sarris said Cyprus was “asking for help clearly, but something that would make also economic sense for Russia,” including the extension of the 2.5 billion-euro loan granted by Russia in Dec. 2011.
  • Three Russian officials said Cyprus was also asking for a fresh 5 billion-euro loan.
  • Sarris said on TV that Russia was unable to provide the loans because of uncertainty in Europe.
  • European officials have struggled to find an agreement that would rescue Cyprus, which accounts for less than half of a percent of the euro region’s economy, without unsettling investors in larger countries.
  • Other elements to the rescue include asset sales and an increase in the corporate tax rate to 12.5% from 10%.

*To view original article from www.bloomberg.com click here.

Filed in: Economy, Latest

No comments yet.

Leave a Reply

You must be logged in to post a comment.