Last-minute deal resurrects Cyprus bailout

Last-minute deal resurrects Cyprus bailout

BRUSSELS - EU and IMF officials struck a last-minute deal with Cyprus early Monday to resurrect a bailout for the island - but one banking chain goes to the wall and major clients, who include many Russians, will take a giant hit.

Final backing was received at around 0100 GMT, 12 hours into marathon talks for President Nicos Anastasiades with EU, ECB, IMF and eurozone leaders, with Cypriot President Nicos Anastasiades saying he was "content."

Earlier, Anastasiades had indicated a breakthrough after hours of gruelling talks Sunday evening, as a deadline for the withdrawal of European Central Bank financing loomed.

"Efforts have culminated," he posted on Twitter.

Soon after, EU sources announced that eurozone finance ministers had given the deal their approval.

The agreement involves breaking up the island's second largest lender Laiki (Popular Bank).

And the Bank of Cyprus, the island's No.1, will take a major "haircut" - a forced wipeout of investment value, on all deposits of more than 100,000 euros.

The Bank of Cyprus, with one third of all holdings, survives, but at a massive price for investors - and the bank holds most of the island's offshore Russian deposits.

But the new agreement backs off from last week's collapsed deal to hit all savers in all banks on the island.

Smaller account-holders will be covered by the EU's deposit guarantee legislation, which runs to the 100,000-euro threshold: it is those above that level who face big losses overnight.

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