• Cyprus Banking Sector restructuring

    27-03-2013

    On Sunday 24 March 2013, Cyprus agreed to an aid package of �10 billion from the European Union and the International Monetary Fund.

    As a result of the agreed deal, the banking sector of Cyprus will undergo a restructuring as follows:

    1. Laiki Bank (the second biggest bank) will close down and be split into a "good bank" and a "bad bank".

    2. Deposits in Laiki Bank of less than �100,000 will be moved to the "good bank" which will be absorbed by Bank of Cyprus (the island's biggest bank).

    3. Deposits in Laiki Bank in excess of �100,000 will be moved to the "bad bank". These depositors will receive an unspecified amount following the liquidation of the "bad bank".

    4. Deposits in Bank of Cyprus in excess of �100,000 will participate in the restructuring of the bank and will become the new shareholders of the bank. The amount of the participation is yet to be determined.

    5. Deposits in Bank of Cyprus of less than �100,000 will be unaffected.

    6. Other banks operating in the country are unaffected by the above deal.

    Banks have been closed for more than a week and are expected to open tomorrow. However, capital controls are expected to be in place in order to avoid a run on the banks.

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