Cypriot Laiki bank to be closed down, Bank of Cyprus restructured

BRUSSELS, March 25 Sun Mar 24, 2013 10:15pm EDT

BRUSSELS, March 25 (Reuters) - Cyprus will close down one of its two biggest banks and restructure the second one as part of an international bailout, Cyprus and international lenders agreed on Tuesday.

Bank depositors of up to 100,000 euros will not suffer any losses but bigger depositors will contribute to recapitalising the bank that is to be restructured - Bank of Cyprus.

Shareholders, bondholders and those who held deposits above 100,000 euros in Laiki bank, which will be closed down, will cover the cost of the resolution, euro zone ministers and the International Monetary Fund decided.

Depositors with more than 100,000 euros in the Bank of Cyprus will see their money above that threshold frozen until it is clear how much of it will be needed to recapitalise the bank so that it can reach a capital ratio of 9 percent.

The Laiki bank will be split into a good and bad bank and the good part will be folded into the Bank of Cyprus. It will take 9 billion euros of European Central Bank liquidity with it to the Bank of Cyprus.