BRUSSELS, March 25 Cyprus's president and the
European Union have agreed the outlines of a rescue deal that
would see the creation of a "good bank" and a "bad bank" and
include the shutting down of Cyprus's second largest lender, EU
The draft proposal was agreed by Cypriot President Nicos
Anastasiades in negotiation with European Council President
Herman Van Rompuy and European Commission President Jose Manuel
Barroso. The plan will now be presented to euro zone finance
ministers for discussion, the officials said.
Two sources said the proposal involved shifting deposits
below 100,000 euros from the Popular Bank of Cyprus (also known
as Laiki) to the Bank of Cyprus to create a "good bank".
Uninsured deposits -- those above 100,000 euros -- would be
held and would face a heavy levy, the officials said, and the
bank would then effectively be shuttered. It was not immediately
clear how big the levy would be.
The Bank of Cyprus would also assume all of the emergency
lending that Popular Bank has taken on from the European Central
Bank, which totals 9 billion euros. That would leave the Bank of
Cyprus with total ELA exposure of 10 billion, the source said.