BRUSSELS, March 25 Cyprus, the European Union
and the International Monetary Fund have agreed a new plan to
resolve the island's bank and finance a rescue of the country,
an EU official said early on Monday.
The proposal, which will now be presented to euro zone
finance ministers for discussion, will involve setting up a
"good bank" and a "bad bank" and will mean that Popular Bank of
Cyprus, known as Laiki, will effectively be shut down.
Deposits below 100,000 euros in Laiki will be transferred to
Bank of Cyprus. Deposits above 100,000 euros, which under EU law
are not insured, will be frozen and will be used to resolve
debt. It remains unclear how large the writedown on those funds
The EU spokesman said there would be no "levy" imposed on
any Cypriot banks, with the package requiring a full "bail-in"
of uninsured depositors, which is likely to mean heavy losses
for those with large holdings in Laiki and potentially Bank of
Cyprus, where many Russians hold bank accounts.