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Cyprus clinched a last-ditch deal with international lenders on Monday for a 10 billion euro ($13 billion) bailout that will shut down its second largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians. The agreement emerged after fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund - hours before a deadline to avert a collapse of the banking system. The plan, swiftly endorsed by euro zone finance ministers, will spare the east Mediterranean island a financial meltdown by winding down Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a "good bank". (SOUNDBITE) (English) EUROGROUP CHAIRMAN JEROEN DIJSSELBLOEM, SAYING: "Laiki bank will be resolved immediately with full contribution of equity shareholders, bondholders and uninsured depositors, and it will be split into a good and a bad bank. The bad bank will be run down over time, the good bank will be folded into the Bank of Cyprus, so all the insured deposits will be moved into the Bank of Cyprus as well as the good assets." Deposits above 100,000 euros, which under EU law are not guaranteed, will be frozen and used to resolve debts, and Laiki will effectively be shuttered, with thousands of job losses. (SOUNDBITE) (English) EUROGROUP CHAIRMAN JEROEN DIJSSELBLOEM, SAYING: "I would like to emphasize that none of these measures will affect deposits below 100,000 euros. There should be no doubts about that." An EU spokesman said no levy would be imposed on any deposits in Cypriot banks. A first attempt at a deal last week collapsed when the Cypriot parliament rejected a proposed levy on all deposits.
March 25 - Euro zone finance ministers approve Cyprus rescue plan to avoid bankruptcy and an exit from the eurogroup. Rough Cut (no reporter narration). ( Transcript )
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