Restructuring would save Cyprus's Laiki bank: ruling party

Restructuring of Cyprus's Popular Bank -- Laiki in Greek -- into good and bad banks would "shield it from bankruptcy", acting leader of the ruling Disy party Averof Neophytou told reporters Thursday.

"I think we will avoid bankruptcy of Popular Bank and 8,000 jobs are secured," Neophytou told reporters after a meeting of party leaders.

He said the restructuring would provide 100 percent protection for 361,000 out of 379,000 accounts in the bank, with the remainder not enjoying full protection because they exceed the 100,000-euro ($129,000) threshold for insured deposits.

Earlier governor Panicos Demetriades said the Cyprus Central Bank was pressing the government to introduce emergency legislation on the banking sector restructuring.

It "has recommended the urgent submission and immediate enactment into law by the House of Representatives of the legislative framework relating to the reorganisation and recovery of the Cypriot banking system," he told reporters.

"This consolidation process will prevent the risk of bank failures and protect in their entirety all insured deposits up to the amount of 100,000 euros ($129,000)," he said.

"It also creates conditions for the recovery of the banking system and guarantees jobs," said Demetriades as he entered the presidential palace in Nicosia for the talks with party leaders.

Demetriades said that without the legislation Popular Bank faced the threat of immediate bankruptcy.

"With the establishment and enactment of the above legislative framework, consolidation measures will be implemented at Popular Bank, in order for it to be able to continue to provide banking services to customers, with the reopening of banks on Tuesday," he said.

"Otherwise, Popular Bank will be driven to immediate bankruptcy and termination of business, with devastating consequences for employees, depositors as a whole, our banking system and the economy."