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Cyprus MPs approve bank restructuring bill

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(Globalpost/GlobalPost)

The Cypriot parliament approved a bill to restructure the island's troubled banking sector late Friday, the third measure adopted so far in a desperate bid to rescue an EU bailout by a Monday deadline.

The bill, much the most contentious of the three approved, passed by 26 votes to two, with 25 abstentions.

The restructuring plan drawn up by the central bank would separate good debts from bad in troubled banks, particularly second largest lender Popular Bank, or Laiki in Greek.

Acting ruling Disy party leader Averof Neophytou had appealed to MPs to back the legislation saying it would guarantee all deposits of up to 100,000 euros ($129,000), although those with balances of more might have to wait years to get all their money back.

He said the plan would also secure some 8,000 jobs in Popular Bank although a few hundred might be lost in the restructuring.

MPs then adjourned shortly before midnight (2200 GMT) without setting a time for resuming their debate on the rest of the government's last-ditch package aimed at raising 5.8 billion euros ($7.47 billion) to unlock loans worth 10 billion euros.

The alternative would be to face being denied European Central Bank (ECB) emergency funds in a move that would collapse the island's banks and devour its economy.

Back on the table is a plan to levy a tax of up to 15 percent on bank balances of 100,000 euros and more that MPs already flatly rejected in slightly different form last Tuesday.

Commentators said that the government wanted to hold further talks on its new plans for the "haircut" on despoits with the troika -- the EU, ECB and International Monetary Fund -- before putting it before parliament.

cc/kir

http://www.globalpost.com/dispatch/news/afp/130322/cyprus-mps-approve-bank-restructuring-bill