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Cyprus bank creditors must share burden - German finance minister

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(Globalpost/GlobalPost)

ATHENS (Reuters) - The euro zone stands ready to help bail out Cyprus but the burden must be shared by its banks, otherwise the island's economy will collapse under its public debt, Germany's Finance Minister told a Greek newspaper on Friday.

"The perception that this (Cyprus) problem can be solved only by taxpayers in the euro zone without the participation of major creditors of Cypriot banks cannot be accepted by Europe's citizens," Wolfgang Schaeuble told daily Ta Nea in an interview.

The European Union has given Cyprus until Monday to raise the 5.8 billion euros it needs to secure a 10 billion euro international bailout, or face a collapse of its financial system that could push it out of the euro currency zone.

Schaeuble said that the 17-nation euro zone was willing to help Cyprus but the bailout must address Cyprus's core problem.

"In Cyprus, the problem has to do with an overbloated and partly bankrupt banking sector. Taxpayers, including Cypriots, should not bear all of the burden, bank creditors should bear part of it," he was quoted as saying.

On Tuesday, angry Cypriot lawmakers rejected a tax on deposits, calling an EU-backed bailout proposal "bank robbery".

Cyprus is struggling to come up with a "Plan B" to raise the 5.8 billion euros.

Chances of raising the money from Russia looked slim on Friday, Cypriot Finance Minister Michael Sarris prepared to fly home empty-handed from Moscow, having failed to win support in two days of talks on prolonging a bailout loan or on a possible new financing package.

The Cypriot parliament reconvenes later on Friday to debate a raft of government crisis measures.

(Reporting by George Georgiopoulos; Editing by John Stonestreet)

http://www.globalpost.com/dispatch/news/thomson-reuters/130322/cyprus-bank-creditors-must-share-burden-german-finance-minister