Cyprus and international lenders reached a draft deal in the early hours of this morning.
Details of the deal were sketchy but involved heavy levies on both of Cyprus’ biggest banks. Other banks appeared to have been spared. And no charges will be incurred against any Cypriot bank account with less than 100,000 euros in them, EU officials said.
Reuters reported that the deal involves 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 will be.
Some reports suggested it might be as high as 40 per cent.
"It should be fairly easy for finance ministers to agree to this," an EU official told Reuters. "We have been in close contact with all relevant eurozone countries during this negotiation process and there is broad agreement."
The plan is likely to mean very heavy losses for uninsured deposits in Laiki, which has suffered since writing down the value of its holdings of Greek government bonds last year.
Around 35 billion euros is held in Cypriot accounts with more than 100,000 euros in them, but it is not clear how much of that total is held in Laiki bank.
If sufficient funds can be found in Laiki to pay off debt and restructure the Cypriot banking sector, uninsured depositors in Bank of Cyprus may not incur any losses, although that remains to be seen.
One of the officials said shareholders and bondholders in Bank of Cyprus would be part of the "bail-in", with those investors receiving equity in the bank in exchange.
The draft proposal was agreed by President Nicos Anastasiades in negotiation with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso. The plan was presented to eurozone finance ministers for discussion, a short time later.
Cyprus acting President Yiannakis Omirou confirmed in Nicosia that an initial agreement had been reached in Brussels.
According to Cyprus News Agency (CNA) sources close to the government, the agreement foresees a 30 per cent “haircut” on Bank of Cyprus deposits over 100,000 euros. But crucially there would be no restructuring of the Bank of Cyprus and it would not be forced to absorb the 9 billion euro burden of emergency liquidity assistance (ELA) of Laiki. This idea, a red line for Anastiasides, had been  abandoned the sources said. However, the details remained unclear.
Anastasiades had at one stage threatened to resign last night during tense and protracted negotiations with international lenders.
If a bailout deal is not done and dusted by midnight tonight, the economy faces total collapse as emergency liquidity assistance from the European Central Bank (ECB) will be cut off.
Although Anastasiades travelled to Brussels on a private jet sent by the European Commission early yesterday morning, the day-long talks with the EU, International Monetary Fund (IMF) and the ECB were fraught with tension. On top of that, Anastasiades had to talk back and forth with the presidential palace in Nicosia where political party leaders were holed up awaiting regular briefings from the president.
At one point during the meeting, he reportedly told international lenders during a heated exchange that their proposal to saddle the Bank of Cyprus with some €9 billion in emergency liquidity assistance owed by the Popular Bank to the European Central Bank, effectively meant the lender’s closure in six months.
 “I table one proposal, you don’t accept it; I table another, same thing. What else do you want me to do? Do you want to force me to resign? If that’s what you want, let me know,” Anastasiades was quoted as telling international lenders.
"He offered to resign," a source later told Reuters, describing the meeting, which included IMF Chief Christine Lagarde, European Central Bank President Mario Draghi, European Council President Herman Van Rompuy and other top officials, as tense.
A decision had already been taken to resolve the island’s second biggest lender, Laiki, while Nicosia had earlier offered to accept a 20 per cent levy on deposits of over €100,000 in BoC and 4.0 per cent in other banks.
Other reports said the EU was considering a haircut of Cyprus’ debt, similar to what happened in Greece, which the Europeans said had been a one-off.
The government spokesman said earlier the president and his team had a "very difficult task to accomplish to save the Cypriot economy and avert a disorderly default".
The EU's economic affairs chief Olli Rehn said there were no good options but "only hard choices left" for the latest casualty of the euro zone crisis.
Anticipating a run when banks reopen on tomorrow, parliament has given the government powers to impose capital controls.
Earlier yesterday, Anastasiades instructed Cypriot officials to halt talks on the transfer of Cypriot banks’ Greek units to Greece as part of the island’s bailout deal.
Observers suggested that Cyprus wanted to use this as a bargaining chip during last night’s negotiations.
With the operations still in Cypriot hands, a potential collapse of the island’s economy could spread to crisis-stricken Greece.
Reports said that over half of the €9.0 billion in ELA absorbed by Popular had been used to prop up its Greek operations.
French Finance Minister Pierre Moscovici rejected charges that the EU had brought Cypriots to their knees, saying it was the island's offshore business model that had failed.
"To all those who say that we are strangling an entire people ... Cyprus is a casino economy that was on the brink of bankruptcy," he told Canal Plus television.
Analysts say failure to clinch a deal could cause a wider financial market selloff, but some say the island's small size - it accounts for just 0.2 percent of the euro zone's economic output - means contagion would be limited.
German Finance Minister Wolfgang Schaeuble said there had been little progress since last weekend's attempted bailout deal involving a levy on all bank deposits, which the Cypriot parliament overwhelmingly rejected, but he hoped people in Cyprus now had "a somewhat realistic view of the situation".
Schaeuble said the financial numbers had worsened, if anything, in the intervening week. Asked what a solution would look like, he said: "What we agreed last week."

IMF managing director Christine Lagarde and Germany's Finance Minister Wolfgang Schauble laugh at the start of the Eurogroup meeting in Brussels

THE board of collapsed Cyprus Popular Bank thought Europe would never let the ailing lender fail, its departed vice chairman said in his first interview since stepping down on Friday.

Chris Pavlou, a Cypriot-born banker, had joined the board of Cyprus Popular, also known as Laiki, in December 2011 and was put in charge of helping the bank sort out its troubled operations. He had spent more than 30 years working for banks overseas including HSBC and Barclays.

Cyprus ultimately agreed to close Laiki, the second-largest bank, and transfer deposits under €100,000 into its competitor, a move that will cost thousands of employees their jobs and could wipe out all deposits above €100,000.

"Professionally today is the worst day of my life. People in the bank, they have been there a long time, a lifetime," Pavlou said.

He said he stepped down after the decision late on Thursday to split Laiki into a good bank and bad bank, because he disagreed with the strategy and felt he could do no more on the board.

"To be fair to the rest of the board, they felt that the European Union would never let Cyprus go down, they would never let Laiki go down," Pavlou said.

"I had a different view to that. I believed that there was that danger very clearly."

Pavlou had supported Cyprus' original plan to tax deposits below €100,000 at a rate of 6.75 per cent, a proposal that provoked outrage both locally and internationally since it breached a government guarantee scheme. It was ultimately voted down by parliament last Tuesday.

"Ten days ago when they came back from the EU with that solution, it wasn't easy but it was the best one," he said. "I knew in my heart that the next thing to come, it would be worse."

Pavlou said the first plan was better because both Laiki and Bank of Cyprus would have survived, albeit as smaller institutions, and that the measures would not have imposed such hardship on large depositors.

Those large depositors are "certainly not" all Russian oligarchs. "It's a lot of Cypriots who stayed loyal to the banks," he said, adding that pension funds also had large deposits at the bank.

Pavlou said a significant amount of large deposits had flowed out of the bank in recent months but that closing the banks had prevented an avalanche of withdrawals in the week and a half after the announcement of taxes on deposits.

"Some money did come out in the last 10 days. It was a slide if you like - panic amongst the Cyprus populace - and slowly but surely they were taking money out." 

RUSSIA signalled yesterday it would backstop the European Union's bailout despite anger that the weekend rescue deal would impose heavy losses on uninsured depositors, many of them Russian.

President Vladimir Putin ordered his government to negotiate the restructuring of a bailout loan it granted to Cyprus in 2011 - having rejected Nicosia's request for easier terms during crisis talks last week.

Putin "considers it possible to support efforts... aimed at overcoming the crisis in the economy and banking system of this island state," his spokesman Dmitry Peskov said.

Russia has repeatedly expressed its dismay at Europe's handling of the debt crisis in Cyprus, while resisting the entreaties of President Nicos Anastasiades to offer significant financial support of its own.

But, following the agreement of a €10 billion European bailout deal over the weekend, Moscow's position has softened.

While Russia has complained over discrimination against businesses that rely on Cyprus as an offshore centre, the Kremlin has been careful not to become embroiled in a potentially open-ended financial and strategic commitment that could become a nexus of friction with Europe.

Nevertheless, Prime Minister Dmitry Medvedev - who ranks below Putin in Russia's ruling hierarchy - earlier criticised the bailout deal that will inflict heavy losses on uninsured deposits of over €100,000 at the two main Cypriot banks.

"The stealing of what has already been stolen continues," Medvedev was quoted by news agencies as telling a meeting of government officials.

Cyprus had requested an extension of the existing €2.5 billion Russian loan, and a reduction in the interest it charges to 2.5 per cent from 4.5 per cent.

Russia also last week turned down an offer of stakes in the island’s banks and offshore energy reserves in return for around €6 billion in new financing, a sign that Moscow is reluctant to become over-extended financially and geopolitically despite a strong balance sheet that is underwritten by oil revenues.

Russians are believed to account for most of the €19 billion of non-EU, non-bank money held in Cyprus banks at the last count by the central bank in January. Of €38 billion in deposits from banks, €13 billion came from outside the EU.

Speaking after the meeting with Medvedev, First Deputy Prime Minister Igor Shuvalov said losses to Russian investors in Cyprus were not yet clear.

He also said that the Cypriot unit of state-controlled VTB, Russian Commercial Bank, would not be affected by measures taken by the government. Russia hopes that further financial support will not be needed.

"What is happening is a good signal to those who plan to move their capital to... Russian banks," he was quoted as saying. "We have very stable banks."

A man walks out of a Russian supermarket in Limassol

SOURCES with access to the Presidential Palace have confirmed that President Nicos Anastasiades at one stage did threaten to resign during tense negotiations with international lenders on Monday morning.

Initial reports had Anastasiades telling International Monetary Fund chief Christine Lagarde:  “I table one proposal, you don’t accept it; I table another, same thing. What else do you want me to do? Do you want to force me to resign? If that’s what you want, let me know,” Anastasiades was quoted as saying.

His outburst reportedly came during a heated exchange with the IMF that their proposal to saddle the Bank of Cyprus with some €9 billion in emergency liquidity assistance owed by the Popular Bank to the European Central Bank, effectively signaled the lender’s closure in six months.

But it appears that what Anastasiades really said was: “If you think I will resign so that another one will come and you can continue the negotiations, you are very mistaken. Even if I did resign, the negotiations could not restart before 45 days have passed,” the President told Lagarde.

Anastasiades – known for his fiery temper – apparently lost it when Lagarde proposed a 60 per cent haircut on uninsured depositors with the Bank of Cyprus.

During a break in the talks, Anastasiades held a working dinner with European Council President Herman van Rompuy and European Commission President Jose Manuel Barroso.

Sources confirmed to the Cyprus Mail media reports that, during the dinner, Anastasiades took van Rompuy and Barroso aside and told them something along the lines of: “Make her come to her senses, if we are to talk shop.”

He was evidently referring to Lagarde.

At least that was Anastasiades’ version during a conference call shortly after with political leaders who were gathered at the Presidential Palace.

During the same call to Nicosia, an exasperated President said half-jokingly that he wanted to pick up a chair and throw it.

At which point one of the politicians back in Nicosia taunted him: “Why don’t you throw an ashtray instead?”

It was an allusion to Anastasiades’ rumoured habit of tossing ashtrays whenever he throws a fit.

“There weren’t any ashtrays around,” the President retorted.

The Church stands to lose more than 100 million euros in the bailout deal reached with international creditors early Monday, its leader Archbishop Chrysostomos said.

"The capital owned by the Church, which was over 100 million euros, has been lost," the archbishop told reporters.

"There will be many difficulties, some will lose their jobs, the hungry will be multiplied and the Church has to take care of people,"

he added.

The church has substantial shareholdings on the island, including in the banks at the centre of the drastic financial sector cuts imposed by the European Union and the International Monetary Fund as a condition for releasing 10 billion euros in emergency loans.

The church's interests range from hotels to brewers, and it is also the island's biggest landowner.

Last September, as the financial crisis bit, the church cut salaries of bishops and most priests by 15 to 25 percent but spared those who received 1,500 euros or less in monthly salaries.

ALL banks will remain closed until Thursday, the Minister of Finance announced last night.

Earlier it was just Bank of Cyprus and Laiki that were to remain closed for a further two days; the change was made last night for the smoother operation of the entire banking sector.

According to sources, the late night decision to stall the opening of the island’s smaller banks was taken following a disagreement between European Commission and European Central Bank (ECB) officials on how to adjust the banking system in lieu of the restructuring of Laiki and its partial merger with Bank of Cyprus. 

In a separate communiquι, the Central Bank said the agreement at the Eurogroup meeting “ensures that Cyprus has avoided default and the associated consequences this would have had for the country. The agreement has also avoided the disorderly default of Laiki Bank”.

It added: “The Bank of Cyprus, which will be restructured and fully capitalised using the relevant legislation, will acquire the performing loans, other assets and the insured deposits of Laiki Bank. This will create a healthy and resilient bank able to serve the needs of its customers and, more broadly, support the Cyprus economy.”

The initial go-ahead for the banks’ reopening came after a formal decision yesterday by the European Central Bank (ECB) to give Cypriot banks access to emergency central bank funding after the country struck a bailout deal.

Last week, the ECB had said it would cut off emergency funding to Cypriot banks if the country failed to agree on a bailout from international lenders by Monday.

“Today, the Governing Council decided not to object to the request for provision of Emergency Liquidity Assistance (ELA) by the Central Bank of Cyprus, in accordance with the prevailing rules,” the ECB said in a statement. “It will continue to monitor the situation closely.”

It was still not clear until late last night whether the banks other than Laiki and Bank of Cyprus would operate without any restrictions on transactions or capital movements.

President Nicos Anastasiades met the Central Bank governor at the Presidential Palace last night.

Earlier, online news outlet Stockwatch cited a Central Bank spokesperson that no restrictions were necessary given that the ECB has promised to make emergency cash available to the Bank of Cyprus.

It was also unclear whether the ‘good’ Laiki would open or whether the merger with Bank of Cyprus should be completed by Thursday.

The capital control law passed by the legislature last Friday gives the regulator the power to: restrict cash withdrawals; ban premature termination of time deposits; mandate a compulsory reprogramme of maturing time deposits; ban or restrict opening new accounts; convert current accounts into time deposits; ban or restrict non-cash transactions; restrict use of credit, debit or prepaid cards; ban or restrict cashing cheques; restrict interbank transactions or transactions within the same bank; restrict transactions between the public and credit institutions; and restrict movement of capital, payments and transfers.

MANY said that Cyprus secured the best possible deal under the circumstances during the 10-hour negotiations in Brussels but this is of little comfort when we ponder the consequences of the terms imposed on President Anastasiades. The best possible deal will push us into a prolonged slump that will shrink the economy beyond recognition, as businesses will close down and the numbers of the unemployed will keep rising.

It is true that Cyprus brought this upon itself, the previous government ignoring the countless warnings over the years and behaving as if the problems would go away if it ignored them. We put ourselves in the position from which there was no escape but this did not justify the punitive nature of the bailout agreement imposed in the early hours of yesterday. The medicine administered by the Eurogroup, on the recommendation of the IMF and the ECB, is designed to finish off rather than cure the patient.

The winding up of Laiki Bank, the second largest lender, should have taken place last year but it was kept afloat by billions from the Emergency Liquidity Assistance. What was unacceptable and indicative of the troika’s bullying was the insistence that Laiki’s €9.2 billion debt should be undertaken by the Bank of Cyprus, which would also be obliged to take over Laiki’s good business, valued rather generously at €7 billion. To be able to survive with an additional €2 billion liability the Bank of Cyprus would have to bail in uninsured deposits by between 30 and 40 per cent to meet capital requirements, instead of the proposed 20 per cent.

This means that many businesses will lose a big chunk of their trading capital, be unable to make payments to creditors and to operate. Add to them the thousands of businesses that were using Laiki and will have lost all their capital and it is difficult to see how the economy would operate. Will credit be available or will the rest of the banks reduce facilities and call in loans to limit their exposure? When the unaffected banks open today, if there are no restrictions on withdrawals, they could also come under severe pressure and face liquidity shortages because confidence in the Cypriot banking system has been shattered.

This is what the Eurogroup has achieved in its mission to reduce the size of the banking sector and destroy Cyprus’ economic model. The fact is that Cyprus was small and inconsequential enough for Germany, the ECB and the IMF to make an example of without the risk of contagion for the rest of the eurozone. They did not dare bail in depositors in the case of Ireland, Greece and Spain’s banks, ignoring the EU policy and legislation, which they felt obliged to pursue for Cyprus.

The big irony is that for months we have been hearing IMF, Eurogroup and Commission officials insisting that Cyprus’ public debt should be sustainable. It would be anything but sustainable now that they have killed off all economic prospects for the next five to 10 years. 

THE COUNCIL of Ministers will appoint criminal investigators in the coming days with a “clear and wide-ranging mandate” to find those responsible for bringing Cyprus to the brink, President Nicos Anastasiades said last night. 

In a televised address to the nation on his return from Brussels where he reached political agreement with the Eurogroup on a Cyprus bailout, the president said he understood the “justifiable sense of anger” felt by people regarding the responsibilities of those who led Cyprus to its current predicament.

Anastasiades confirmed that Cyprus will introduce “very temporary” restrictions on capital flows when banks reopen this week.

“The central bank will implement capital controls on transactions,” he said, adding, “I want to assure you that this will be a very temporary measure that will gradually be relaxed.”

After his late night televised address, Anastasiades held a meeting with central bank governor Panicos Demetriades at the Presidential Palace.

The president said the bailout deal reached overnight Sunday to Monday in frantic talks with the island’s partners in the eurozone was “painful” but the best under the circumstances.

Anastasiades held marathon talks with European Council and Commission Presidents Herman Van Rompuy and Jose Manuel Barroso, the IMF’s Christine Lagarde and representatives of the European Central Bank before a deal was banged out which the Eurogroup rubber stamped in the early hours of Monday morning.

“The agreement that we reached is difficult but, under the circumstances, the best that we could achieve,” said the president.

Anastasiades said failure to reach agreement on a rescue package at the weekend would have led to the collapse and bankruptcy of the state.

Regarding the high-stakes Brussels visit, he noted there were both “difficult” and “dramatic” moments.

“Cyprus was a breath away from economic collapse. Our choices were not easy nor the environment ideal. But through tough negotiations, persistence and a sense of responsibility we reached a result that secures the country’s prospects.”

He added: “Together, the people and political leadership fought a hard battle from which we came out wounded, but upright and determined to make a fresh start.”

Anastasiades said the country can now leave behind the uncertainty and anxiety witnessed in recent months and look to the future with optimism.   

“From tomorrow, begins a new era for Cyprus. In the next few days, tough decisions will be implemented,” he said, adding, “We have an obligation to stand on our feet and get out of the vicious cycle of recession”.  

He assured people that the government will do all it can to provide concrete measures to help those who will suffer the most from the crisis. “As a first measure, we will secure all provident funds of the affected banks.” 

Regarding calls to leave the euro currency, he said: “Despite the bitterness and disappointment we all felt regarding the positions some of our partners took against Cyprus, I do not believe distancing ourselves from the European family would be the right response to the crisis.”

Starting from now, Cyprus and its people must begin the reconstruction effort, he said. 

“Let’s turn the crisis into an opportunity, making a fresh start to build the future on more solid and sound foundations.”

After hours of ‘tense’ negotiations in Brussels, in exchange for a €10 billion rescue package, Anastasiades agreed to wind down Laiki Bank, inflict heavy losses on big depositors, merge the bank’s healthy assets and loans with the Bank of Cyprus (BoC) and accept a haircut on BoC large deposits, the size of which has yet to be announced. All small savers with under €100,000 deposits in both banks will be protected. 

Uninsured deposits above €100,000 in both banks will be frozen and used to resolve Laiki's debts and recapitalise the Bank of Cyprus through a deposit/equity conversion. Laiki will effectively close down, with thousands of job losses.

According to Reuters, Eurogroup chairman Jeroen Dijssebloem said the raid on uninsured Laiki depositors is expected to raise €4.2 billion.

The final terms of the agreement will bring a sigh of relief to eurozone leaders who came under heavy criticism for agreeing to hit both insured depositors, guaranteed by EU law, and uninsured depositors in the first agreement reached on March 15. That agreement was subsequently rejected by the Cypriot parliament with MPs effectively branding it depositor theft.

Without an agreement, Cyprus had faced certain banking collapse and potential exit from the European single currency. It still risks a run on banks when they reopen their doors this week. 

With the latest agreement, it looks increasingly like Laiki’s big deposits will be all but wiped out while BoC’s big depositors will also take a big hit - an unprecedented step in the eurozone.

Meanwhile, Barroso yesterday announced the creation of a Task Force for Cyprus to provide technical assistance to the Cypriot authorities, with the aim of restarting the real economy of the country.

He warned that the challenges facing Cyprus are “immense”, but that Cyprus could count on the EU for support. 

“We want to alleviate the social consequences of the economic shock by mobilising funds from EU instruments and by supporting the Cypriot authorities’ efforts to restore financial, economic and social stability.” 

President Anastasiades addressing the nation last night

The Larnaca bar-scene is no longer as one-dimensional as it once was; a new culture has emerged with an interest in a wide variety of genres and styles, and the town is acting accordingly to gratify these new trends. While rock bars such as Savino and Stone Age have been around for decades in Larnaca’s famous old quarter of the Laiki Yitonia, the emergence of Dylan’s Bar offers something unique to the town’s newfound diverse culture.

Dylan’s Bar is situated in what used to be an old house which dates back to the early 19th century, just off the Phinikoudes promenade. However, from the moment you enter the bar, you are immediately drawn to the present with its sleek wooden floors, American-style bar stools and framed photos of musical legends of various times.   

It boasts a wide choice of both local and international beers, 60 to be precise. For those who have a hard time deciding which one to pick, the staff are always willing to lend their expert advice as to which one will suit your needs. A host of cocktails are also available, which will come in handy as the temperatures begin to start rising once again. 

Dylan’s is host to a number of live music nights, ranging from anything from Dubstep to R&B and Salsa to Funky House. With a number of important matches coming up from now until the middle of June, Dylan’s could be a useful hangout for sports fans with all the important games, both home and abroad, being shown at the bar. There is also an impressive games room, equipped with a pool table, foosball table, arcade games and even some board games.

The bar is closed on Mondays but is open on every other day from 6pm until the early hours of the morning. 

Dylan’s Bar

Where: 9 Watkins Street, Laiki Yitonia, Larnaca 

When: 6-late, Tuesday-Sunday

Contact: 96 211161

Dylan's Bar in Larnaca - a great spot

The Chairman of the Board of Directors of the Bank of Cyprus (BOC), Andreas Artemi, has handed in his resignation earlier today. 

It is believed that the reasons for his resignation concern his disapproval of the decision to sell off the Bank’s branches in Greece as well as €9.2 billion (ELA) that the BOC will be burdened with as a result of the restructuring of the banking sector.

Andreas Artemi

THE GOVERNMENT yesterday ran to put out the fire it accused the Central Bank of starting over the future of the Bank of Cyprus (BoC), highlighting the growing rift between the presidential palace and the CB governor. 
A short Central Bank announcement on the appointment of a special administrator for the BoC yesterday morning sparked all-out panic among Bank of Cyprus employees that the island’s largest lender awaited the same fate as Laiki (Popular) Bank - a wind down. 
Within hours, hundreds of distraught BoC employees gathered outside the Bank of Cyprus’ headquarters in Nicosia before moving their demonstration to the neighbouring Central Bank building, shouting for the resignation of CB governor Panicos Demetriades.
Finance Minister Michalis Sarris rushed to the Central Bank to bang out a short announcement clarifying that the Bank of Cyprus would undergo restructuring and internal recapitalisation, converting big depositors’ savings into shares.
As a result of this process, the European Central Bank (ECB) was committed to provide liquidity for BoC so the bank’s liquidity will not be affected by the transfer of Laiki’s effective debt to the ECB, amounting to €9.2 billion sucked out of the Emergency Liquidity Assistance (ELA) programme to keep Laiki afloat.  
Government spokesman Christos Stylianides said the confusion created in the morning by the CB’s failure to clarify the difference between the winding down of Laiki and the restructuring of the BoC was a “big mistake”.
“Unfortunately, there were communication errors. A Central Bank temporary order was issued effectively marrying winding down and restructuring as if they were the same thing. This issue was not properly explained and created panic not only among BoC employees but also the wider public,” said Stylianides.
He noted that it also created problems with the bank’s international partners, inevitably causing problems to its prestige and prospects.
“The government would have liked to see a clarification in the CB statement on appointing a special administrator (for BoC) so we wouldn’t have to see what happened as a result,” said the spokesman. 
Later in the day, Demetriades and Sarris held a joint press conference to bring the point home that the Bank of Cyprus would not suffer the same fate as Laiki.
Seeking to justify the apparent lack of coordination between the CB and the government, Demetriades said people were working under immense pressure until the early morning hours in a bid to complete the procedures.
“Coordination between the authorities becomes a bit more difficult under such conditions,” the governor said, adding that that efforts were being made to do everything in two days.
With chants for his resignation heard from the angry crowd of BoC employees below, Demetriades told a packed room of reporters that the rescue deal for BoC, which will merge with part of Laiki, will produce a “very strong bank”. 
The attempt to show a united front by the government and supervisory authority to calm jittery employees and deposit-holders comes not only after the government chastised the governor for his laconic early morning announcement, but also following mixed messages on when the banks will finally open again.
According to sources, President Nicos Anastasiades postponed his address to the nation at least three times on Monday after learning that the CB governor had announced that the banks- excluding BoC and Laiki- would open yesterday and without any capital controls imposed.
Anastasiades and Demetriades clearly have different views on whether the banking system would survive without capital controls.
Sources told the Cyprus Mail that the CB governor was keen to get the banks open as soon as possible, believing all other banks not undergoing a wind down or restructuring did not need capital controls. 
Hence, the CB announcement on Monday that those other banks would open yesterday. Anastasiades had a different view, preferring controls at least for the first few weeks.
On the same day, and just a few minutes to midnight, a second announcement was released saying all banks would remain closed yesterday and today. 
Demetriades confirmed as much yesterday saying the initial plan to open the smaller banks yesterday  would not have included capital controls.
However, since their opening date was pushed back two days, this changed the situation and the level of trust in the banking system, resulting in the need to impose “temporary” and “loose” capital controls on all banks on the island, said the governor.
All banks have been closed since March 15. Both Sarris and Demetriades said yesterday that everything was being done to prepare for the opening of the banks tomorrow though neither could guarantee for sure that they would.
Sources said Anastasiades was “furious” with Demetriades over his unilateral decision to open the ‘untroubled’ banks two days earlier than the other banks and without capital controls.
When asked to confirm reports that the governor does not have the confidence of the president, Stylianides dodged the question, saying instead: “The institutions, particularly in such difficult times, have to operate in a way that serves the common good.”
Asked later whether consultations between the governor and government were problematic, he replied: “Yes, when you have such errors in coordination then you have a problem that you have to deal with.”
According to sources, the government has considered removing Demetriades from office but has reached a stumbling block over provisions within the constitution.
Defending his handling of the crisis, Demetriades said that from the day he took office, he warned the previous government that Laiki was facing a serious risk of collapse and pushed the Demetris Christofias administration to apply for an EU bailout as soon as possible.
Asked why he did not order its winding down, the CB governor – a Christofias appointee - argued that the legislation was not in place at the time, meaning the only option was liquidation which would have led to bankruptcy of the bank and state.
Following parliament’s approval of the resolution and recovery bill last week, the instruments are in place to protect insured depositors and restructure both of the island’s biggest banks, he said.
Asked whether he would consider resigning following the government’s failure to provide comforting words of support for him, Demetriades said this was not the time for bravado, and expressed pride in the fact that the ECB has trust in him.
He also defended the ECB’s decision to keep Laiki on a “respirator” for many months, allowing Cyprus to hold elections and bring in a new government that would be willing to reach a bailout agreement. 

A distraught bank employee at the demo yesterday (CNA)

THE Electricity Authority of Cyprus will reduce the cost of electricity a further 3.0 per cent in addition to the scheduled reduction of 5.75 per cent due on April 1.

The announcement was made on Wednesday by Commerce Minister George Lakkotrypis after a meeting at the Presidential Palace with all parties involved in the energy sector.

Regarding developments in the natural gas and relations with Israel, Lakkotrypis said that he intended to visit the country in April, while President Nicos Anastasiades will also visit Israel in May.

THE Central Bank has sacked the boards and CEO’s of the Bank of Cyprus and Laiki to facilitate the banking sector’s restructuring.

The decision had been taken during a meeting between international lenders, the finance ministry, Central Bank Governor Panicos Demetriades, and the undersecretary to the president.

The move follows the appointment of special administrators who will oversee the enforcement of a Eurogroup decision to resolve Laiki and transfer its assets to Bank of Cyprus.

CEO Yiannis Kypri  said he was summoned to the Central Bank early on Wednesday and asked to submit his resignation.

"The reason I was given was that, based on the resolution decree recently passed by parliament and upon demands of the troika, an administrator had been appointed at the Bank," Kypri said in a written statement.

"Until now I have not received a formal letter from the governor of the Central Bank on the matter," he said.

Kypri, who has spent decades at the bank, took over last year as CEO. A central bank spokeswoman was not available for comment.

Bank of Cyprus will have to impose a hefty haircut on uninsured depositors – over €100,000 – as part of the deal.

The rate currently mooted was 40 per cent but there was nothing official so far.

CYPRUS is expected to stop people taking their money out of the country but will not restrict dealings at home as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders.

With banks due to reopen on Thursday after nearly two weeks, Finance Minister Michael Sarris said capital controls will be "within the realms of reason" and a business leader said he had been told they would affect only international transactions.

"We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals," Sarris told local television.

Speaking after meeting government officials, the head of the Cyprus chamber of commerce said: "We have been assured that limitations will not affect transactions within Cyprus at all."

"Where there will be limitations is on what we spend abroad and also on capital outflows," Phidias Pelides told reporters.

The central bank governor said earlier that "loose" controls would apply temporarily to all banks. Earlier, the finance minister said they could be in place for weeks. Banks have been shut since final bailout talks got under way in mid-March. (R) 

The European Commission has decided, after a suggestion submitted by its President Jose Manuel Barosso, to set up a task force for Cyprus to  help Cypriot authorities restore financial and social stability on the island.

A European Commission spokesperson said Commissioners were informed during a meeting on Wednesday about the situation and discussed Eurogroup decisions on Cyprus.

The Commission adopted Barosso’s proposal to set up a Task Force to assist Cyprus in its efforts to ease repercussions and bring the economy back on the track.

Barroso had said in a statement on Monday that the business model of Cyprus was not viable and could not offer lasting prosperity to the people of Cyprus and therefore a solution had to be found.

"We want to alleviate the social consequences of the economic shock by mobilising funds from European Union instruments and by supporting the Cypriot authorities` efforts to restore financial, economic and social stability. We will bring in further expertise to facilitate the emergence of new sources of economic activity. The Commission stands by the Cypriot people," he said.

Particular emphasis will be given to employment and growth. The Task Force will submit progress reports to the Cypriot authorities and the Commission every two months. It will be coordinated by Commissioner Olli Rehn.

 CYPRUS IS to impose a ban on cashing cheques and limit the amount of cash that can be taken out of the country under a series of measures to avert a run on its s crippled banks, a Greek newspaper reported on Wednesday.

The Kathimerini newspaper, citing a government decree, said the measures would remain in force for seven days after the banks re-open on Thursday.

Cypriots who want to transfer money overseas will have to prove that the transactions meet strict rules laid out by the government.

To allow trade to continue, Cypriot businesses can pay for imports if they provide authorities with the necessary documentation.

The use of credit and debit cards overseas is restricted, and individuals travelling abroad can take a maximum of 3,000 euros on each trip.

Funds deposited with banks for a fixed period of time cannot be withdrawn early.

Officials at the Cypriot central bank and finance ministry told Reuters that the newspaper report was based on draft proposals and a final version had yet to be adopted.

Final proposals were expected to be published later on Wednesday, a day before the banks reopen for the first time in 12 days. 

A VIDEO clip with the title ‘Apple Has the Cash to Buy Cyprus and Rename it iCyprus has been uploaded on youtube by syndicated columnist Charles Krauthammer.

The video clip is a tongue in? cheek comment on the current financial situation in Cyprus. It suggests that Apple buy Cyprus, rename it iCyprus, and use it as an offshore campus. 

Krauthammer said: “What’s amazing here I think is how small Cyprus is and how relatively small the problem is. The bailout total that you mentioned is about a quarter of Apple’s cash on hand. I mean, this is one country that Apple could purchase, and have a lot left. It could own the island and call it, you know, iCyprus or something, and have all this cash left over… It would be a great campus for Apple.”

To view the video clip:

 http://www.youtube.com/watch?v=s6dVEkEE3-Q&feature=youtu.be

AN ALL-DAY solidarity concert, titled ‘CyprusAID – People for People’ will be held on April 1 from 4pm until midnight at the Constanza moat in Nicosia where around 50 performers from Cyprus and Greece will sing without pay but ask that all those attending take food and necessity items to be given to community markets in all towns.

The concert is being organised by a number of volunteers who met during the recent protests against the harsh Cyprus bailout. Many Cypriot actors are among the volunteers and many organisations are also volunteering their services and products. CyTA will be live streaming the event.

“During the last couple of days we have experienced a cold shower, lived through intense emotions and rapid reversals. The only thing we knew for sure was the uncertainty we were facing. This common thread of frustration brought together a group of actors and friends who decided to form an event, reacting against everything that is coming our way. This was drawn from a need. A need to be united, a need for solidarity, a need for a strong, common, and apolitical voice to be heard by the outside world. We want to share a positive message for the future that together we can do better,” a statement from the group said.

There is no admission fee for the concert but people are asked to bring whatever they can spare in terms of food and over-the-counter medicines, which will be distributed to individuals, families and other groups who have an immediate need.

Lea Maleni, a Cypriot actress and director said: “We chose a concert because music is a universal means of communication. The concert will be held on April 1 because it is a national holiday and more people can attend. Also technicians will be working on other days. We ask people to not concentrate on the tree but on the woods, to not associate this act with political parties.”

“We also encourage other people to organise such events in other countries. Students abroad who cannot receive money need something to get them through this. Some people have criticised the title because it is in English. English was chosen because we want this event to be known outside Cyprus and for it to be continued elsewhere” Maleni added.

Panayiotis Larxou, a Cypriot actor highlighted the fact that “this is a common effort, not an individual one.”

“The actions of those off stage are more important than those on stage. We want people to sing along, to raise their voices so we can be heard. We want to replace the emphasis placed on the euro and place it on solidarity,” Larxou said.

The food that will be collected will be shared among the existing 16 community markets, depending on each ones needs. Reaction Cyprus will collect the food and it will be stored in municipality storage. Volunteers will then distribute the food to the markets,” said Maria Papapetrou, one of the organisers. 

According to the CyprusAID facebook page, 1,596 people are going, 252 people may go and 28,767 people have been invited.

Some of the performers participating in the concert are are Lina Nicolacopoulou, Alkinoos Ioannides, Demetra Galani, Christos Thiveos, Christos Dantis, Evridiki, Antonis Mitzelos, Demetris Koryialas, Sophia Papazoglou, Ero, Alex Panayi, Christina Argyri, Marlain Angelides, Despina Olympiou, George Kalogirou, Efstathia, Argyro Kaparou, Sotos Constantinou, Demetris Markis, Eleonora Rousou, Tefkros Neocleous, Nicos Evangelou, Salina, Myrto Meletiou, Michalis and Petros Kouloumis, and Rodos Kyriacou.

Flour, long-life milk, baby food, cornflakes, olive oil, sugar, cooking oil, tooth paste, lentils, nappies, rice, pasta, shampoo, washing powder, washing-up liquid, coffee, toilet paper and juices are the suggested items to be taken to the concert. 

Banks in Cyprus will reopen at midday on Thursday, a spokeswoman for the island's Central Bank said, 10 days after they closed their doors to avert a run on deposits.

The spokeswoman said banks would open their doors between midday and 6pm. The Cypriot authorities are expected later on Wednesday to detail the capital controls they plan to impose to prevent a flight of funds.

Cypriots will be unable to cash cheques or withdraw more than 300 euros per day under capital controls in place when the island's banks reopen on Thursday, a Central Bank official told the Cypriot state broadcaster.

Yiangos Demetriou, head of internal audit at the Central Bank, said the controls would allow unlimited use of credit cards within Cyprus, but set a limit of 5,000 euros per month abroad.