Cyprus president meets ECB head over bailout

“The focus of the meeting was the practical difficulties that arise for the banking system from the implementation of the loan agreement,” Cyprus government spokesman Christos Stylianides said in the statement issued in Nicosia.

“The two sides decided that today’s meeting will be followed by other meetings whenever that is deemed necessary and whenever practical difficulties arise,” the statement said.
In exchange for a 10-billion-euro loan from the ECB, European Union and the International Monetary Fund, Cyprus agreed in March on 13 billion euros in measures to cut its budget deficit and to restructure its bloated banking system.

“At the meeting, the (Cyprus) president raised specific issues related to the practical difficulties in the implementation of the conditions of the loan agreement and the (bailout) memorandum,” yesterday’s statement said, without elaborating.

Cyprus Finance Minister Haris Georgiades and central bank governor Panicos Demetriades also took part in the discussions.
Anastasiades had written to Draghi, as part of the troika of international lenders, slamming the terms of the bailout and asking for practical help to ensure Cyprus could live up to its part of the deal.

The president has insisted he does not want to renegotiate the bailout deal but called for a tweaking of the rescue plan, arguing that its terms were harsh for the Bank of Cyprus and would hinder efforts to kick-start the economy.

With BoC being the island’s largest lender, the economy will remain shackled until it can operate without restrictions.
An ECB statement said the meeting “consisted of an exchange of views on the on-going implementation of the macroeconomic adjustment programme in Cyprus”.

“Both parties agreed that, in the period ahead, one priority is to bring Bank of Cyprus out of resolution. The asset valuation is expected for the second half of July, and the discussions will continue when these results are available,” it added.

Cyprus was forced to wind up failed lender Laiki and impose a massive levy on larger deposits in Bank of Cyprus, the island’s largest. BoC customers with deposits of more than 100 000 euros could lose up to 60 percent of those holdings.

Those in defunct Laiki will have to wait years to see any of their money over 100 000 euros, after it was split into a good bank and bad bank – the good part being absorbed by BoC. – AFP.