Cyprus Debate Cancelled, "Not Within Touching Distance" Of A Deal

The situation in Europe remains fluid. ‘Rumors’ circulate from ‘anonymous’ sources but seemingly confirming what ‘news’ we do have from Olli Rehn that there is no deal; Xinhua reports that the Cypriot Parliament has cancelled the debate over the deposit levy for today (following daylong negotiations with the Troika). Further to the ‘no deal’ meme, ekathimerini is reporting, via another senior Cypriot official,


“We are not in touching distance of an agreement,” the official, who preferred to remain anonymous, commented adding that the impasse was a result of the “inflexible” stance of the IMF“Every half hour, new demands are made.” Further comments indicate the ‘low levy’ on the rest of Cyprus-based bank deposits has been abandonedimplying a potential 25% haircut for Bank of Cyprus deposits. 


The IMF insists that the bank be split in a good bank to take over guaranteed deposits of under 100,000 euros and good loans and the bad section to be left with deposits of over 100,000 euros and the bad loans be liquidated after some years. The same official said the IMF also insists that the good sections of the two banks be merged.


Via Xinhua (from Bloomberg),

The same sources said Saturday’s negotiations centered on a levy to be imposed on deposits in the Bank of Cyprus, the island’s largest lender.


An alternative option to impose a low levy on deposits in about 26 foreign banks operating in Cyprus was abandoned as potentially wrought with problems, including legal ones.


The state broadcaster said that abandoning the option to tax all deposits would possibly mean increasing the levy to up to 25 percent on Bank of Cyprus deposits over 100,000 euros (about 129,000 U.S. dollars), so as to generate about 2.8 billion euros.

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