Cyprus scrambles for & gets bailout

EU and IMF officials struck a last-minute deal with Cyprus to resurrect a bailout for the island — but Bank of Cyprus will take a giant hit. The bank has one third of all holdings and holds most of the island’s offshore Russian deposits. The agreement involves breaking up Cyprus’ second largest lender Laiki and the Bank of Cyprus undergoing a forced wipeout of investment value, on all deposits of more than 100,000 euros. The new deal though protects smaller account holders, who will be covered by the European Union’s deposit guarantee legislation, which runs to the 100,000-euro threshold. Last week, the Cypriot Parliament rejected the original deal which would impose a one-time tax on all deposits in Cyprus banks to raise 5.8 billion euros.

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