President: We have an agreement to the benefit of Cyprus and the EU

We have an agreement to the benefit of the people of Cyprus and the EU, President of the Republic Nicos Anastasiades said in Brussels.

 

The Cypriot President was speaking after the conclusion of the crucial negotiations with the Eurogroup.

 

Eurogroup reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme.

 

The agreement provides for the following.

 

1. Laiki (Cyprus Popular Bank) will be resolved immediately – with full contribution of equity shareholders, bond holders and uninsured depositors – based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.

 

2. Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.

 

3. The good bank will be folded into Bank of Cyprus (BoC), using the Bank Resolution Framework, after having heard the Boards of Directors of BoC and Laiki. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.

 

4. The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.

 

5. BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.

 

6. The conversion will be such that a capital ratio of 9 % is secured by the end of the programme.

 

7. All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.

 

8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus. The Eurogroup is convinced that this solution is the best way forward for ensuring the overall viability and stability of the Cyprus financial system and its capability to finance the Cyprus economy”.