The programme will “restore the viability of the financial sector, with the view of restoring sustainable growth and sound public finances over the coming years.”
The plan includes:
– restructuring the financial sector;
– safeguard all deposits below EUR 100.000;
– appropriate downsizing of the financial sector reaching the EU average by 2018;
– commitment to fiscal consolidation, structural reforms and privatization;
– independent evaluation of the anti-money laundering framework (the launch of the audit is "imminent");
– increase of the withholding tax on capital income;
– increase of the statutory corporate income tax rate;
– agreement between Cyprus and Russian on a financial contribution;
– immediate implementation of the agreement on the Greek branches of the Cypriot banks;
– finalise the MoU at staff level in early April;
– intention of the Cypriot authorities to compensate potential individual victims of fraudulent practices outside the programme (securities holders?);
– introduce administrative measures for a swift reopening of the banks;
– Eurogroup reconfirms financial assistance of up to EUR 10bn.
Following the presentation by the Cyprus authorities of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:
1. Laiki will be resolved immediately – with full contribution of equity shareholders, bond holders and uninsured depositors.
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. It will take 9 bn Euros of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected.
4. 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. (Savings of less than EUR 100,000).
8. The programme money (up to 10bn Euros) will not be used to recapitalise Laiki and Bank of Cyprus.
