Eurogroup set to conclude agreement on Cyprus bail out

EU Finance Minister, meeting in Dublin on Friday, are expected to reach a political agreement on a Memorandum of Understanding with Cyprus.
However, the final decision is anticipated at the end of the month and funds are expected to flow in the first two weeks in May, according to a Eurozone official.

Cyprus will be one of the main topics of discussion in Dublin and the only one on which the Finance Ministers will reach agreement.

The Memorandum is already available but not final, the official noted, and explained that once the political decision is taken, the ratification process will begin at parliaments of Eurozone members that need to ratify the agreement.

Ratification is set to conclude in April, to allow the release of funds, he said.

Asked why the haircut agreement for Cyprus cannot be applied elsewhere in the Eurozone, he explained this cannot be the case because the structure of the banking sector and the size in relation to the Gross Domestic Product are unique.

“We have reached a specific solution because the problem was specific. No other banking sector in any other Eurozone member was facing such a problem,” he added.

Replying to questions, he appeared certain that the 10 billion euro, approved for Cyprus, will be sufficient.

The government has concluded a deal with the Troika of international lenders, which needs to be ratified by national parliaments and the Eurogroup. The Eurogroup reached an agreement with the Cypriot authorities on the key elements necessary for the macroeconomic adjustment programme.

The island’s second largest bank, Cyprus Popular Bank (Laiki), splits into a "good" and a "bad" bank. The bank`s "good" assets are being transferred to the Bank of Cyprus, where a massive haircut is being imposed on uninsured deposits of more than €100,000.