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| Cyprus agrees bailout with international creditors | Cyprus agrees bailout with international creditors |
| (35 minutes later) | |
| Cyprus says it has agreed a bailout deal with international creditors, becoming the fifth eurozone member to seek outside help. | Cyprus says it has agreed a bailout deal with international creditors, becoming the fifth eurozone member to seek outside help. |
| The country made the request to its European partners and the International Monetary Fund in June, for help to revive its banks. | The country made the request to its European partners and the International Monetary Fund in June, for help to revive its banks. |
| Lenders have suffered huge losses due to their heavy exposure to Greece. | Lenders have suffered huge losses due to their heavy exposure to Greece. |
| The deal, expected to include 16bn euros (£13bn; $20bn) of loans, will be confirmed later, Cyprus said. | The deal, expected to include 16bn euros (£13bn; $20bn) of loans, will be confirmed later, Cyprus said. |
| But any deal would have to be ratified by parliaments in the eurozone countries. | But any deal would have to be ratified by parliaments in the eurozone countries. |
| "The deadline that was set by the European Central Bank (ECB) for the recapitalisation of the banks expired, so we had to enter the (EU/IMF) rescue mechanism," government spokesman Stefanos Stefanou told reporters. | "The deadline that was set by the European Central Bank (ECB) for the recapitalisation of the banks expired, so we had to enter the (EU/IMF) rescue mechanism," government spokesman Stefanos Stefanou told reporters. |
| 'Massacre' | 'Massacre' |
| The troika of international authorities - the European Commission, ECB and the IMF - said they were still ironing out details with Cypriot officials on key policies to strengthen public finances, restore the health of banks and overhaul the country's competitiveness. | The troika of international authorities - the European Commission, ECB and the IMF - said they were still ironing out details with Cypriot officials on key policies to strengthen public finances, restore the health of banks and overhaul the country's competitiveness. |
| Initial results to a series of independent stress tests on banks to evaluate their strength in disaster scenarios will be unveiled in the next few weeks, it added. | Initial results to a series of independent stress tests on banks to evaluate their strength in disaster scenarios will be unveiled in the next few weeks, it added. |
| Earlier in the day, Mr Stefanou had said that a deal had been agreed and would become official later on Friday. | Earlier in the day, Mr Stefanou had said that a deal had been agreed and would become official later on Friday. |
| "The bailout deal includes unpleasant measures," he told reporters. | "The bailout deal includes unpleasant measures," he told reporters. |
| Glafkos Hatzipetrou, a senior official of public sector union PASIDY, who was briefed about the deal said: "These measures are unjust, they will be a massacre." | Glafkos Hatzipetrou, a senior official of public sector union PASIDY, who was briefed about the deal said: "These measures are unjust, they will be a massacre." |
| Banks have lost large amounts on they money they leant to the Greek government by buying its bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hit by the deep recession in neighbouring Greece, its biggest trading partner. | Banks have lost large amounts on they money they leant to the Greek government by buying its bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hit by the deep recession in neighbouring Greece, its biggest trading partner. |
| Banking debt | Banking debt |
| In total, Cypriot banks have outstanding liabilities and debt totalling 152bn euros, or eight times the size of the country's gross domestic product, according to the IMF. | In total, Cypriot banks have outstanding liabilities and debt totalling 152bn euros, or eight times the size of the country's gross domestic product, according to the IMF. |
| In June the country's two largest lenders the Bank of Cyprus and Cyprus Popular Bank had asked for more than 2bn euros in government aid. | In June the country's two largest lenders the Bank of Cyprus and Cyprus Popular Bank had asked for more than 2bn euros in government aid. |
| Fitch on Friday slashed further its credit rating on both banks as well as Hellenic Bank to Bb- from Bb, meaning their bonds are now junk grade and in danger of default. | Fitch on Friday slashed further its credit rating on both banks as well as Hellenic Bank to Bb- from Bb, meaning their bonds are now junk grade and in danger of default. |
| The downgrades are based on a "high level of uncertainty over the costs associated with the overall banking system's recapitalisation," Fitch said in a statement, although it added that the likelihood that they would get state support remained strong given their "systemic importance" in the domestic economy. | |
| Cyprus has been unable to borrow from international markets for over a year because credit rating agencies lowered its sovereign rating to junk status. | Cyprus has been unable to borrow from international markets for over a year because credit rating agencies lowered its sovereign rating to junk status. |
| The Cypriot government has also been holding negotiations for a possible loan from a country outside the EU, such as Russia or China. | The Cypriot government has also been holding negotiations for a possible loan from a country outside the EU, such as Russia or China. |
| The country has already borrowed 2.5bn euros from Russia, whose business people are important customers of Cyprus's relatively large offshore financial sector which offers low tax rates. | The country has already borrowed 2.5bn euros from Russia, whose business people are important customers of Cyprus's relatively large offshore financial sector which offers low tax rates. |
| Cyprus's stock exchange was up 8.5% after the announcement. | Cyprus's stock exchange was up 8.5% after the announcement. |
| Cyprus is the fifth country in the 17-member euro area to accept external emergency assistance. | Cyprus is the fifth country in the 17-member euro area to accept external emergency assistance. |
| Greece, Ireland, Portugal, and Spain have asked for bailouts, although Spain's banking rescue was funded by the eurozone's European Financial Stability Facility. | Greece, Ireland, Portugal, and Spain have asked for bailouts, although Spain's banking rescue was funded by the eurozone's European Financial Stability Facility. |