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| Under Pressure, Cyprus Lawmakers to Vote on Bailout | |
| (35 minutes later) | |
| NICOSIA — Under pressure from the European Central Bank to quickly reach a deal or risk a cutoff of financing for Cypriot banks, members of the Cypriot Parliament were preparing to vote Friday morning on yet another revamped formula for an international bailout. | NICOSIA — Under pressure from the European Central Bank to quickly reach a deal or risk a cutoff of financing for Cypriot banks, members of the Cypriot Parliament were preparing to vote Friday morning on yet another revamped formula for an international bailout. |
| If lawmakers do not approve the new measures, the country would fail to receive the €10 billion, or $13 billion, bailout it has requested and could risk a disorderly default. | If lawmakers do not approve the new measures, the country would fail to receive the €10 billion, or $13 billion, bailout it has requested and could risk a disorderly default. |
| Members of the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — met Friday morning with President Nicos Anastasiades and were planning to review the new proposal should Parliament pass it. | Members of the so-called troika of lenders — the International Monetary Fund, the European Central Bank and the European Commission — met Friday morning with President Nicos Anastasiades and were planning to review the new proposal should Parliament pass it. |
| A crowd of several hundred demonstrators massed again Friday morning in front of the Parliament building. Many angrily demanded compensation for their losses at the banks. | A crowd of several hundred demonstrators massed again Friday morning in front of the Parliament building. Many angrily demanded compensation for their losses at the banks. |
| With anger and anxiety growing across Cyprus, Mr. Anastasiades’s new plan would scrap a controversial tax on bank deposits. Experts warned, however, that the deposit-tax plan might need to be revisited unless the government found other means to reach the goal of raising €5.8 billion to satisfy Cyprus’s creditors and unlock the full bailout funds. | With anger and anxiety growing across Cyprus, Mr. Anastasiades’s new plan would scrap a controversial tax on bank deposits. Experts warned, however, that the deposit-tax plan might need to be revisited unless the government found other means to reach the goal of raising €5.8 billion to satisfy Cyprus’s creditors and unlock the full bailout funds. |
| The central bank said the new package included “consolidation measures” to enable Cyprus Popular Bank, also known as Laiki Bank, to continue operating. | The central bank said the new package included “consolidation measures” to enable Cyprus Popular Bank, also known as Laiki Bank, to continue operating. |
| As the country’s most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank, and transferring healthy assets to the Bank of Cyprus, the nation’s largest financial institution. By effectively shutting down one of the banks needing support, the government would lower the tab for supporting the banking system. | As the country’s most troubled lender, it would be reorganized by placing underperforming loans and questionable assets into a so-called bad bank, and transferring healthy assets to the Bank of Cyprus, the nation’s largest financial institution. By effectively shutting down one of the banks needing support, the government would lower the tab for supporting the banking system. |
| But the central bank warned that if Parliament failed to pass the measure, “Laiki will default immediately, causing major consequences to its employees and its clients.” | But the central bank warned that if Parliament failed to pass the measure, “Laiki will default immediately, causing major consequences to its employees and its clients.” |
| Lawmakers will also vote on restrictions on taking cash out of banks and out of the country, known as capital controls, when the banks reopen Tuesday after a national holiday Monday. The bill would limit cash withdrawals, prohibit or restrict check cashing and bar “premature” account closings and any other transaction that authorities deemed unwarranted. | Lawmakers will also vote on restrictions on taking cash out of banks and out of the country, known as capital controls, when the banks reopen Tuesday after a national holiday Monday. The bill would limit cash withdrawals, prohibit or restrict check cashing and bar “premature” account closings and any other transaction that authorities deemed unwarranted. |
| The central bank said Thursday that Cyprus had until Monday to reach an agreement with the European Union and the International Monetary Fund if the government wanted its banks to continue to receive the low-interest loans essential to keeping them afloat. | The central bank said Thursday that Cyprus had until Monday to reach an agreement with the European Union and the International Monetary Fund if the government wanted its banks to continue to receive the low-interest loans essential to keeping them afloat. |
| After a hastily convened meeting Thursday evening to assess the situation, the group of 17 finance ministers of the euro member countries issued a statement declaring themselves “conditionally satisfied” with most of the new proposal. | After a hastily convened meeting Thursday evening to assess the situation, the group of 17 finance ministers of the euro member countries issued a statement declaring themselves “conditionally satisfied” with most of the new proposal. |
| “We now need to move into top gear and work intensively with the Cypriot government and our troika partners to design a viable alternative solution that can be acceptable to all euro area member states,” Simon O’Connor, a spokesman for the European commissioner for economic and monetary affairs, Olli Rehn, said in a statement. | “We now need to move into top gear and work intensively with the Cypriot government and our troika partners to design a viable alternative solution that can be acceptable to all euro area member states,” Simon O’Connor, a spokesman for the European commissioner for economic and monetary affairs, Olli Rehn, said in a statement. |
| The plan sent to Parliament would nationalize pension funds from state-run companies and conduct an emergency bond sale to help raise the €5.8 billion Cyprus needs to secure the full bailout. Gone was any reference to a deposit tax, which Parliament had roundly rejected in a vote on Tuesday. | The plan sent to Parliament would nationalize pension funds from state-run companies and conduct an emergency bond sale to help raise the €5.8 billion Cyprus needs to secure the full bailout. Gone was any reference to a deposit tax, which Parliament had roundly rejected in a vote on Tuesday. |
| In Moscow, President Vladimir V. Putin discussed the Cyprus situation on Thursday in a one-on-one meeting with the European Commission president, José Manuel Barroso, who was in Russia for an annual meeting of senior officials. | In Moscow, President Vladimir V. Putin discussed the Cyprus situation on Thursday in a one-on-one meeting with the European Commission president, José Manuel Barroso, who was in Russia for an annual meeting of senior officials. |
| Many of the wealthiest citizens of Russia, which is not in the euro currency union, have bank accounts in Cyprus — one reason that euro zone finance ministers have taken such a hard line. | Many of the wealthiest citizens of Russia, which is not in the euro currency union, have bank accounts in Cyprus — one reason that euro zone finance ministers have taken such a hard line. |
| A delegation of Cypriot officials led by the finance minister, Michalis Sarris, remained in Moscow until Friday morning to press their case for additional aid, but there were no reports of progress, and the officials stayed out of sight. | A delegation of Cypriot officials led by the finance minister, Michalis Sarris, remained in Moscow until Friday morning to press their case for additional aid, but there were no reports of progress, and the officials stayed out of sight. |
| For months, Cyprus had been discussing the possibility of changing the terms of a loan of €2.5 billion that Russia provided in late 2011, to lower the interest rate and defer the repayment deadline. | For months, Cyprus had been discussing the possibility of changing the terms of a loan of €2.5 billion that Russia provided in late 2011, to lower the interest rate and defer the repayment deadline. |
| The Russian prime minister, Dmitri A. Medvedev, said in a meeting with European journalists on Thursday that a number of Russian state-owned companies had bank accounts in Cyprus, and he expressed annoyance that those accounts had been frozen, presumably interfering with some business operations. | The Russian prime minister, Dmitri A. Medvedev, said in a meeting with European journalists on Thursday that a number of Russian state-owned companies had bank accounts in Cyprus, and he expressed annoyance that those accounts had been frozen, presumably interfering with some business operations. |
| Russian citizens and other entities are estimated to have €23 billion or more in Cypriot banks. But the Russian government is also concerned about an even larger amount of money that typically flows through Cyprus, where many companies that operate in Russia maintain offshore affiliates. | Russian citizens and other entities are estimated to have €23 billion or more in Cypriot banks. But the Russian government is also concerned about an even larger amount of money that typically flows through Cyprus, where many companies that operate in Russia maintain offshore affiliates. |
| The authorities have ordered Cypriot banks to keep A.T.M.’s filled with cash as long as the banks themselves are closed. But that has been of little help to the thousands of international companies that do banking in Cyprus, which cannot transfer money in and out of those accounts to conduct business. | The authorities have ordered Cypriot banks to keep A.T.M.’s filled with cash as long as the banks themselves are closed. But that has been of little help to the thousands of international companies that do banking in Cyprus, which cannot transfer money in and out of those accounts to conduct business. |
| Jeroen Dijsselbloem, chairman of the euro zone finance ministers, said on Thursday that there were few signs that Russia would come forward with an alternative plan or loans enabling European lenders and the Cypriots to reduce their contribution to a bailout package. | Jeroen Dijsselbloem, chairman of the euro zone finance ministers, said on Thursday that there were few signs that Russia would come forward with an alternative plan or loans enabling European lenders and the Cypriots to reduce their contribution to a bailout package. |
| He added that Russian loans to Cyprus would only swell the country’s already unmanageable debt, and that this made it inevitable that Cyprus would have to impose a one-time tax on “investors” rather than on “savers.” | He added that Russian loans to Cyprus would only swell the country’s already unmanageable debt, and that this made it inevitable that Cyprus would have to impose a one-time tax on “investors” rather than on “savers.” |
| Reporting was contributed by Melissa Eddy in Berlin, James Kanter in Brussels, David M. Herszenhorn in Moscow and Andreas Riris in Nicosia. | Reporting was contributed by Melissa Eddy in Berlin, James Kanter in Brussels, David M. Herszenhorn in Moscow and Andreas Riris in Nicosia. |