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'Draft deal reached' in Eurogroup Cyprus bailout talks 'Draft deal reached' in Eurogroup Cyprus bailout talks
(35 minutes later)
A key meeting of eurozone finance ministers to discuss a bailout for Cyprus to prevent its banking system collapsing has produced a draft deal, officials say.A key meeting of eurozone finance ministers to discuss a bailout for Cyprus to prevent its banking system collapsing has produced a draft deal, officials say.
Initial reports suggest significant levy on bank deposits of more than 100,000 euros is part of the plan. Reports suggest the deal will include a levy on deposits of more than 100,000 euros in the Laiki (Popular) Bank.
Cyprus needs to raise 5.8bn euros (£5bn) to qualify for a 10bn-euro EU bailout and avoid bankruptcy.Cyprus needs to raise 5.8bn euros (£5bn) to qualify for a 10bn-euro EU bailout and avoid bankruptcy.
The Cypriot president tweeted that discussions were "culminating".The Cypriot president tweeted that discussions were "culminating".
An EU official told the BBC that under the draft agreement, Cyprus's troubled Laiki (Popular) Bank will be wound down with a levy affecting those with deposits of over 100,000 euros. An EU official told the BBC that under the draft agreement, Cyprus's troubled Laiki Bank will be wound down with a significant levy affecting those with deposits of over 100,000 euros.
Correspondents say the levy could be as high as 40%.
However, the meeting could yet continue for several hours to iron out remaining disagreements.However, the meeting could yet continue for several hours to iron out remaining disagreements.
Laiki is also likely to be split into "good" and "bad" banks.
Earlier reports said good assets would be merged into Bank of Cyprus and administrators appointed to liquidate the remaining toxic assets.
Resignation threat
The meeting was delayed by four hours while Cypriot President Nicos Anastasiades was locked in talks with EU, European Central Bank and IMF leaders.The meeting was delayed by four hours while Cypriot President Nicos Anastasiades was locked in talks with EU, European Central Bank and IMF leaders.
Mr Anastasiades had reportedly asked the heads of the "troika" - the IMF, European Central Bank and European Commission - if they wanted him to quit.Mr Anastasiades had reportedly asked the heads of the "troika" - the IMF, European Central Bank and European Commission - if they wanted him to quit.
"Do you want to force me to resign?" Cyprus News Agency quoted him as saying, citing sources at the presidential palace."Do you want to force me to resign?" Cyprus News Agency quoted him as saying, citing sources at the presidential palace.
"I am giving you one proposal, and you do not accept it. I give you another and it's the same. What else do you want me to do?" he was quoted as saying."I am giving you one proposal, and you do not accept it. I give you another and it's the same. What else do you want me to do?" he was quoted as saying.
In another development on Sunday, Bank of Cyprus - the island's biggest lender - further limited cash machine withdrawals to 120 euros a day.In another development on Sunday, Bank of Cyprus - the island's biggest lender - further limited cash machine withdrawals to 120 euros a day.
With queues growing outside cash machines across the island, the second biggest lender, Laiki (Popular) Bank, also lowered its daily limit to 100 euros, Cyprus News Agency reported. The bank's previous limit had been 260 euros per day. With queues growing outside cash machines across the island, the second biggest lender, Laiki, also lowered its daily limit to 100 euros, Cyprus News Agency reported. The bank's previous limit had been 260 euros per day.
Banks have been closed since Monday and many businesses are only taking payment in cash.Banks have been closed since Monday and many businesses are only taking payment in cash.
In the run-up to the crunch talks in Brussels, the EU's commissioner for economic affairs, Olli Rehn, said the island had only "hard choices left" and must agree terms on Sunday.In the run-up to the crunch talks in Brussels, the EU's commissioner for economic affairs, Olli Rehn, said the island had only "hard choices left" and must agree terms on Sunday.
"Unfortunately the events of recent days have led to a situation where there are no longer any optimal solutions available," he added.
A source close to the negotiations earlier told the BBC's Mark Lowen in Cyprus that the rescue plans - as they stand - involve splitting Laiki Bank into "good" and "bad" banks.
Good assets would be merged with Bank of Cyprus and the toxic assets will stay in Laiki. Administrators will then be appointed to liquidate those assets. The bank will not be closed but will be hugely reduced in size.
Our correspondent says that the changes, should they pass, would cut Cyprus's banking sector by between a third and a half.
German pressureGerman pressure
Parliament rejected a bank levy on small and large deposits earlier this week. The levy that was rejected would have taken 6.75% from small savers and 9.9% from larger investors. It caused widespread anger among ordinary savers.Parliament rejected a bank levy on small and large deposits earlier this week. The levy that was rejected would have taken 6.75% from small savers and 9.9% from larger investors. It caused widespread anger among ordinary savers.
If a deal on an alternative agreement fails, the European Central Bank (ECB) says it will cut off funds to the banks, meaning they would collapse, possibly pushing the country out of the eurozone.If a deal on an alternative agreement fails, the European Central Bank (ECB) says it will cut off funds to the banks, meaning they would collapse, possibly pushing the country out of the eurozone.
"The negotiations are at a very delicate stage," said government spokesman Christos Stylianides. "The situation is very difficult and the time limits are very tight." There is concern on the Mediterranean island that a levy on large-scale foreign investors, many of whom are Russian, will damage its financial sector.
There is concern on the island that a levy on large-scale foreign investors, many of whom are Russian, will damage its financial sector.
But leading Cypriot bankers have urged parliament to accept a levy, with small savers exempted.But leading Cypriot bankers have urged parliament to accept a levy, with small savers exempted.
Correspondents say Germany has pushed hard for a levy on investors who have benefited from high interest rates in recent years, rejecting a Cypriot plan to use money from pension funds.Correspondents say Germany has pushed hard for a levy on investors who have benefited from high interest rates in recent years, rejecting a Cypriot plan to use money from pension funds.
Cypriot Finance Minister Michael Sarris recently travelled to Moscow in an unsuccessful attempt to get Russian help.Cypriot Finance Minister Michael Sarris recently travelled to Moscow in an unsuccessful attempt to get Russian help.
Banks in Cyprus have been closed since Monday and many businesses are only taking payment in cash.
On Saturday afternoon more than 1,000 bank employees marched to the Cypriot finance ministry, stopping briefly at the presidential palace.On Saturday afternoon more than 1,000 bank employees marched to the Cypriot finance ministry, stopping briefly at the presidential palace.