Cyprus secures bailout at cost of banks, jobs

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Cyprus clinched a €10-billion bailout on Monday that averted a “disorderly” euro zone exit, but at the cost of agreeing to painful reforms that will downsize its status as an offshore banking centre. The 11th-hour agreement deals a major hit to investors and depositors in the island’s biggest bank, the Bank of Cyprus, many of whom are Russian, and will also effectively shut down its second-largest lender, Laiki. Under the agreement, Laiki is to be wound up and major depositors at the Bank of Cyprus will face a “haircut” of 30%, government spokesman Christos Stylianides said. The deal spares all depositors with less than 100,000 ($130,000) in the island’s banks, a key condition missing from a previous agreement the Cypriot Parliament rejected last week. A big unknown is the reaction of Russian investors, who hold $31 billion (€24 billion) in private and corporate accounts in Cyprus. But President Vladimir Putin suggested Russia could pitch in to the Cyprus bailout by easing the terms of a €2.5-billion loan in the wake of the agreement with Brussels.

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