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Cyprus Scrambles for Funds After Bailout No-Vote

  • Selah Hennessy

European Parliament President Martin Schulz briefs media on Cyprus situation at European Parliament, Brussels, March 20, 2013.

European Parliament President Martin Schulz briefs media on Cyprus situation at European Parliament, Brussels, March 20, 2013.

Lawmakers in Cyprus are scrambling to find billions of dollars to prop up the country's battered banking system, after rejecting a proposed international bailout deal. Meanwhile, Cyprus's Central Bank has announced that the island nation's banks, which have been closed since Saturday to prevent a run on accounts, will remain closed at least until Tuesday.

Not a single member of the Cyprus parliament voted in favor of the controversial deal late Tuesday.

That was good news for many Cypriots, and for foreigners with savings in Cypriot banks. The deal would have seen their accounts hit with a tax of up to 10 percent.

The "No" vote leaves Cyprus needing billions of dollars, however, to prop up an ailing banking system.

Countries that received Eurozone bailouts:


  • Spain, 2012: $129 billion
  • Portugal, 2011: $100 billion
  • Ireland, 2010: Ireland: $110 billion
  • Greece, 2010 & 2012: $316 billion
In the deal with the European Union and the International Monetary Fund, the savings tax would have made Cyprus eligible for an international loan worth $13 billion.

Now it is unclear how Cyprus will find the cash needs.

German Chancellor Angela Merkel said she regretted the outcome of the vote, but noted that E.U. officials will wait to see what proposals Cyprus makes to the so-called troika — the European Union, European Central Bank and the International Monetary Fund.

A Cypriot government spokesman said talks with the Central Bank are underway.

Meanwhile, Cyprus's finance minister was in Moscow hoping to secure assistance from the Kremlin. Just under half of bank deposits in Cyprus belong to foreigners, most of which are believed to be Russian.

Russia had severely opposed the proposed levy, with Russian President Vladimir Putin describing it as "dangerous."

The chief of France-based bank KBL Richelieu, Nathalie Perlas, said the markets are hoping for a quick resolution.

"The market is not expecting that this will take too much time because of the situation," said Perlas. "The parliament needs to find a solution, a way to agree."

Seeking help from Russia, she said, may make the overall situation easier.

Banks in Cyprus have been closed in order to prevent mass withdrawals. Cash machines have been open for small cash withdrawals.

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