Cyprus considers taxing a quarter of big deposits at largest bank as president prepares to fly to Brussels to discuss eurozone bailout

Finance minister says 'significat progress' is being made with proposals expected as early as this evening

Cyprus MPs are looking at seizing up to a quarter of the value of big deposits at its largest bank to meet requirements for a bailout from the European Union

Finance Minister Michalis Sarris said "significant progress" had been made, and that new legislation raising funds could be completed and submitted to Parliament as early as this evening, although the timing was not certain.

He confirmed discussions were centred on a possible levy of around 25 per cent on holdings of over €100,000 at Bank of Cyprus, and expressed hope that a package could be ready by the end of the day for approval by parliament.

A snub from Russia yesterday left Cyprus little choice but to reconsider a plan to tax people’s deposits to secure desperately needed funding from Europe and the IMF and avert a crisis that could engulf the eurozone.

Last night, the Cypriot Parliament backed the implementation of capital controls, becoming the first eurozone country to enforce such drastic measures while MPs also voted for the set-up of an emergency solidarity fund in a last-minute effort to save their country from bankruptcy and an exit from the eurozone. Authorities postponed the voting of a controversial European-backed bank levy, which resurfaced after having been shelved for prompting widespread public fury.

President Nikos Anastasiades and other politicians will fly to Brussels tomorrow to hold talks with senior European officials ahead of an extraordinary Eurogroup meeting.

"Tomorrow 6pm #eurogroup on #cyprus," read a tweet from Jeroen Dijsselbloem, who is Dutch minister of finance and president of the Eurogroup - the 17 eurozone national finance ministers.

Averof Neophytou, deputy leader of the ruling Disy party, speaking in parliament, said politicians owed an apology to the Cypriot people. “We are all responsible for letting our land reach the edge of the cliff,” he said.

Meanwhile, British officials are flying to Nicosia to offer advice to the government on ways of saving country’s local banks from collapse.

Mr Anastasiades’ administration has the difficult task of not only coming up with a plan to scrape together €5.8bn (£4.9bn), but convincing parliament and the troika of the International Monetary Fund, the ECB and the European Union to accept it.

Neither is guaranteed: on Tuesday the legislature threw out a plan to tax everyone with money in Cypriot banks, while the signals from Germany about measures to nationalise pensions have not been encouraging. Hopes that Russia might provide more loans were dashed yesterday when Michael Sarris, the Finance Minister, returned from Moscow empty-handed.

The proposals to be put forward to parliament are reported to include restructuring the ailing Cyprus Popular Bank – known as Laiki. People with more than €100,000 there could lose up to 30 per cent of their deposit.

Mr Sarris said tonight that taxing people with more than €100,000 in other banks was again under discussion. “I think that is clearly on the table; that is something that needs to be discussed to see whether a levy on deposits of some sort ... would make a contribution to finalising the package,” Mr Sarris said.

EU officials in Brussels said they were studying proposals put forward by Cyprus and were moving into “top gear” to help design “a viable  alternative solution which can be acceptable to all eurozone member states”.

The tone from Berlin, however, was less encouraging, with Chancellor Angela Merkel reported to be wary of a proposal to create a “solidarity fund” of state assets. If the plan does not make it past the troika, Cyprus will not qualify for the €10bn bailout agreed in Brussels last Saturday.

The ECB would also pull emergency funding and the banks would collapse, taking the Cypriot economy with them and leading to its eventual exit from the single currency.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executives - OTE £60,000

£25000 - £60000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Care Workers Required - The London Borough of Bromley

£15000 per annum: Recruitment Genius: This homecare agency is based in Beckenh...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum