Cyprus deal is model for future bailouts says top European official as banks are told to open

The deal will see investors with more than €100,000 in the nation’s largest banks forfeit a large chunk of their deposits

A top European official has said the Cyprus bailout, agreed in last-ditch negotiations over the weekend, should become the bloc's default approach for dealing with ailing lenders.

Jeroen Dijsselbloem, who chairs the Eurogroup gatherings of the 17 eurozone finance ministers, said in an interview today that banks' owners and investors must be held responsible "before looking at public money or any other instrument coming from the public side."

Dijsselbloem, who is also Dutch Finance minister, said the €10bn Cypriot rescue marked a watershed moment in how to deal with failing banks.

He commented that European leaders should be committed to “pushing back the risks” of paying for bank bailouts from taxpayers.

"If there is a risk in a bank our first question should be 'OK, what are you in the bank going to do about that?'," he told Reuters and the Financial Times.

Mr Dijsselbloem's comments came ahead of an announcement by Cyprus' central bank that all the banks in the country except the two biggest will reopen for business on Tuesday, more than a week after they shut down to prevent a run.

Laiki and Bank of Cyprus will remain closed until Thursday, and a withdrawal limit from ATMs of 100 euros ($130) a day will also remain in place until then, the bank said.

Financial institutions in the country have been shut since March 16 as Cyprus and its international lenders struggled to agree on a plan to raise funds so the island could qualify for a bailout package.

The 11th hour bailout package agreed over the weekend was welcomed by Prime Minister David Cameron, and the United States.

Russia, however, responded furiously to the deal - condemning it as 'stealing'.

The arrangement with the EU has brought Cyprus back from the brink but will see investors with more than €100,000 in the nation’s largest banks forfeit a large chunk of their deposits.

"In my view, the stealing of what has already been stolen continues," Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.

Despite this Russia also signalled it would backstop the European Union's bailout of Cyprus despite anger that the weekend rescue deal would impose heavy losses on uninsured depositors, many of them Russian.

President Vladimir Putin ordered his government to negotiate the restructuring of a bailout loan it granted to Cyprus in 2011 - having rejected Nicosia's request for easier terms during crisis talks last week.

Putin "considers it possible to support efforts ... aimed at overcoming the crisis in the economy and banking system of this island state," his spokesman Dmitry Peskov said.

Meanwhile British Prime Minister David Cameron said the economic situation in Cyprus should be a “reminder of a couple of important home truths” for the UK.

Durring a visit to Ipswich, the Prime Minister said he was glad that savers with less than £100,000 in their accounts would be spared the one-off levy and insisted the Government was doing everything it could to protect soldiers and staff on the island.

But turmoil in Cyprus highlighted a couple of home truths for Britain, he said in a question-and-answer session after a speech on immigration.

"It is good that an agreement has been reached overnight and I think that is welcome for people in Cyprus," Mr Cameron said.

"I think the first proposals of taxing people with bank accounts under £100,000 was a complete mistake and I am glad that has been avoided.

"I think, from Britain's point of view, the situation in Cyprus is a reminder of a couple of important home truths.

"The first is it was right not to join the euro, we are better off outside the euro. We can have our own economic policy, our own monetary policy and mend our fragile economy, which is badly in need of mending.

"But I think the second lesson is that while it is very difficult, there isn't an alternative to getting on top of our deficit, to getting our public spending under control, to making our economy more prone to growth.

"Those difficult steps the Government's taking, there is no alternative to that.

"I think people can see that when they switch on their televisions and see what is happening in other parts of Europe.

"Certainly, we are good friends of the people of Cyprus, we have many connections there, we have many British people living there and we also have the direct responsibility for the soldiers and MoD personnel, the Foreign Office personnel, and we have made very clear that they will be properly protected and we are doing everything we can on that front."

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
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

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world