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."

Start your day with The Independent, sign up for daily news emails
Sport
wimbledonScot will face Ivo Karlovic next
Sport
football
News
Hillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
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 Administrator - Spanish Speaking

£17000 - £21000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - German Speaking

£17000 - £23000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - Japanese Speaking

£17000 - £23000 per annum: Recruitment Genius: If you are fluent in Japanese a...

Recruitment Genius: Graphic Designer - Immediate Start

£16000 - £25000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test