Cyprus Gets OK For Next Loans

cypriot bank protests

Eurozone finance chiefs meeting in Brussels have approved release of the next installment, this one for 100 million euros ($137 million,) toward the 10 billion euro ($13.67 billion) bailout as part of a deal entered into nine months ago to keep the economy and banks from collapsing.

The European Stability Mechanism, the Eurozone’s rescue fund, will release the money by Dec. 31 while the International Monetary Fund is due to sign off on a further 86 million euros ($118.38 million) the Eurogroup said. The EU and IMF, along with the European Central Bank, make up the Troika of international lenders providing the rescue funds.

Cypriot President Nicos Anastasiades said he was forced in March, shortly after taking office, to ask for the assistance because the state banks had lost some 4.5 billion euros ($6.19 billion) in bad loans to Greek businesses that went belly-up in that country’s crushing economic crisis, and in big holdings of Greek bonds that were devalued by 74 percent as Greece sought to write down its staggering debt.

Cypriot banks are still under capital controls, limiting depositors to 300 euros ($413) in daily withdrawals while businesses are allowed greater access but have complained they are still without enough liquidity to operate properly.

Anastasiades reneged on his promise not to allow confiscation of bank accounts, going along with a 47.5 percent seizure of deposits of more than 100,000 euros ($137,000) for customers, setting off weeks of protests.