Cyprus parliament to hold bailout crisis session

Sue Hall runs a wedding business in Cyprus: "Most of the money in my business deposit account belongs to couples who are to get married"
Cyprus' parliament is due to hold an emergency session to discuss a big bailout, which has angered the public.
President Nicos Anastasiades' Democratic Rally party has 20 seats in the 56-member assembly and needs other parties' support to ratify the deal.
The 10bn-euro ($13bn; £8.6bn) bailout agreed by the EU and IMF demands that all bank customers pay a one-off levy and has led to heavy cash withdrawals.
Asian and European stock markets fell amid uncertainty in Monday's trading.
Hong Kong's Hang Seng Index closed down 2%.
Vladimir Putin, the president of Russia, whose banks and businesses have significant deposits in Cyprus, on Monday called the levy "unfair, unprofessional and dangerous", his spokesman said.
'People betrayed'
If the deal is defeated in Cyprus' parliament, state media say banks could be closed on Tuesday so as to avoid mass withdrawals.

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A spokesman for one of the coalition partners, the Democratic Party, told BBC News it wanted assurances that the deal would solve the problems facing Cyprus before it voted in favour.
Opposition leader George Lillikas, an independent, said the president had "betrayed the people's vote".
Ahead of the parliamentary vote, President Anastasiades said he was trying to amend the levy demand.
"I fully share the unhappiness caused by a difficult and painful decision," he said on TV on Sunday.
"That's why I continue to fight with the eurogroup to amend their decisions in the coming hours to limit the impact on small depositors."
However, the president warned that Cyprus had had to choose between stabilising its finances or the eventual collapse of its financial system and exit from the eurozone.
He also said it was the worst crisis since Turkey invaded in 1974.
Russian capital
Under the bailout's terms, people in Cyprus with less than 100,000 euros in their accounts would have to pay a one-time tax of 6.75%. Those with sums over that threshold would pay 9.9%.
Reform of how to mend broken banks, which has been negotiated globally and in Europe since the crash of 2007-8, has been based on two central principles.
First, that the savings of ordinary people should be protected, up to a high threshold - or 100,000 euros in the European Union for example.
And that financial institutions which lend to banks by buying their bonds should incur losses when banks are bailed out: bondholders should, to use the jargon, be bailed in, as part of resolution plans.
So what is seen by many as profoundly shocking about the terms of the rescue of Cyprus by the rest of the eurozone and the International Monetary Fund is that both of these principles have been broken.
Depositors will be compensated with the equivalent amount in shares in their banks, and Mr Anastasiades promised that those who kept deposits in Cypriot banks for the next two years would be given bonds linked to revenues from natural gas.
Cyprus announced the discovery of a field containing between 5 and 8 trillion cubic feet of natural gas under the Mediterranean Sea in 2011 but Turkey disputes its drilling rights.
Reports have suggested that eurozone leaders, particularly in Germany, insisted on the levy because of the large amount of Russian capital kept in Cypriot banks, amid fears of money-laundering.
However, German Finance Minister Wolfgang Schaeuble said he and the International Monetary Fund had been in favour of "respecting the deposit guarantee for accounts up to 100,000" euros.
He said it was the Cypriot government, the European Commission and the European Central Bank that had decided on the levy terms and that "they now must explain this to the Cypriot people".
Russian presidential spokesman Dmitry Peskov said on Monday: "Assessing the possible decision of imposing additional tax by Cyprus on deposits, [President] Putin said that this decision, if taken, would be unfair, unprofessional and dangerous."
The Moody's ratings agency estimates that, at the end of 2012, Russian banks had placed $12bn in Cypriot banks, with corporate deposits at $19bn. So Russian corporate and individual investors could lose up to $2bn.

Unprecedented levy

  • Depositors with under 100,000 euros deposited must pay 6.75%
  • Those with more than 100,000 in their accounts must pay 9.9%
  • Depositors will be compensated with the equivalent amount in shares in their banks
  • The levy is a one-off measure
The levy has also drawn criticism from economic analysts. Michael Hewson, of CMC Markets, told the Press Association: "If European policymakers were looking for a way to undermine the public trust that underpins the foundation of any banking system they could not have done a better job."
It is clear that negotiators of the bailout in Brussels drastically underestimated the reaction in Cyprus, says the BBC's Mark Lowen.
A tiny eurozone economy feels it is being blackmailed by the most powerful, and the growing resentment will do nothing to foster European solidarity, our correspondent adds.
He says negotiations will continue throughout Monday morning, with the president possibly looking at lowering the levy on those with smaller savings to 3%, while raising it on the larger depositors to 12.5%.
If the levy goes ahead, it will affect many non-Cypriots with bank accounts, including UK expatriates.
However, depositors in the overseas arms of Cypriot banks will not be hit. Bank of Cyprus UK and Laiki Bank UK both confirmed on their websites that there would be no impact.
Chancellor George Osborne said the UK would compensate any government employees and military personnel whose bank accounts were affected.

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