The Eurogroup statement following last night’s meeting on Cyprus can be read here.
Laiki bank is going to put into resolution with shareholders, bondholders and uninsured depositors taking the hit. The losses for depositors will be determined over the coming weeks but could be up to 40%.
Insured deposits of less than €100,000 will be moved to the Bank of Cyprus. Bank of Cyprus will be recapitalised via a debt-for-equity swap with bondholders and uninsured depositors. Junior bonds will be cut.
The official loans to be provided remain at €10 billion though no contribution from the IMF is currently in place. Some financial assistance from Russia is expected. Capital controls will be implemented.
This agreement does not require a vote in the Cypriot parliament and, although not confirmed, it is likely that the amount to be raised from the banking measures is greater than €5.8 billion. All insured deposits of less than €100,000 will be protected.
So how does Plan B compare to Plan A?