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Cyprus agrees overnight last minute deal

March 25, 2013

Cyprus reached an overnight last-minute deal with the European Union, the European Central Bank and the International Monetary Fund to avert a complete collapse of its banking system and a disorderly state default. Cyprus will recapitalize Bank of Cyprus and close down the island’s second largest bank Laiki Bank in an attempt to raise €5.8bn in return for the Troika’s €10bn ($13bn) bailout. Instead of a across-the-board levy, deposits above €100,000 in both bank mentioned, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapi-talize Bank of Cyprus. The revised accord spares bank accounts below the insured limit of €100,000.