Update on Cyprus

Cyprus has made a last-ditch deal with the EU and IMF:

A report from Sunday night/Monday morning from CNN Money: http://money.cnn.com/2013/03/24/news/economy/cyprus-bailout-eu/index.html

The Guardian UK has updated coverage:
http://www.guardian.co.uk/business/2013/mar/24/eurozone-crisis-cyprus-bailout-eurogroup-meeting?CMP=twt_gu



Analysis is limited at this point, but the deal was made in such a way that it won't need approval from the parliament in Cyprus.  The deal focuses the "haircut" on deposits above 100,000 Euros, but the percentage is not yet know. Earlier on Sunday, ATM withdrawals were limited to 100 Euros per day, and it's not clear when banks will reopen. The new deal reportedly imposes capitol controls in order to avoid runs on banks.

Russia has many deposit holders in Cyprus, and the government may continue to play a role in the overall negotiations.  Meanwhile, Russians are looking to other options for their offshore holdings, as reported in the FT: http://www.ft.com/intl/cms/s/0/de24fb32-94a1-11e2-9487-00144feabdc0.html#axzz2OWE1ipQZ

Some commentary:

The Wall Street Journal's Simon Nixon:  http://online.wsj.com/article/SB10001424127887324789504578380473415855386.html

A Euro-skeptic perspective from the FT: " A eurozone that compromises countries as diverse as Germany and Cyprus is not sustainable, even if the EU and Cyprus manage to find a last-minute compromise."
http://www.ft.com/intl/cms/s/0/1c481838-92e3-11e2-b3be-00144feabdc0.html#axzz2OZ4Xsn7n

From the Guardian UK:
Will this be the end of Cyprus's problems?
'No. In fact, analysts say it is only the beginning. Cyprus has benefited for years from attracting the deposits of wealthy individuals from around the eurozone. That business model is now broken and the country has nothing to replace it with. Tellingly, the EU gave no economic projections for Cyprus in its statement.

Gary Jenkins of Swordfish Research said: "The economy is crushed for the next god knows how many years. As soon as people can take their money out the banks, they will take it out. Confidence has disappeared. Who's going to want to do business with Cypriot corporates right now?"'
http://www.guardian.co.uk/business/2013/mar/25/cyprus-bailout-deal-at-a-glance