Bloomberg is reporting that Eurozone finance ministers are pushing Cyprus to hit large depositors at both of its two biggest banks - Bank of Cyprus and Laiki - with losses of up to 40%, in an attempt to get a new bailout deal agreed in time.
Under the plan, attributed to four European officials, the two institutions would be smashed together to create a 'good' bank and a 'bad' bank:
Insured deposits -- below the European Union ceiling of 100,000 euros ($129,000) -- would go into a so-called good bank and not sustain any losses, while uninsured deposits would go into the bad bank and be frozen until assets could be sold, said the four officials.
Losses to unsecured creditors, including uninsured depositors, could reach 40%, which has support from the International Monetary Fund and the European Central Bank.
Close watchers of the crisis will know that a similar version of this plan was discussed at the meeting last weekend when the Cyprus bailout was agreed.
As this inside story of the negotiations explains, Germany and the IMF wanted a big hit on wealthier savers' deposits, the commission was keen on modest contributions from savers with less than €100,000 and president Anastasiades didn't want to spook wealthy Russians.
A week is a long time in the eurozone crisis
