Cyprus, Troika Agree to Bail-In

 
Silver Doctors
*Updated: In response, a bomb has just been detonated at the Limassol branch of the Bank of Cyprus
Multiple breaking reports indicate that in an early Monday meeting with Lagarde, Draghi, & Von Rompuy, Cyprus’ President Anastasiades has agreed to a Cypriot bank restructuring/ depositor haircut deal in exchange for €10 billion in emergency loans from the ECB.  
The deal reportedly will avoid the necessity for any vote by the Greek Parliament, and is far, far, far worse for Cypriot citizens and depositors than the one the Cypriot legislature voted down on Thursday, as the ECB will reportedly be handing out 40% haircuts for depositors with over €100,000 on deposit in the Bank of Cyprus, anddeposits over €100,000 at Cyprus Popular bank will be WIPED OUT!!!
Forget haircuts, the Cypriots have just been scalped alive by the ECB & IMF!
As Bloomberg reports, deposits over 100,000 at the Bank of Cyprus will see 40% haircuts, and deposits over the insured levels at other Cypriot banks will be WIPED OUT!:

As euro finance ministers milled around for a meeting that began more than six hours after the scheduled 6 p.m. start time, Anastasiades brokered the bargain with officials including European Union President Herman Van Rompuy, European Central Bank President Mario Draghi and International Monetary Fund Managing Director Christine Lagarde.
The agreement calls for Cyprus Popular Bank Pcl (CPB) to be shut down and split. The Bank of Cyprus Plc would take over the viable assets of the failed bank along with 9 billion euros in central bank-provided emergency liquidity aid, according to three EU officials who asked not to be named because talks are ongoing.
Bank Deposits
Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said.

*Breaking: In response, a bomb has just been detonated at the Limassol branch of the bank of Cyprus:

'Thieves': Russia savages EU after Cyprus gets £8.5billion bailout deal which could see richest investors losing 40% of savings

• EU finance chiefs in last-minute agreement after 10 hours of negotiations
• IMF chief: 'It will form a lasting, durable and fully financed solution'
• Savers with more than £85,000 will lose up to 40 per cent of their money
• Uninsured funds to be frozen and used to pay off debts in bank restructure
• Cyprus will not to need to vote on deal because bank law already in place
• But Germany may have to hold vote before agreement can take effect 
• More than 60,000 British expats live on the island, so many face losses
• Russian PM: 'The stealing of what has already been stolen continues'

Moscow today accused the European Union of theft after it emerged the bailout of Cyprus would result in heavy losses for foreign depositors, many of whom are Russian.
The cash-strapped island nation needs a 10billion euro (£8.5billion) rescue package to recapitalise its ailing lenders and keep the government afloat.
But savers with more than £85,000 in its banks will lose up to 40 per cent of their cash as one of several draconian measures imposed by Brussels to stop the country going bust.
The deal will wind down the largely state-owned Popular Bank of Cyprus, also known as Laiki, and shift deposits below 100,000 euros to the Bank of Cyprus to create a 'good bank'.

Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki's debts and recapitalise Bank of Cyprus through a deposit/equity conversion.
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Deal done: French Finance Minister Pierre Moscovici (centre) gestures during the emergency meeting in Brussels. A last-minute rescue package for Cyprus was thrashed out after hours of negotiations

Details revealed: President of the Eurogroup Council, Jeroen Dijsselbloem (centre), announces the deal with IMF chief Christine Lagarde (left) and EU Commissioner for Economic and Monetary Affairs, Olli Rehn (right)

Country in turmoil: A worker restores a damaged door of a branch of a Bank of Cyprus in the early hours of Monday after a bomb attack at Polemidia, a suburb of the southern port city of Limassol

Furious: Russia's Prime Minister Dmitry Medvedev has accused the European Union of theft over its bailout of Cyprus which will impose heavy losses on his foreign investors

Relief: Cypriot Prime Minister Nicos Anastasiades gives his reaction to the deal on Twitter

 

Eurozone banking shares rallied as much as 2.4 per cent at one point to lead a rally on global stock markets that reached as far as Australia.
The FTSE 100 Index closed today, however, 14.4 points lower at 6378.4, having been up by as much as 65 points amid earlier relief over the Cyprus rescue plan, which ensured the country will get the 10 billion euros needed to shore up its banking system.
Jeroen Dijsselbloem, who chairs the Eurogroup of 17 eurozone finance ministers, spooked global markets when he said the move in Cyprus to inflict losses on banks' shareholders, bondholders and large-scale savers should become Europe's default approach for dealing with ailing lenders.
The Dax in Frankfurt and the Cac 40 in Paris were both up by nearly 1.5 per cent at one stage but closed sharply lower, while the euro also reversed gains.
At 1.18, the pound was back at a level last seen against the euro in mid- February, although it was marginally lower against the US dollar at 1.517.
Banking stocks endured a volatile session as a result of the attention on Cyprus, with Barclays eventually 3 per cent or 9.9p lower at 282.1p and Royal Bank of Scotland down 6.1p at 287.2p. Lloyds Banking Group slipped 0.8p to 47.8p.
Eurozone leaders maintain the country's business model of attracting foreign investors, many of them Russians, with low taxes and lax financial regulation has backfired and must be reformed.
Russian investors have around 20billion euros in Cyprus, and would be particularly hard hit, prompting speculation they could pull out their money.

Saying their prayers: Cypriots attend a Sunday service at Saint-Mamas Orthodox church in Nicosia

'In my view, the stealing of what has already been stolen continues,' furious Russian Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.
The Kremlin warned it could retaliate by ‘punishing’ European businesses if the EU imposes a bank levy.
Andrew Nekrassov, a former government adviser, added: ‘There are a number of large German companies operating in Russia. You could look at freezing assets.’
Russia turned down desperate appeals for financial aid last week from the Cypriot government and the final bailout was likely to be more painful for its depositors than an initial rescue plan rejected by the Cypriot parliament.

 

More...

• Biggest rise in house prices for three years: Overseas buyers see Britain as 'safe haven' from eurozone crisis

A spokesman for Russian President Vladimir Putin says the president has asked the government to restructure a 2.5 billion euro ($3.2 billion) loan to the country.
Cyprus secured the package of rescue loans after after tense negotiations ended last night, saving the country from a banking system collapse and bankruptcy.
Cyprus government spokesman Christos Stylianides said: 'We averted a disorderly bankruptcy which would have led to an exit of Cyprus from the euro zone with unforeseeable consequences.'

Congregation: Cypriots attend Sunday service at Ayios Ioannis (St John's) Orthodox Cathedral in Nicosia

Religious observance: Cypriots light candles during a service at Saint-Mamas Orthodox church in Nicosia

AT A GLANCE: DETAILS OF THE DEAL

• Cyprus had to come up with 5.8bn euros to secure bail-out
• Depositors in the country's second-largest bank, Laiki, with accounts of more than 100,000 euros will lose an unspecified amount of their money, possibly up to 40%
• The move is expected to yield 4.2bn euros overall
• The remainder of the money will come from tax increases and privatisations
• Cyprus also had to agree to restructure its banking sector, which is unusually large for the size of its economy
• Laiki will be dissolved at once and split into a 'good bank' and a 'bad bank' 
• The 'good bank' portion of Laiki will be folded into the largest bank, the Bank of Cyprus
• The 'bad bank' will include its uninsured deposits and toxic assets

Asked about the level of losses on uninsured depositors in Bank of Cyprus, he told state radio: 'The assessment is that it will be under or around 30 per cent.'
However, some reports suggest that figure could be as a high as 60 per cent.
The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros, Eurogroup chairman Jeroen Dijssebloem said.
Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution.
An EU spokesman said no across-the-board levy or tax would be imposed on deposits in Cypriot banks, although the hit on large account holders in the two biggest banks is likely to be far greater than initially planned. 
The chairman of the Cypriot parliament's finance committee, Nicholas Papadopolous, said the agreement made 'no economic sense'.
'We are heading for a deep recession, high unemployment.
'They wanted to send a message that the Cypriot economy ought to be destroyed, and they've succeeded in a large part - they've destroyed our banking sector,' he told the BBC.
A first attempt at a deal last week collapsed when the Cypriot parliament rejected a proposed levy on all deposits.
German Finance Minister Wolfgang Schaeuble said Cypriot lawmakers would not need to vote on the new scheme, since they had already enacted a law on procedures for bank resolution.
'The Commission informed us today that the necessary legislation to implement these points has already been passed,' he told reporters after euro zone finance ministers approved the deal.
'Additional legislation would only have been necessary if a levy on uninsured deposits would have been raised but (not) for restructuring of the banks in question.'
Schaeuble said legally Germany's lower house of parliament would not need to vote on the bailout at this stage, but a vote could be held this week if legislators wanted it.
He was confident the deal would get a majority in Bundestag.

The island has at least 60,000 British expats and attracts investors from all over the world because of its low tax and light-touch financial regulations.
There are also another 80,000 Cypriots who live in the UK but may have some of their cash invested there.

Rage: Protestors shout slogans against the EU at protest in Nicosia, Cyprus

Panic buying: Crowds flock to supermarkets for fear of lack of products due to supply shortages in Nicosia

Without a deal, the tiny Mediterranean island nation of about a million people would have faced the prospect of bankruptcy, which could force it to abandon the euro currency and spur turmoil in the eurozone.
In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatise state assets.

The European Central Bank had threatened to cut crucial emergency assistance to the country's banks by Tuesday without an agreement.

'We believe that this will form a lasting, durable and fully financed solution,' said IMF chief Christine Lagarde.
The finance ministers of the 17-nation eurozone accepted the plan reached in 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors: the International Monetary Fund, the European Commission and the ECB.

Shoppers: Supermarket supplies were said to be running low in some areas of Cyprus after panic buying

Big day: Cypriot President Nicos Anastasiades pictured in his car after arriving at an airport in Brussels

'We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week,' said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.
Under the plan, Cyprus' second-largest bank, Laiki, will be restructured and holders of bank deposits of more than 100,000 euro (£85,000) will have to take losses, Mr Dijsselbloem said, adding that it was not yet clear how severe they would be.
Analysts have estimated investors might lose up to 40 per cent of their money.

Getting cash out: People are pictured today withdrawing money from an ATM of the Bank of Cyprus in Nicosia

Demonstration: Thousands of bank employees protest outside the Ministry of Finance in Cyprus yesterday

Chants: On Saturday, some 1,500 protesters, many of them bank workers, marched on the presidency, holding banners that read, 'No to the bankruptcy off Cyprus' and 'Hands of workers' welfare funds'

Savers' deposits with all Cypriot banks of up to 100,000 euro will be guaranteed by the state in accordance with the EU's deposit insurance guarantee, Mr Dijsselbloem said.
Laiki will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation's biggest lender, Bank of Cyprus.
Mr Dijsselbloem defended the creditors' approach to make deposit holders take heavy losses, saying the measures 'will be concentrated where the problems are, in the large banks'.
The international creditors, led by the IMF, were seeking a fundamental restructuring of the outsized financial system, which is worth up to eight times the country's gross domestic product of about 18 billion euro (£15.2 billion).
For Cyprus, the drastic shrinking of its financial sector, the loss of confidence with the recent turmoil and the upcoming austerity measures means that the country is facing tough times.

'The near future will be very difficult for the country and its people,' acknowledged the Commission's top economic official Olli Rehn.

'But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis.'
Christopher Pissarides, a Nobel prize-winning economist who is advising the Cypriot president, said his country had been treated 'far worse' than larger economies who have previously needed rescue packages.

'The Eurogroup has dealt with Cyprus as small country with no contagion, but they forget that the way we deal with this situation has implications for the rest of Europe'

Nobel prize-winning economist Christopher Pissarides

Speaking on BBC Radio 4's Today programme, he said: ‘The Eurogroup has dealt with Cyprus as small country with no contagion, but they forget that the way we deal with this situation has implications for the rest of Europe.
‘We have a German finance minister who comes and tells us Cypriots that “We don’t like your economic model, bankrupt your banks and you can sort it out on the way."
‘When Greece was in trouble, Cyprus stepped in. We have been treated far worse [than Greece].
‘The euro has more to do with politics and relations with big countries like Russia and Germany than economy.
‘The difference with Cyprus is that it is small. Is Luxemburg is going to be next in line? Is Malta going to be next in line? Small members of the Eurozone beware.’
But Richard Corbett, an advisor to European Council president Herman Van Rompuy, said the Eurozone can’t make 'sweeping generalisations' for countries in economic disarray as Cyprus has a banking sector 'nearly eight times the size of its economy'.

In the stands: Cypriot football fans hold an anti-bailout banner during a World Cup 2014 qualifying match against Switzerland in Nicosia yesterday. The fans entered the stadium during the match to protest against the crisis

Concern: Without a deal, the European Central Bank said it would cut off emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the euro zone

To secure a rescue loan package, Nicosia had to find ways to raise several billion euro so it could qualify for the 10 billion euro bailout package.
The bulk of that money is now being raised by forcing losses on large deposit holders, with the remainder coming from tax increases and privatisations.
The creditors had insisted that Cyprus could not receive more loans because that would make its debt burden unsustainably high.
A plan agreed to in marathon negotiations earlier this month called for a one-off levy on all bank depositors in Cypriot banks.

But the proposal sparked fierce anger among Cypriots because it also targeted small savers, and failed to win a single vote in the Cypriot Parliament.

In an illustration of the depth of the fear of a banking collapse, Cyprus' central bank yesterday imposed a daily withdrawal limit of 100 euro (£85) from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.

Cypriot banks have been closed for the past week while officials worked on a rescue plan, and they are not due to reopen until tomorrow. Cash has been available through ATMs, but long queues formed and many machines have quickly run dry.

After the eurozone's finance ministers' approval, several parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks.

EU officials said they expect the whole programme to be approved by mid-April.

Spare change: People buy goods from a vegetable market in central Nicosia. The EU's economic affairs chief said there were now 'only hard choices left' for the latest casualty of the euro zone crisis

Purchases: A woman buys goods from a vegetable market in Nicosia. A run on banks could be on the way

In Asia, Japan's Nikkei 225 index surged 1.9 per cent to 12,567.07, South Korea's Kospi jumped 1.4 per cent to 1,975.33 and Hong Kong's Hang Seng 0.7 per cent to 22,272.68, while Australia's S&P 500 added 0.5 per cent to 4,993.20. 
Depending on the deal's details, 'the outcome will mean that the risks of Cyprus defaulting and leaving the euro zone will have significantly diminished,' said analysts at Credit Agricole CIB in Hong Kong in a market commentary.
Stocks in mainland China fell, although trading volume was somewhat thin.
Linus Yip, strategist at First Shanghai Securities in Hong Kong, said the market was being cautious ahead of the release of earnings from the Industrial and Commercial Bank of China, the Agricultural Bank of China and Bank of China this week.
'Chinese banking players will report, so the market is maybe taking a wait-and-see attitude,' he said.
Banking shares in other markets posted strong gains, evidence of relief amid the financial sector for the Cyprus bailout.
South Korea's Shinhan Financial Group jumped 5.3 per cent. Japan's Nomura Holdings advanced 1.9 per cent. Australia's Westpac Banking Corp. added 1.7 per cent.
The deal should bring a rally when U.S. stock markets open today, according to investment managers.
U.S. investors will not care too much about who takes losses in Cyprus, as long as there is a bailout that stops the run on banks and keeps the eurozone stable, said Karyn Cavanaugh, market strategist at ING Investment Management in New York.
'If this works out, regardless of the terms, this is going to be good for the market,' she said.
The move should be well received by U.S. investors because it's the third bailout deal in the eurozone, including Greece and Spain, and in each case the countries have agreed to austerity plans.
The Dow Jones industrial average dropped more than 90 points on Thursday in part on fears that the crisis in Cyprus would intensify, but it rebounded and erased the loss on Friday.
In related news, local media have reported an explosion outside of a Bank of Cyprus branch in Limassol.
Enikos.gr reports that the blast destroyed the window, creating a small fire, and the area has been cordoned off by the police.

 VIDEO  See EU officials announcing new Cyprus bailout deal

After Rejection of 75% Tax Rate on Wealthy, France Considers 66% Rate

• Huffington Post, France's Tax On The Rich To Be Radically Scaled Back
• Reuters, France Says Studying All Options for Supertax on Wealthy
• Wall Street Journal, France Drops 75% Tax on Rich

Five Ugly Extremes of Inequality in America -- The Contrasts Will Drop Your Chin to the Floor

Any of the ten richest Americans could pay a year's rent for all of America's homeless with their 2012 income.

 

The first step is to learn the facts, and then to get angry and to ask ourselves, as progressives and caring human beings, what we can do about the relentless transfer of wealth to a small group of well-positioned Americans.
1. $2.13 per hour vs. $3,000,000.00 per hour
Each of the Koch brothers saw his investments grow by  $6 billion in one year, which is three million dollars per hour based on a 40-hour 'work' week. They used some of the money to try to  kill renewable energystandards around the country.
Their income portrays them, in a society measured by economic status, as a million times more valuable than the  restaurant server who cheers up our lunch hours while hoping to make enough in tips to pay the bills.
A comparison of top and bottom salaries within large corporations is much less severe, but a lot more common. For CEOs and minimum-wage workers, the  difference is $5,000.00 per hour vs. $7.25 per hour.
2. A single top income could buy housing for every homeless person in the U.S.
On a winter day in 2012  over 633,000 people were homeless in the United States. Based on an annual single room occupancy  (SRO) cost of $558 per month, any ONE of the  ten richest Americans would have enough with his 2012 income to pay for a room for every homeless person in the U.S.  for the entire year. These ten rich men together made more than our entire  housing budget.
For anyone still believing "they earned it," it should be noted that  most of the Forbes 400 earnings came from  minimally-taxed, non-job-creating capital gains.
3. The poorest 47% of Americans have no wealth
In 1983 the poorest  47% of America had $15,000 per family,  2.5 percent of the nation's wealth.
In 2009 the poorest  47% of America owned  ZERO PERCENT of the nation's wealth (their debt exceeded their assets).
At the other extreme, the  400 wealthiest Americans own as much wealth as 80 million families --  62% of America. The reason, once again, is the stock market. Since 1980 the American GDP has approximately doubled. Inflation-adjusted wages  have gone down. But the stock market has increased by  over ten times, and the richest quintile of Americans  owns 93% of it.
4. The U.S. is nearly the most wealth-unequal country in the entire world
Out of 141 countries, the U.S. has the 4th-highest degree of  wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon.
Yet the financial industry keeps creating new wealth for its millionaires. According to the authors of the Global Wealth Report, the world's wealth has doubled in ten years, from $113 trillion to $223 trillion, and is expected to reach $330 trillion by 2017.
5. A can of soup for a black or Hispanic woman, a mansion and yacht for the businessman
That's literally true. For every one dollar of assets owned by a  single black or Hispanic woman, a member of the Forbes 400 has over  forty million dollars.
Minority families once had substantial equity in their homes, but after Wall Street caused the housing crash,  median wealth fell 66% for Hispanic households and 53% for black households. Now the average single black or Hispanic woman has about  $100 in net worth.
What to do?
End the  capital gains giveaway, which benefits the wealthy almost exclusively.
Institute a  Financial Speculation Tax, both to raise needed funds from a currently untaxed subsidy on stock purchases, and to reduce the risk of the irresponsible trading that nearly brought down the economy.
Perhaps above all, we progressives have to choose one strategy and pursue it in a cohesive, unrelenting attack on greed. Only this will heal the ugly gash of inequality that has split our country in two.

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Cyprus banks remain closed to avert run on deposits

By Michele Kambas and Karolina Tagaris

NICOSIA | Mon Mar 25, 2013 7:44pm EDT

(Reuters) - The president of Cyprus assured his people a bailout deal he struck with the European Union was in their best interests, but banks will remain closed until Thursday - and even then subject to capital controls to prevent a run on deposits.
Returned from fraught negotiations in Brussels, President Nicos Anastasiades said late on Monday the 10-billion euro ($13 billion) rescue plan agreed there in the early hours of the morning was "painful" but essential to avoid economic meltdown.

 

He agreed to close down the second-largest bank, Cyprus Popular, and inflict heavy losses on big depositors, many of them Russian, after Cyprus's outsize financial sector ran into trouble when its investments in neighboring Greece went sour.
European leaders said a chaotic national bankruptcy that might have forced Cyprus from the euro and upset Europe's economy was averted - though investors in other European banks are alarmed by the precedent of losses for depositors in Cyprus.
"The agreement we reached is difficult but, under the circumstances, the best that we could achieve," Anastasiades said in a televised address to the nation on Monday evening.
"We leave behind the uncertainty and anxiety that we all lived through over the last few months and we look forward now to the future with optimism," he told compatriots who face an immediate, deep recession and years of hardship unlikely to be milder than those experienced by Irish, Greeks and Portuguese.
Many Cypriots say they felt anything but reassured by the bailout deal, however, and are expected to besiege banks as soon as they reopen after a shutdown that began over a week ago.
Reversing a previous decision to start reopening at least some banks on Tuesday, the central bank said late on Monday that they would all now stay shut until Thursday to ensure the "smooth functioning of the whole banking system".
Little is known about the restrictions on transactions that Anastasiades said the central bank would impose, but he told Cypriots: "I want to assure you that this will be a very temporary measure that will gradually be relaxed."
Capital controls, preventing people moving funds out of the country, are at odds with the European Union's ideals of a common market but the government may fear an ebb tide of panic that would cause even more disruption to the local economy.
Without an agreement by the end of Monday, Cyprus had faced certain banking collapse and risked becoming the first country to be pushed out of the European single currency - a fate that Germany and other northern creditors seemed willing to inflict on a nation that accounts for just a tiny fraction of the euro economy and whose banks they felt had overreached themselves.
Backed by euro zone finance ministers, the plan will wind down the largely state-owned Cyprus Popular Bank, known as Laiki, and shift deposits under 100,000 euros to the Bank of Cyprus to create a "good bank", leaving problems behind in, effectively, a "bad bank".
Deposits above 100,000 euros in both banks, which are not guaranteed by the state under EU law, will be frozen and used to resolve Laiki's debts and recapitalize the Bank of Cyprus, the island's biggest, through a deposit/equity conversion.
PRECEDENT SET
The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros of the 5.8 billion euros the EU and IMF had told Cyprus to raise as a contribution to the bailout, Dutch Finance Minister Jeroen Dijsselbloem said.
Cyprus government spokesman Christos Stylianides said losses for uninsured depositors would be "under or around 30 percent".
Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution - setting a precedent for the euro zone.
Comments by Dijsselbloem on the need for lenders to banks to accept the potential risks of their failure had a knock-on effect in the euro zone, raising the cost of insuring holdings of bonds issued by other banks, notably in Italy and Spain.
Global equity markets and the euro retreated on his comment that the Cyprus bailout could be a template for solving other problems, by shifting more risk to depositors and stakeholders:
"What we've done last night is what I call pushing back the risks," Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times.
A first attempt at a deal 10 days ago had collapsed when the Cypriot parliament rejected a proposed levy on all deposits, large and small. That proposal outraged ordinary Cypriots, leading to queues at bank cash machines.
The central bank has imposed a 100-euro daily limit on withdrawals from ATMs at the two biggest banks to avert a run.
PUBLIC SCEPTICAL
Russia signaled it would back the bailout even though it would impose big losses on Russian depositors, who by some estimates may hold a third of all deposits in Cypriot banks.
President Vladimir Putin ordered officials to restructure a loan Moscow granted to Cyprus in 2011 - having rejected Nicosia's request for easier terms in crisis talks last week.
Among Cypriots sipping coffee in warm sunshine, there was a mood of wariness about the deal: "How long will it last?" asked Georgia Xenophontos, 23, a hotel receptionist in Nicosia.
"Why should anyone believe anything this government says?"
In the morning, a public holiday, residents of the capital lined the streets to watch a parade by soldiers and students to mark Greek Independence Day, waving the Greek and Cypriot flags.
"On this day I'm proud to be Greek, but at the same time I feel humiliated," said Marios Charalambous, 56, a print-shop owner. "I'm worried what will happen when the banks reopen."
Cyprus' tottering banks held 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros - enormous sums for an nation of 860,000 people that could never sustain such a big financial system on its own.
The U.S. Treasury, noting the importance to the United States of financial stability in Europe, its largest trading partner, said it was now up to Cypriots to rebuild their economy: "It is critical to lay the foundation for a return to financial stability and growth in Cyprus," the Treasury said.
(Additional reporting by Luke Baker, John O'Donnell, Robin Emmott, Philip Blenkinsop and Rex Merrifield in Brussels, Costas Pitas in Nicosia and Lionel Laurent in Paris; Writing by Giles Elgood and Matt Robinson; Editing by Alastair Macdonald)

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