From Reuters, more detail: Cyprus and EU/IMF agree draft proposal to rescue banks
Its still at the Eurogroup meeting, but looks likely to get through as described. ADDED: Eurogroup have approved it.
- setting up a “good bank” and a “bad bank”
- Popular Bank of Cyprus, known as Laiki, will effectively be shut down
- Deposits below 100,000 euros in Laiki will be transferred to Bank of Cyprus
- Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt.
Around 35 billion euros is held in Cypriot accounts with more than 100,000 euros in them, but it is not clear how much of that total is held in Laiki bank.
If sufficient funds can be found in Laiki to pay off debt and restructure the Cypriot banking sector, uninsured depositors in Bank of Cyprus may not incur any losses, although that remains to be seen.