Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Cyprus Turns to Russia for Loan to Stem Bank Crisis

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Cyprus Turns to Russia for Loan to Stem Bank Crisis

Article excerpt

NICOSIA, Cyprus -- Searching for a way out of a crippling financial crisis, officials in Cyprus on Wednesday pursued a new bailout strategy that could include a loan from Russia in exchange for natural gas leases and selling off assets from its most troubled banks.

Cyprus needs to come up with 5.8 billion euros ( $7.5 billion) on its own in order to secure 10 billion euros in rescue loans from international creditors. But the country's first plan to seize as much as 10 percent of people's bank accounts failed miserably. Now, officials are trying to limit the amount of money they need to take from customer's deposits.

The new "Plan B" could be voted on as early as today, three top government officials said.

The latest move came a day after lawmakers voted overwhelmingly against the earlier plan, a rejection that threw Cyprus' entire bailout into question. That raised the possibility that the nation's banks could collapse, the government would be unable to pay its bills, and Cyprus could be forced out of the euro.

That could roil global financial markets and endanger deposits in the country even more.

The new "Plan B" was described by three top government officials, who spoke on condition of anonymity because details of the proposal were not being released until party officials had a chance to review them at a meeting this morning. The plan could be voted on by Parliament as early as this evening, one official said.

The package includes a proposal to restructure Cyprus' heavily indebted second-largest lender, Laiki. …

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