Cyprus’s finance minister resigned on Tuesday after concluding a 10 billion euro bailout deal with international lenders in which the country slashed its dominant banking sector and hit depositors with losses, Reuters reported.
Michael Sarris, a lead player in talks with International Monetary Fund and European Union lenders, said he had completed his task but also that he was likely to come under scrutiny in an investigation into the crisis.
Tuesday’s deal, which requires ratification from national EU parliaments and euro zone finance ministers, will see Cyprus receiving a 10 billion euro loan, carrying an interest rate of approximately 2.5 per cent. It is repayable over a 12 year period after a grace period of a decade.
“This is a very important development which ends a very long period of uncertainty,” said Christos Stylianides, Cyprus’s government spokesman. Sarris said he expected the first disbursement of aid in May.
Compared with a previous draft deal with lenders brokered in November, Tuesday’s agreement gave authorities additional room to reach a primary surplus by 2018, longer than an initial 2016, Stylianides said.
Cyprus’s status as a financial hub, meanwhile, has all but crumbled in the space of a fortnight. Authorities were forced to wind down one bank and impose heavy losses on wealthier depositors in a second in return for the financial aid.
When banks reopened after a two-week lockdown last week, Cypriots were faced with currency controls to prevent a run on banks, unprecedented in the history of the 17-member euro zone.
In the event, there was no run.
Conservative President Nicos Anastasiades, in the job for a little over a month, appointed judges on Tuesday to investigate possible political and regulatory failures in the island’s economic demise, as well as the role of banks.
Sarris, who was dispatched to Moscow last month but returned empty-handed as Cyprus sought Russian aid after parliament rejected a European bank levy proposal, said his main goal of agreeing a deal with lenders had been accomplished.
But he said it was also appropriate to resign since his previous role as chairman of the Popular Bank, or Laiki, – the island’s second largest lender wound down under terms of the bailout – was also likely to come under scrutiny.
“I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did,” said Sarris, who headed Popular for a few months in 2012.
Anastasiades, who appointed three retired Supreme Court judges to run the inquiry on Tuesday, said nobody would be exempt from the probe, starting with the legal business he once headed, and family connections.
A list of business which had moved money out of Popular in the run up to the bailout deal included a company in Limassol, whose owners are related to Anastasiades by marriage.
The list, produced in the Communist party newspaper Haravghi on Sunday and reproduced by other media, said the company, A. Loutsios and Sons, had moved some 21 million euros out of the bank.
The company said it had moved 10.5 million euros to Barclays Bank Plc in Britain, and the remaining amount to Bank of Cyprus in order to complete real estate transactions.