Eurozone crisis live: Cypriot finance minister resigns as blame game begins

Michael Sarris quits after concluding Cyprus bailout talks. First installment of aid scheduled for May. Euro-zone manufacturing slump worsens with 20 months of contraction. Unemployment in euro area hits new high at 12%. UK factory output declines…


Powered by article titled “Eurozone crisis: Cypriot finance minister resigns as blame game begins” was written by Josephine Moulds and Nick Fletcher, for on Wednesday 3rd April 2013 08.20 UTC

6.04pm BST

European markets close on a high note

Stock markets have begun the week, and indeed the quarter, by recording reasonable gains, lifted by hopes of further central bank action after disappointing manufacturing figures from across the globe, flavoured with a touch of takeover speculation.

• The FTSE 100 finished 78.92 points higher at 6490.66, a 1.23% rise

• Germany's Dax added 1.91%

• France's Cac closed 1.98% higher

• Italy's FTSE MIB ended up 1.4%

• Spain's Ibex added 1.65%

• But Athens was down 1.48% and Cyprus closed 2.48% lower

In the US, the Dow Jones Industrial Average is currently 94 points or 0.64% higher while the S&P 500 came to within just three points of its all time intra-day high of 1576.

And with that, it's time to close up for the evening. Thanks for all your comments and we'll be back tomorrow.

Updated at 6.09pm BST

6.03pm BST

Osborne confirms Laika UK account transfers

Laiki bank's 15,000 UK accounts with total balances of £270m have been transferred to the Bank of Cyprus's UK subsidiary, chancellor George Osborne has confirmed.

In a letter to Andrew Tyrie, the chairman of the Treasury select commitee, Osborne said that without a deal Laiki depositors would have been sucked into the restructuring "and all the uncertainty that would have brought with it". In his letter, published on the Treasury web site, he wrote:

There has been no material recourse to public funds. We have not made a bilateral loan to Cyprus and the UK is not contributing to the financial assistance programme announced by the eurogroup.

We support Cypriot efforts to restructure their banking system, as it is in everyone's interests that their financial sector is safe and secure. But I promised a solution that would stop depositors here from being sucked into that restructuring process. We have delivered on that.

Updated at 6.08pm BST

5.46pm BST

Samaras hopeful ahead of troika visit to Greece

Over in Greece, our correspondent Helena Smith says prime minister Antonis Samaras’ coalition government is hopeful it will finalise negotiations when visiting troika officials descend on Athens tomorrow. She writes:

Much hangs on the troika’s visit to Greece starting with the debt-stricken country’s next €2.8bn installment of aid. The tranche has been held up since mission chiefs representing the EU, ECB and IMF cut short their last inspection tour of Greece in March.

But emerging from talks with the prime minster, Antonis Samaras, the finance minister Yannis Stournaras said he was confident differences with troika officials would soon be settled. Greek media reports said the governing coalition expected all outstanding differences with foreign lenders to be resolved by the end of the month when Greece hopes to take receipt of a total €8.8bn (including €6bn due this month) from creditors.

The troika is expected to begin reviewing progress made on budget targets when representatives meet Stournaras on Thursday morning.

Greece’s leading daily, Ta Nea, said mission chiefs, including the IMF official Poul Thomsen, expected to be in the country for at least ten days although experience has shown that this could change. 

Among the thorny issues likely to delay progress are demands that Athens immediately sacks up to 35,000 civil servants from the bloated public sector and continues to apply a highly controversial property tax through electricity bills.

Updated at 9.20am BST

5.26pm BST

ECB’s Coeure warns on currency wars

ECB board member Benoît Coeuré has warned of the dangers of currency wars, saying foreign exchange swings caused by misguided policies could become disruptive.

This was especially true, he said in a speech for a conference on the subject, since central banks in advanced economies had reached the limits of their ability to manoeuvre. He said:

It would be a matter of concern if countries were to directly pursue overt competitive devaluations.

The Bank of Japan wants to take aggressive monetary policy measures to hit its inflation target, in terms of the volume and types of assets it purchases.

Updated at 5.47pm BST

5.10pm BST

Bank of Cyprus has suspended its operations in Romania for a week, so they can be restructured and sold.

Updated at 5.44pm BST

4.23pm BST

Former French minister reportedly admits to foreign bank account

Former French budget minister Jerome Cahuzac has admitted he has had a foreign bank account for the last 20 years, containing a reported €600,000.

Cahuzac, in charge of clamping down on tax evasion, resigned last month after allegations that he evaded taxes with a secret Swiss bank account.

He had repeatedly denied the accusations, and a legal investigation was opened.

Updated at 4.34pm BST

3.30pm BST

Bersani says Italy’s problems cannot be solved by new elections

Back in Italy, and centre-left leader Pier Luigi Bersani has said the country's problems cannot be solved by new elections, despite its inability to form a government after an inconclusive poll.

Bersani repeated he was not willing to form a grand coalition with Silvio Berlusconi's centre-right party. He said a centre-right demand to pick the president of the republic was unacceptable.

His task of trying to form a government was over, Bersani said, and a new phase had opened.

The president has already appointed 10 wise men to try to find a way out of the deadlock.

Democratic Party leader Pier Luigi Bersani at the Quirinale Presidential palace in Rome at the end of March. Photograph: Reuters/Tony Gentile
Democratic Party leader Pier Luigi Bersani at the Quirinale Presidential palace in Rome at the end of March. Photograph: Reuters/Tony Gentile

Updated at 3.42pm BST

3.02pm BST

IMF to close Latvian office

The International Monetary Fund will close its office in Latvia this summer, after the Baltic state repaid all its outstanding obligations last year following its 2008 bailout. The IMF said:

Latvia has regained macroeconomic stability and its economic recovery is now well established, though significant remaining challenges include the ongoing need to address still-high unemployment and to continue microeconomic reforms.

The IMF looks forward to continued close cooperation with Latvia, primarily in the context of regular bilateral policy consultations as with other IMF member countries.

The country has formally applied to join the euro in 2014.

2.32pm BST

More from Cyprus, with a reported comment from the now ex-finance minister Michael Sarris:

And on the reshuffle:

Updated at 2.33pm BST

2.26pm BST

And with that I'll hand you over to my colleague Nick Fletcher.

2.25pm BST

Markets buoyant across Europe

A quick look at the markets. In the UK, shares have powered ahead after poor manufacturing data raised hopes the Bank of England may boost its quantitative easing programme earlier than expected.

UK FTSE 100: up 1.1%, or 72 points, at 6484

France CAC 40: up 1%

Germany DAX: up 1.1%

Spain IBEX: up 0.8%

Italy FTSE MIB: up 0.7%

Updated at 2.28pm BST

1.58pm BST

Georgiades takes over as Cypriot finance minister

The Cypriot government has now confirmed that the labour minister, Harris Gerogiades, has been appointed as the new finance minister.

Cyprus' new finance minister Harris Georgiades, second from left, in a meeting ahead of the country's bailout.
Cyprus’ new finance minister Harris Georgiades, second from left, in a meeting ahead of the country’s bailout. Photograph: Petros Giannakouris/AP

Updated at 2.23pm BST

1.50pm BST

Cypriot cabinet reshuffle expected today – ekathimerini

A full shakeup of the Cypriot cabinet is expected in the next few hours, ekathimerini reports.

It blames the resignation of the Cypriot finance minister on his handling of the crisis since 1 March. From the website

Cypriot finance minister Michalis Sarris tendered his resignation on Tuesday afternoon, Skai radio reported, following the president's disappointment with his handling of the island's crisis since 1 March.

His successor is about to be named, with labour minister Haris Georgiadis being among the favorites.

A full shakeup of the Cypriot cabinet is expected in the next few hours, too.

Updated at 2.22pm BST

1.29pm BST

Reuters concurs. The Cypriot finance minister, Michael Sarris, has resigned after concluding talks with the island state's international lenders. President Nicos Anastasiades has accepted his resignation.

Another headline suggests he has quit because of 'ongoing investigations'.

State broadcaster RIK TV says the labour minister, Harris Georgiades, is likely to take his place.

Updated at 1.59pm BST

1.20pm BST

Cypriot finance minister resigns

Oops. It seems the Cypriot government was premature in its denials over the future of the finance minister, Michael Sarris (see 1.17pm). Bloomberg, for one, is running the headline that Sarris has just resigned. 

More on that as it comes in …

Updated at 1.34pm BST

1.17pm BST

Cyprus concludes talks with lenders

Further developments in Cyprus, which has concluded talks with its lenders and agreed the final terms of its €10bn bailout.

The government said the island state will get its first slice of aid in May. Here's government spokesman Christos Sylianides:

We have concluded on a memorandum. This is a significant development.

Under the terms of the deal …

  • Cyprus has until 2018 to shore up its finances
  • It will pay 2.5% interest on the bailout loans and will start repayment in 10 years' time

The finance minister, Michael Sarris, said he hoped to ease capital controls as soon as possible but was unable to say when that might happen.

The government earlier had to deny reports that Sarris was going to be replaced.

Cypriot finance minister Michael Sarris could not say when capital controls will be eased.
The Cypriot finance minister, Michael Sarris, was unable to say when capital controls would be eased. Photograph: Yannis Behrakis/Reuters

Updated at 1.34pm BST

12.00pm BST

Italian wise men meet to try to break deadlock

In Italy, 10 wise men appointed by the president are meeting to try to find a way out of the country's political deadlock, following inconclusive elections last month.

The ANSA news wire quotes a presidential spokesman saying the meetings are "absolutely informal, purely reconnaissance, and have obvious time limits".

At 11am local time, a meeting began with the six figures responsible for economic and European issues. At 12, it's the turn of the institutional figures, including the president of the constitutional court and various politicians.

The president's office said the meetings are aimed at …

formulating precise policy proposals that can become a target shared by political forces.

The meetings have come in for strong criticism from Silvio Berlusconi's party, which described them as a useless waste of time.

Berlusconi, leader of centre-right PDL party gave a press conference after a meeting with Italy's president last week.
Silvio Berlusconi gives a press conference after a meeting with Italy’s president last week. Photograph: Tiziana Fabi/AFP/Getty Images

Updated at 1.05pm BST

11.47am BST

No significant outflow of funds from Slovenia, says central banker

Over to Slovenia, which many see as the most likely contender for the next international bailout.

The head of the central bank, Marko Kranjec, said today he was worried about 2014. He is not the only one.

The Slovenian central bank sees GDP contracting by 1.9% this year, but says it will grow by 0.5% in 2014.

Kranjec said investors have not been pulling out large amounts of money from Slovenia in the wake of the Cyprus crisis, which saw strict capital controls imposed when the bailout was announced.

We are monitoring the [deposit] flows on a daily basis but have not registered significant moves. The way the situation in Cyprus was being solved did not influence the confidence of our depositors.

Ljubljana at sunset from Castle Hill, Slovenia.
Ljubljana at sunset from Castle Hill, Slovenia. Photograph: Guy Edwardes/Getty Images

Updated at 1.06pm BST

11.27am BST

Eurozone unemployment up 2.1% since crisis began

Another gloomy fact of the day.

Channel 4's economics editor notes that the rise in eurozone unemployment as a result of the debt crisis will soon beat the rise immediately following the Lehman crash.

10.56am BST

Spain seeks more time to cut deficit

There's more bad news from Spain, which is set to cut its growth forecasts this week and ask for more time to reduce its budget deficit as the recession cuts deeper than expected, a government source told Reuters.

Julien Toyer reports:

Spain's gross domestic product (GDP) will be forecast to shrink by 1%, rather than 0.5%, the source said, adding that the government intended to shift emphasis to growth rather than deficit reduction.

Spain is negotiating with the European commission for more time to bring its deficit within 3% of GDP, something it is currently expected to do by 2014, the source said.

Spain will increase its 2013 deficit target to 6% of GDP, from an existing forecast of 4.5%. The figures on growth and the deficit could still vary by one or two decimal points, depending on the outcome of talks with the commission, the source said.

If the country is given one extra year, the deficit-cutting path will be 6% of GDP in 2013, 4.5% in 2014 and 3% in 2015, the source said, adding this was the most likely outcome of the negotiations.

Spain's economy will sink deeper into recession this year.
Spain’s economy will sink deeper into recession this year. Photograph: Susana Vera/Reuters

Updated at 1.12pm BST

10.43am BST

Eurozone youth unemployment continues to rise

Back to the eurozone jobless data, where statistics for youth unemployment make particularly grim reading.

In Greece, almost 60% of the under 25s are out of work, and in Spain the number continues to rise, hitting 55.7% in February.

Only Austria and Germany (not included in the Bloomberg chart below) have rates of under 10%.

10.32am BST

Here's the EEF, the UK manufacturers' association, on the factory data. Lee Hopley, chief economist at the EEF, said:

There’s been very little in any of the survey data over the past couple of months that would indicate that manufacturing has staged a recovery in the first quarter of the year. The continued weakness in the PMI is disappointing overall, but of particular concern is another month of falling export demand. While manufacturers have made some good gains in non-EU markets over the past couple of years, the on-going drag on orders from the eurozone is still significant and likely to impact on prospects over the coming months.

Updated at 1.31pm BST

10.18am BST

Poor UK factory data raises chance of more QE

Back to the weak UK manufacturing data, which one analyst says comes as no surprise.

Christian Schulz of Berenberg Bank writes:

The poor performance of manufacturing should come as no surprise. Each of the past three years has seemed to begin with a burst of optimism from the PMIs, followed by a return to reality.

This year, the UK's main trading partner remains in recession, and UK domestic demand is being hobbled by the squeeze on household real incomes as inflation runs ahead of wage growth. Sterling's depreciation should help manufacturing later in the year, but March is far too early to see any benefits.

He says further stimulus is pretty much inevitable this year. If services PMI data (out on Thursday) is bad, the Bank of England could act as early as this month. 

But May or August are much more likely months for a move than April. On balance, we stick to our call for Fed-style guidance and more asset purchases to be announced in August, but the risks of an earlier move have risen a touch.

10.14am BST

Eurozone unemployment hits new high

Eurozone unemployment data is in, and it makes predictably grim reading.

Joblessness in the currency bloc hit an all-time high of 12% in February, compared with an original estimate of 11.9% for January, which has since been revised up to 12%.

That is a big jump from this time last year, when the unemployment rate was 10.9%.

As usual, there were huge discrepancies between the member states, with the lowest unemployment rates recorded in Austria at 4.8% and Germany at 5.4%. The highest was in Greece, which recorded a rate of 26.4% (although the figures are from December 2012), and Spain, where the rate is 26.3%.

Unemployment in the European Union
Unemployment in the EU. Source: Eurostat

Codes as follows… Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

Updated at 1.41pm BST

10.04am BST

Eurozone lending declines

Another attractive chart to display a worrying trend in the eurozone, courtesy of a Norwegian trader.

The graph shows the decline of lending in the eurozone, led by Spain (for a larger version, click on the image).

Updated at 1.42pm BST

9.47am BST

Cyprus to ease capital controls

Back to Cyprus, where reports suggest the country will ease some of its restrictions designed to stop money flowing out of the country today.

Reuters reports:

Cyprus is expected to announce a partial relaxation of currency controls on Tuesday, raising the ceiling for financial transactions that do not require central bank approval to €25,000 from €5,000, a central bank source said.

Cypriot authorities have also decided, in consultation with international lenders, to unblock 10% of a 40% effective freeze on large deposits in Bank of Cyprus under a bail-in arrangement.

The country held a Cyprus Aid concert in Nicosia last night, where participants were asked to make a contribution in kind such as food, which will be distributed to individuals, families and other groups in immediate need.

People donate bags of food as they attend the Cyprus Aid solidarity concert last night. Photograph: Yiannis Kourtoglou/AFP/Getty Images

Updated at 1.48pm BST

9.36am BST

UK factory data worse than expected

Over in the UK, manufacturing missed expectations but is slightly higher than last month.

The sector is still in decline, however, with a PMI of 48.3. That's up from February's 47.9, but worse than forecasts of 48.7.

Rob Dobson at Markit said the numbers could be enough to push the Bank of England to expand its quantitative easing programme at its meeting next week.

He says that first quarter GDP is still on a knife-edge. If the economy contracted again in the first quarter, the UK would slide into its third recession (defined as two consecutive quarters of contraction) in four years. Dobson says:

The onus is now on the far larger service sector to prevent the UK from slipping into a triple-dip recession. The ongoing weakness of manufacturing and the hard to estimate impact of bad weather on first quarter growth suggest that this is still touch-and-go and that any expansion will be disappointing nonetheless.

Updated at 1.53pm BST

9.27am BST

Cyprus share index drops after two-week hiatus

Ouch. The Cyprus stock exchange is now down by 2.35%. No great surprise there, but it's not going to do the country any good. 

Updated at 1.54pm BST

9.26am BST

Slump in eurozone manufacturing could prompt ECB to cut rates

With manufacturing in all eurozone member states contracting, analysts say GDP in the currency bloc is likely to have dropped in the first quarter.

Here's Howard Archer of IHS Global Insight:

The deeper contraction in eurozone manufacturing activity in March is both disappointing and worrying. It now looks odds-on that the eurozone suffered further GDP contraction in the first quarter of 2013, likely around 0.3% quarter-on-quarter, while the increased drop in orders and declining backlogs of work does not bode at all well for second quarter prospects.

But he does not expect the European Central Bank to rush to cut rates in order to try and drive a recovery.

Despite mounting signs that the already weak eurozone economic situation is deteriorating anew and muted inflationary pressures, the ECB still seems likely to hold off from cutting interest rates at its April policy meeting on Thursday.
The ECB currently appears reluctant to take interest rates down from 0.75% to 0.50%, partly due to some doubts that such a move would have a beneficial impact given current fragmented conditions in credit markets. And there is a risk that this fragmentation could be magnified by the recent events in Cyprus.

However, some governing council members did favour an interest rate cut in March, and we suspect that likely ongoing disappointing eurozone economic news will increasingly prod the ECB towards acting within the next few months. We suspect that the ECB will eventually take interest rates down from 0.75% to 0.50%, very possibly around June.

Updated at 2.06pm BST

9.21am BST

French factory slump continues

French manufacturing is also predictably bad, with activity down for the 13th month running.

The Markit PMI inched up to 44 (from 43.9 in February) but remains significantly below the 50 mark that separates growth from contraction. 

Jack Kennedy at Markit said:

A very slight improvement in the headline PMI figure does little to disguise an ongoing sharp deterioration in French manufacturing sector operating conditions during March.

The chart below shows just how badly France has fared compared with the rest of the eurozone. Follow the thin red line.

Updated at 2.07pm BST

9.16am BST

German manufacturing contracts

Even German manufacturing is bad, moving back into negative territory after a positive reading in February.

The sector – which represents around a fifth of the German economy – was hit by a fall in new orders, raising doubts about the strength of the eurozone recovery in the first quarter. 

Markit's manufacturing PMI for Germany dropped to 49 in March from 50.3.

Tim Moore at Markit said:

Manufacturers cited heightened uncertainty about the economic outlook especially across export markets within the euro area, as having curtailed client spending.

Updated at 2.08pm BST

9.03am BST

Italian factory sector continues to slide

Over to Italy, where manufacturing was even worse than expected, making today a day for negative surprises.

The PMI came in at 44.5, substantially below the 50 mark that separates growth from contraction and missing forecasts of 45.4.

It is the 20th straight month in which manufacturing has contracted, with little sign of turning the corner so far.

Updated at 2.09pm BST

8.50am BST

Cyprus stock exchange opens down 0.5% after two-week haitus

The Cyprus stock exchange is open again after a more than two-week hiatus, and shares are down 0.5%.

Trading in the country's two largest lenders, Bank of Cyprus, which will undergo a major restructuring, and Laiki Bank, which will be wound down, has been halted. 

The stock exchange has been closed since 15 March, when Cyprus announced initial plans for a eurozone bailout (which were subsequently revised).

The Cyprus general market index dropped 11% in the first few months of the year, according to Bloomberg. The index has slumped 98% from its peak in October 2007.

Updated at 2.10pm BST

8.38am BST

Swiss manufacturing in surprise contraction

Over to Switzerland, where the manufacturing sector also unexpectedly moved into negative territory last month. 

The Swiss PMI dropped to a seasonally adjusted 48.3 in March, from 50.8 in February. That is below the 50 mark that separates growth from contraction and is a big miss from analyst forecasts of 50.2. 

Analysts at Credit Suisse and the SVME purchasing managers' association said:

The chaos surrounding the bailout package for Cyprus and stalemate in the Italian elections also created uncertainty among Swiss companies.

We anticipate that the recent flare-up int eh crisis will last a while yet, but that the medium-term trend toward a recovery in the eurozone is not at risk.

Next up Italy, and hopes are not high.

Updated at 2.11pm BST

8.33am BST

Spanish manufacutring contraction accelerates

Spanish manufacturing fared even worse, with the sector shrinking at its fastest rate since October.

The Markit PMI for manufacturing – which accounts for just over 12% of Spain's economy – dropped to 44.2 in March from 46.8 in February. 

There were some signs at the beginning of this year that the long slide in Spanish manufacturing was bottoming out, but this data seems to counter that.

Markit economist Andrew Harker said:

The data for Spain make grim reading for the manufacturing sector. Moreover, the latest figures have brought an end to the recent period of moderating declines and cast doubt on any hopes of recovery for the rest of the year.

8.27am BST

Irish manufacturing contracts for first time in over a year

Now to today, and the manufacturing data is rolling in from the eurozone.

First up, Ireland, which had a shocker in March. Manufacturing in Ireland contracted for the first time in over a year last month, with the shaprest drop in new export orders since the dark days of August 2009.

The NCB purchasing managers' index fell to 48.6 in March from 51.5 in February, dropping below the 50 line that separates growth from contraction for the first time since February last year.

Updated at 2.12pm BST

8.22am BST

Cyprus wins deadline extension

Cypriot negotiators won concessions from its international lenders over the weekend, on the basis that it is facing a longer and deeper recession than feared.

The island state has been granted an extra year to achieve a budget surplus of 4%. The original deal was based on forecasts that the economy would shrink 3.5% this year, but an anonymous government official told the Associated Press that the economy is now projected to contract by about 9%. A government spokesman, Christos Stylianides, said negotiators are now pushing to extend the deadline to 2018 to achieve a better budget surplus.

Updated at 2.14pm BST

8.20am BST

Laiki’s UK customers escape Cypriot savings levy

UK customers of Laiki bank will be relieved to hear this morning that they will not lose their savings.

My colleague Jill Treanor reports:

Some 15,000 account holders at Laiki bank in the UK are to escape any levy imposed on savings by the Cypriot authorities.

After a week of negotiations since George Osborne told MPs the government was trying to find ways to stop Laiki being "sucked" into the Cyprus bailout, the UK arm of Bank of Cyprus has taken over £270m of Laiki balances in the UK.

As Laiki operates as a "branch" in the UK, its depositors were covered by the Cyprus government for the €100,000 (£85,000) European-wide guarantee in savings but could have been subject to levies above that level.

However, as Bank of Cyprus UK Limited is a separately capitalised, UK incorporated bank, it is subject to UK regulation and protected by the financial services compensation scheme which guarantees up to £85,000. Its customers will not be hit by any levy – possibly 60% on accounts above £85,000 – or restrictions on limiting withdrawals to €300 a day.

Volunteers organize food donated by attendees of the “Cyprus Aid” solidarity concert in the centre of the Cypriot capital, Nicosia, yesterday. Photograph: Yiannis Kourtoglou/AFP/Getty Images

Updated at 2.16pm BST

8.16am BST

The Cypriot president has now launched an investigation into events leading to the financial crisis. The Wall Street Journal reports:

A three-member panel of former top judges tasked with investigating the events leading to the financial crisis has received copies of the lists, Cyprus's top public prosecutor said Monday.

On Monday, Mr. Anastasiades said they would leave no stone unturned. "These three respected judges . . . will be given the mandate to investigate anything that might relate to me, or my relatives by marriage," he said.

Updated at 2.16pm BST

8.10am BST

Anastasiades denies family member exported funds

The blame game began in Cyrpus this weekend, with reports emerging that a company with family ties to the president, Nicos Anastasiades, withdrew funds from the island ahead of the bailout.

Just to recap, last week Cyprus and the troika of international lenders agreed a €10bn bailout plan aimed at saving the island from financial meltdown.

  • Under the terms of the deal, depositors holding more than €100,000 at the Bank of Cyprus will lose 37.5% of their savings in exchange for bank shares. A further 22.5% will be put into a fund that earns no interest and could be confiscated should the bank need further funds.
  • Depositors in Laiki bank with over €100,000 will face heavy losses. Those with deposits of less than €100,000 will have their accounts transferred to Bank of Cyprus.
  • The central bank imposed strict capital controls following the announcement of the bailout to stem the flow of funds fleeing the country.

It seems, however, that several people had advance warning of the deal and millions of euros leaked out of the island before it was announced. 

Greek and Cypriot media have published a list of 132 companies and individuals that allegedly pulled money out of Cypriot banks and sent it abroad days before the capital controls came into force.

Among them was A Loutsios & Sons Ltd, a company said to be co-owned by the father-in-law of one of Anastasiades's daughters.

The list could not be verified, and the company has denied that it moved any cash.

The president said the reports were an "attempt to defame companies or people linked to my family".

A Greek website has published another list, naming six current and former politicians and several others whom it claims benefited from favourable loan restructuring at Laiki Bank. All of those named have denied any wrongdoing.

Updated at 2.20pm BST

7.50am BST

Good morning and welcome to our rolling coverage of the eurozone crisis and other developments in the global economy.

Cyprus continued to dominate the headlines over the weekend, after its controversial bailout that punished savers in Cypriot banks was agreed last week.

We'll have all the news from there, the rest of the eurozone and around throughout the day. © Guardian News & Media Limited 2010

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