Orthodox Church pledges assets to crisis-hit Cyprus
THE head of Cyprus’s influential Orthodox Church said yesterday that he will put the church’s assets at the country’s disposal to help pull it out of a financial crisis, after politicians rejected a plan to seize up to 10 per cent of people’s bank deposits to secure an international bailout.
Speaking after meeting president Nicos Anastasiades yesterday, Archbishop Chrysostomos II said the church was willing to mortgage its assets to invest in government bonds.
The church has considerable wealth, including a property portfolio estimated to be worth about €80 million (£69m), stakes in the Hellenic Bank and a brewery.
Tuesday’s rejection of the deposit tax has left the future of the country’s international bailout in question.
Cyprus needs €15.8bn (£13.5bn) to bail out its banks and shore up government finances to avoid default and a potential exit from the European single currency.
Last night, government officials announced that the country’s banks, which have been shut all week, will remain closed until next Tuesday at the earliest. Monday is a bank holiday on the island.
The announcement came after officials spent yesterday attempting to find new ways to stave off financial ruin, including asking Russia for help. Without the bailout, the Cypriot banking sector would collapse, devastating the economy and potentially causing the country to leave the euro.
Political party leaders met at the central bank to discuss an alternative plan to raise the €5.8bn the country needs to qualify for €10bn in rescue loans from its fellow euro countries and the International Monetary Fund (IMF).
They also discussed not raising the full €5.8bn domestically, with the rest potentially coming from other sources, such as Russia. Cyprus’s finance minister was in Moscow to ask for support, possibly in the form of an extension on an existing loan.
“We will be here until some kind of agreement is reached,” said Michalis Sarris in Moscow.
Mr Anastasiades held talks with European and IMF officials but issued no statement on the result. The eurozone and IMF officials must sign off on any plan B the Cypriots come up with if it is to be approved as part of the bailout.
The ministers would likely draft a bill to limit the amount of money leaving the country, according to a banking official. The ministers would also try to create a so-called “bad bank”, a fund in which to dump the non-performing investments of the country’s two largest banks, which lost billions on bad Greek debt.
However, Cyprus is running on borrowed time, literally.
The European Central Bank (ECB) is keeping the Cypriot banks alive by allowing them to draw on emergency support from the local central bank. But the ECB has said it would cut off that aid if there was no bailout deal soon and it became clear the banks had no hope of becoming solvent again.
Under the initial bailout plan, conceived in Brussels last weekend, other eurozone countries and the IMF would give Cyprus €10bn in rescue loans if the country raised €5.8bn through one-off bank deposit seizures.
The plan was initially to take 6.75 per cent of deposits up to €100,000 and 9.9 per cent on those above that threshold.
That caused outrage, leading the government to propose an amended version that would have spared deposits up to €20,000. But that plan also failed to win over Cypriot politicians.
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