Cyprus bailout deal 'fair': German finance minister

25th March 2013, Comments 0 comments

German Finance Minister Wolfgang Schaeuble said the bailout agreed Monday for Cyprus was a fair deal that will restore shaken faith in the debt-laden country.

"The result is a fair one for everybody involved," Schaeuble told a news conference after the 11th-hour agreement was sealed between Cyprus and its international lenders.

"It is the best path possible even if it isn't an easy one."

In order to unlock 10 billion euros ($13 billion) in rescue loans Cyprus agreed to close down its second largest lender Laiki (Popular Bank), with deposits above 100,000 euros ($130,000) being used to cover the bank's losses.

Uninsured deposits above 100,000 euros in the Bank of Cyprus will also suffer losses to restructure the island's main lender.

The banks faced collapse without restructuring, which would have pushed the state into a default and possibly to exit the euro.

The deal will help "stabilise the situation in Cyprus and help Cyprus back onto a path of sustainable consolidation. I think the solution can help win back lost confidence for and in Cyprus," added Schaeuble.

Separately, government spokesman Steffen Seibert said the size of the bailout demonstrates Europe's solidarity with Cyprus.

"You need to remember that an aid package of around 10 billion euros has just been agreed -- considering the size of the Cypriot economy, that is a dimension that no other European aid package has reached," he told journalists.

Seibert expressed confidence that the German parliament would approve the bailout agreement.

© 2013 AFP

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