Nicos Anastasiades wrote that the restructuring of the country’s two largest banks was “implemented without careful preparation”, wiping out the working capital of many Cypriot companies and requiring unprecedented capital controls that were suffocating the island’s economy. “The economy is driven into a deep recession, leading to a further rise in unemployment and making fiscal consolidation all the more difficult”, Mr Anastasiades wrote to the heads of three EU institutions and the International Monetary Fund. “I urge you to review the possibilities in order to determine a viable prospect for Cyprus and its people.”
Mr Anastasiades has asked EU leaders to unwind the complex restructuring and partial merger of its two largest banks, which account for 80 per cent of the domestic banking sector, backed by further eurozone loans. Although he does not explicitly request more money, Mr Anastasiades is in effect asking for further eurozone loans on top of the existing €10 billion sovereign bailout – something specifically ruled out by a German-led group of countries at the time. He asks for part of the €9 billion given to Laiki in so-called emergency liquidity assistance by the Eurosystem’s central banks to be converted into long-term bonds. These bonds would be used to unwind the partial merger of the “good” bit of Laiki with Bank of Cyprus.
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