Cyprus still groping for a solution to a banking crisis that's roiling Europe

Cyprus lawmakers are facing hard choices. Swallowing a bitter pill in exchange for a European bailout or leaving the eurozone are just two of them.

By Robert Marquand,?Staff writer / March 22, 2013

A woman waits as two people use the ATM machines in central capital Nicosia, Cyprus, Friday. Cypriot authorities were putting the final touches Friday to a plan they hope will convince international lenders to provide the money the country urgently needs to avoid bankruptcy within days.

Petros Karadjias/AP

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The instant saga of Cyprus ? and whether it will go belly up, default, and shake the European, if not the world, economy like some crazed mouse that roared ? continues along with enough hourly news to bring live updates here and here.?

Skip to next paragraph Robert Marquand

Staff writer

Over the past three decades, Robert Marquand has reported on a wide variety of subjects for?The Christian Science Monitor, including American education reform,?the wars in the Balkans, the Supreme Court, South Asian politics, and the oft-cited "rise of China." In the past 15 years he has served as the Monitor's bureau chief in Paris, Beijing, and New Delhi.?

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Cyprus has until Monday to come up with $7 billion and a reform plan, or face losing its creditors and sinking into ignominious pools of red ink.

Today the Russians said "nyet" to Cypriot officials, who waited in Moscow for three days?to get a possible bailout. Russian oligarchs hold at least 40 percent of Cyprus bank deposits. Cypriots had hoped, for some reason, that Russia might bail out what is essentially a banking system that thrives on helping the wealthy evade paying Russian taxes.

?The next few hours will determine the future of the country,? Reuters reports?Cypriot government spokesman Christos Stylianides said today, ahead of a vote on a slew of different and changing plans to stay solvent. ?We must all assume our share of the responsibility.??

What first caught world attention was an EU-inspired plan, voted on and killed by Cyprus lawmakers this week, to tax or expropriate private bank deposits in the country. That sent a shudder through the minds of ordinary Europeans, not to mention a lot of Russians and Cypriots themselves.

Yet facing looming insolvency, the largest Cypriot bank today called for the nation?s parliament to levy a tax on holdings over 100,000 euros ($120,000), arguing the alternative is collapse.

Plans on Cypriot tables include the creation of ?good? banks with credible holdings and ?bad? banks with toxic holdings, and to cordon off the bad Greek bank debt whose exposure helped cause the problem in the first place, in the midst of a three-year euro crisis that started in Athens.

EU approval is essential to get the tranche of bailout funds from the European Central Bank. Today the Germans said no to a Cyprus pension raiding scheme that has been floated for days.

Cypriot banks remain closed, ostensibly until Tuesday, when no one knows what will happen; bank ATMs are for now providing petty cash for the commercial sustenance of regular folk and lines are long.

As the world starts to focus on why an island making up 0.2 percent of the EU economic picture could shake world markets, the question is being asked: Why would Cypriot officials turn their island into a quasi-money laundering center for offshore oligarchs and at the same time buy Greek debt that was already shaky ? and imagine this would somehow turn out fine?

Paul Krugman of The New York Times continues to probe the story, writing Thursday that Cyprus has combined on one tiny Mediterranean island all the mistakes made by the European economies of Portugal, Greece, Spain, Italy, Ireland, and so on (the so-called ?PIIGS?) that have helped bring the euro crisis to bloom.?

This includes ?runaway banking,? the all-too familiar real estate bubbles brought by ?massive overvaluation,? and the problem of not having enough productive capacity to pull out of a dive into debt when things went sour.

Mr. Krugman asks:

So then what? As a number of people have pointed out, Cyprus is arguably better positioned than Iceland to do an Iceland, because devaluing a reintroduced Cypriot currency could bring in a lot of tourism. But will the Cypriots ? who haven?t even reconciled themselves to the end of their round-tripping business ? be willing to go there

Source: http://rss.csmonitor.com/~r/csmonitor/globalnews/~3/BypO6pVAFgg/Cyprus-still-groping-for-a-solution-to-a-banking-crisis-that-s-roiling-Europe

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SEC approves Nasdaq's Facebook IPO payment plan

NEW YORK (AP) ? The Securities and Exchange Commission said Monday that it has approved a plan by the Nasdaq stock exchange to pay $62 million in reimbursements to investment firms that lost money because of technical problems during Facebook's initial public offering last year.

The Nasdaq had said in June that it would pay $40 million but later increased the amount to $62 million.

Facebook went public May 18 amid great fanfare, but computer glitches at the Nasdaq delayed the start of trading and threw the debut into chaos. Technical problems kept many investors from buying shares that morning, selling them later in the day or even from knowing whether their orders went through. Some said they were left holding shares they didn't want.

Facebook's stock originally priced at $38 and closed that first day at $38.23 after going as high as $45. The lackluster close disappointed investors who had hoped for a first-day pop. Nasdaq has said that it was embarrassed by the glitches, but that they didn't contribute to the underwhelming returns.

Shares of Menlo Park, Calif.-based Facebook Inc. fell 39 cents to $25.34 in Monday morning trading. The stock has not hit its IPO price since the first day of trading.

Source: http://news.yahoo.com/sec-approves-nasdaqs-facebook-ipo-payment-plan-133619547--finance.html

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Central African Republic rebel chief to name power-sharing government

By Ange Aboa and Paul-Marin Ngoupana

BANGUI (Reuters) - The leader of rebels in Central African Republic pledged to name a power-sharing government in a bid to defuse international criticism of Sunday's coup that killed 13 South African soldiers and plunged the mineral-rich nation into chaos.

Regional peacekeepers said that the leader of the Seleka rebel coalition, self-proclaimed President Michel Djotodia, appealed for help in restoring order after his own men joined in a second day of looting in the riverside capital Bangui.

The rebels' ouster of President Francois Bozize was swiftly condemned by the United Nations and the African Union. But in a sign of pragmatism, the United States, France and regional power broker Chad called on the insurgents to respect a January peace deal creating a unity government.

Some 5,000 Seleka fighters swept into the capital on Sunday after a lightning offensive in which they fought their way from the far north to the presidential palace in four days after a the collapse of the power-sharing agreement signed in the Gabonese capital Libreville.

Neighboring Cameroon confirmed on Monday that Bozize had arrived there but said it was not giving him permanent refugee.

The removal of Bozize, who himself seized power in a 2003 coup backed by Chad, was just the latest in a series of rebellions since the poor, landlocked country won independence from France in 1960.

"We will respect the Libreville accord, which means a political transition of 2 to 3 years before elections," Seleka spokesman Eric Massi said by telephone.

The Libreville deal - drafted by regional mediators after the rebels besieged Bangui in December - had created a government drawn from Bozize loyalists, rebel leaders and the civilian opposition.

Massi said that civilian opposition member Nicolas Tiangaye would remain as prime minister with a slightly rejigged cabinet.

In the sprawling capital, 600,000 residents remained without power and running water for a third day, preventing Djotodia from making a planned national address from the presidential palace.

Despite a curfew, there was widespread pillaging of offices, public buildings and businesses by rebels and civilians.

"Public order is the biggest problem right now," said General Jean Felix Akanga, commander of the regional African peacekeeping force. "Seleka's leaders are struggling to control their men. The president has asked us to help restore calm."

He said the rebels would start to confine their forces to barracks from Monday.

"SAD MOMENT" FOR SOUTH AFRICA

With France's military contingent refusing to intervene, two heavily armed columns of insurgents in pick up trucks stormed into Bangui on Sunday, brushing aside a South African force of 400 troops which attempted to block their path.

South Africa's President Jacob Zuma said at least 13 soldiers were killed and 27 others wounded in the fighting, the worst military setback for Pretoria since the end of apartheid.

"It is a sad moment for our country," Zuma said, adding that another soldier was still missing. "The actions of these bandits will not deter us from our responsibility of working for peace and stability in Africa."

Zuma said South Africa had not decided yet whether or not to withdraw its force, which he said had inflicted heavy casualties on the rebels during a 9-hour attack on their base.

"This is complete disaster for South Africa," said Thierry Vircoulon, Central African specialist at International Crisis Group. "They did not at all understand they were backing the wrong horse. They did not consult within the region."

Seleka, a loose coalition of five rebel groups whose name means "alliance" in the Songo language, was formed last year after Bozize had failed to implement power-sharing in the wake of disputed 2011 elections boycotted by the opposition.

It resumed hostilities on Thursday after military leaders of the group detained its five members of Bozize's government and accused the president of violating January's peace deal by failing to integrate 2,000 of its fighters into the army.

"The movements that make up Seleka have a long history of divisions," Vircoulon said. "The cohesion of Seleka will be tested now they are in full control."

Despite rich deposits of gold, diamonds and uranium, Central African Republic remains one of the world's least developed and most unstable nations.

Bozize rose to prominence in the military during the 1966-1979 rule of dictator Jean-Bedel Bokassa, a self-styled emperor found guilty of the murder of schoolchildren and other crimes.

In recent years, Bozize's government had hosted U.S. Special Forces helping regional armies hunt down the Lord's Resistance Army rebels, led by a Ugandan warlord, who have killed thousands of civilians during decades of conflict.

FRENCH NATIONALS SAFE

Paris, which already had 250 soldiers in Central African Republic, has sent another 300 troops to ensure the security of its citizens and diplomatic missions.

Foreign Minister Laurent Fabius said there was no need to evacuate the 1,200 French nationals, most of whom are in the capital. "Things are under control from our point of view regarding French nationals," Fabius said on Europe 1 radio.

French President Francois Hollande spoke to U.N. Secretary General Ban Ki-moon and Chadian President Idriss Deby to suggest that any solution to the crisis should be based on the January Libreville agreement, Fabius added.

France's Defense Ministry said on Monday that French troops patrolling the international airport in Bangui killed two Indian citizens when three vehicles tried to enter the facility.

The ministry said France offered its condolences to India and Defense Minister Jean-Yves Le Drian was due to speak with his Indian counterpart in the coming hours.

(Additional reporting by Leigh Thomas in Paris; Writing by Daniel Flynn and David Lewis; Editing by Peter Graff and Stephen Powell)

Source: http://news.yahoo.com/central-african-republic-rebel-chief-name-power-sharing-130535622--finance.html

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Cyprus races to complete alternative rescue plan

NICOSIA, Cyprus (AP) ? Politicians in Cyprus were racing Saturday to complete an alternative plan raising funds necessary for the country to qualify for an international bailout, with a potential bankruptcy just three days away.

Finance Minister Michalis Sarris said "significant progress" had been made, and that new legislation raising funds could be completed and debated in Parliament as early as Saturday evening, although the timing was not certain.

Cyprus has been told it must raise 5.8 billion euros ($7.5 billion) in order to secure 10 billion euros in rescue loans from other European countries that use the single currency, and from the International Monetary Fund. The country's lawmakers soundly rejected an unpopular initial plan that would have seized up to 10 percent of people's bank accounts, and is now seeking a way to raise the desperately needed money.

Time is running out fast. The European Central Bank has said it will stop providing emergency funding to Cyprus' banks after Monday if no new plan is in place. Without ECB's support, Cypriot banks would collapse on Tuesday, pushing the country toward bankruptcy and a potential exit from the 17-nation eurozone.

Banks have been shut all week while the plan is put into place, and are not due to reopen until next Tuesday. Cash has been available through ATMs, but many run out quickly, and those machines for the troubled Laiki Bank are only dispensing 260 euros a day.

Nicosia made a significant step towards cementing a new plan Friday night, when its lawmakers approved nine bills, including three crucial ones that will restructure ailing banks, restrict financial transactions in emergencies and set up a "solidarity fund" that will act as the vehicle for raising funds from investments and contributions.

The bank restructuring will include the country's troubled second largest lender, Laiki, which suffered heavy losses after being exposed to toxic Greek debt.

Thousands of angry bank employees afraid of losing their jobs marched through the center of Nicosia to the Finance Ministry and Parliament, some with placards around their necks reading: "No to the bankruptcy of Cyprus." They marched up to the front of the ministry, calling on President Nicos Anastasiades to resign and chanting, "Anas, you took our homes away from us."

Bank employee Zoei Koiachi said: "We are protesting for our jobs, and jobs of all in Cyprus."

The restructuring of Laiki and the sale of the toxic-asset laden Greek branches of Cypriot banks is expected to cut the amount the country needs to raise to about 3 billion euros instead of 5.8 billion euros, officials have said.

Other banks may also be included in the restructuring, such as the country's largest lender, Bank of Cyprus, which was also exposed to Greek debt.

"We have to be clear to protect the financial system and for banks to open Tuesday with a clear picture," Sarris said.

Representatives of the IMF, ECB and European Commission ? collectively known as the troika ? met with Sarris and other officials in the Finance Ministry in the morning, negotiating several new proposals, including a crucial bill that would impose some form of a tax on bank deposits.

The details were still being worked out, but officials have said that the tax could apply to deposits in the country's top two lenders, which were most exposed to bad Greek debt, or even all banks.

Troika consent is essential as they will determine whether the plan that the Cypriots come up with would meet the requirements for the bailout before it is presented to the eurozone finance ministers for final approval.

A eurogroup meeting of the finance ministers will be held in Brussels Sunday evening. Cyprus President Nicos Anastasiades was also expected to fly there, though details of the timing was unclear.

"Significant progress has been made toward an agreement at least with the troika which will report to the Eurogroup," Sarris told reporters after the initial morning meeting at his ministry.

"Two or three issues need further work, issues on banks, there are different calculations," Sarris said. "There is the contribution of experts from the private sector."

The experts would hold consultations amongst themselves and officials would resume negotiations with the troika again later Saturday afternoon.

"We have a number of experts that are working from the private sector, at the Central Bank, at the Ministry of Finance trying to iron out these details so that when we do reach an agreement there will be no room for different understanding or misrepresentation."

____

Elena Becatoros in Nicosia contributed to this report.

Source: http://news.yahoo.com/cyprus-racing-complete-alternative-rescue-plan-101417471--finance.html

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