Cyprus Update

Not good:

Cyprus ordered its banks to remain closed until next week as the cabinet held emergency talks on Wednesday in an effort to strike a deal with the EU or Russia to avert financial meltdown and stave off bankruptcy.

After the country's parliament rejected a plan to provide €5.8bn (£5bn) by seizing a portion of bank deposits from anyone with a bank account, Cyprus is struggling to come up with a plan that will let it access an EU bailout to stop its banks failing.

The country's eurozone partners and the International Monetary Fund (IMF) are ready to provide €10bn in an emergency bailout if Cyprus comes up with an extra €7bn itself. Most of the bailout money is needed to shore up the country's oversized banking sector, with the rest for government finances.

No clear "plan B" had emerged after meetings between politicians and representatives of European partners and the IMF. The Cypriot cabinet was said to be discussing ideas including the nationalisation of pension funds of semi-government corporations, which hold €2bn-€3bn, and another form of levy on deposits.

Another option debated may have been natural gas bonds linked to hydrocarbon reserves discovered off Cyprus, which remain uncertain and will not be exported until at least 2019.

The nationalization of the pension plans will not be accepted:

International creditors were set to reject an alternative bailout plan Cyprus cobbled together a day after the government's divisive tax on bank deposits died a quick death, two officials with knowledge of the situation said on Wednesday.

Experts from the troika—the European Commission, the European Central Bank and the International Monetary Fund—were briefed Wednesday on Nicosia's Plan B to secure a €10 billion ($12.93 billion) bailout after Parliament resoundingly rejected the deposit-levy plan attached to the original agreement.

Cypriot authorities proposed turning pension-fund assets into government bonds in a bid to raise about €4.2 billion of the €5.8 billion the deposit tax would have raised.
But troika officials weren't convinced this would be a viable option, the officials said. While the plan would bring money into state coffers, it would be in the form of debt, making the country's already heavy load unsustainable, they said.

 On it goes...