Cyprus banks remain closed to avert run on deposits

(Reuters) - The president of Cyprus assured his people a bailout deal he struck with the European Union was in their best interests, but banks will remain closed until Thursday - and even then subject to capital controls to prevent a run on deposits.

Returned from fraught negotiations in Brussels, President Nicos Anastasiades said late on Monday the 10-billion euro ($13 billion) rescue plan agreed there in the early hours of the morning was "painful" but essential to avoid economic meltdown.

 

He agreed to close down the second-largest bank, Cyprus Popular, and inflict heavy losses on big depositors, many of them Russian, after Cyprus's outsize financial sector ran into trouble when its investments in neighboring Greece went sour.

European leaders said a chaotic national bankruptcy that might have forced Cyprus from the euro and upset Europe's economy was averted - though investors in other European banks are alarmed by the precedent of losses for depositors in Cyprus.

READ MORE:   http://www.reuters.com/article/2013/03/25/us-cyprus-parliament-idUSBRE92G03I20130325