The Eurogroup meeting in Brussels had still not begun at about 11 p.m. Greek time on Sunday after almost four hours of delay and following long and tense discussions between Cypriot President Nicos Anastasiades and European Union and International Monetary Fund chiefs.
Kathimerini understands that the hold-up is being caused by differences between Nicosia and the IMF over the potential merger of Cyprus Popular Bank (Laiki) and Bank of Cyprus following a resolution process. There was a possibility the meeting of eurozone finance ministers would be delayed until Monday morning.
The IMF and Germany insist that after being split into a good and bad bank, “good” Laiki should be merged with Bank of Cyprus and the new lender should then assume liability for the 9 billion euros that Laiki received as Emergency Liquidity Assistance (ELA) from the European Central Bank.
Anastasiades reportedly rejected this proposal and warned Lagarde that he would be forced to resign if the IMF insisted on it.
This extra burden would essentially force a resolution on Bank of Cyprus as well. Nobel Prize winning economist Christopher Pissarides told Cypriot state broadcaster RIK on Sunday that the one thing Nicosia should avoid at all costs was accepting the resolution of the Bank of Cyprus as this would amount to a bankruptcy.
Eurogroup chief Jeroen Dijsselbloem called the other eurozone finance ministers in for a briefing at about 11 p.m. but Cypriot representatives remained locked in talks with the troika.
Eurozone ministers had arrived in Brussels for the talks, which were due to begin at 7 p.m. Greek time but the start was put back several times.
German Finance Minister Wolfgang Schaeuble called for Anastasiades and Cypriot officials to view the challenges facing them “realistically”. “We had an agreement following our negotiations last Saturday but we start again today,” he said.
“There were talks during the week but I am not aware of their outcome. I hope we will be able to reach an agreement, however this demands that Cyprus must see the situation realistically. We are ready for a solution, we want to do everything and not spend every weekend here. It does not depend on us, but Cyprus.”