Cyprus to mull new bills as Russian-Laiki deal talk rebuffed [UPDATE]

The Central Bank of Cyprus was on Wednesday preparing to submit new draft legislation to Parliament in the event that government and troika officials fail to to find an alternative proposal for raising the 5.8 billion euros that would have been raised from a tax on bank deposits that was proposed by the eurozone but rejected by Cypriot lawmakers, sources in Nicosia said.

Meanwhile Kathimerini Cyprus reported that an agreement has been reached in principle for Russian investors to buy Cyprus Popular Bank (Laiki) in a deal that would reduce Cyprus’ funding needs by 4 billion euros. The deal was verbal and has yet to be signed, sources told Kathimerini. Questioned about the report, a Cyprus government spokesman denied that such a deal had been reached.

Cypriot President Nicos Anastasiades meanwhile continued talks with troika officials in a bid to reach a new consensus. In Moscow Finance Minister Michalis Sarris continued negotiations with his Russian counterpart Anton Siluanov on the extent of the financial support that Russia is prepared to offer Cyprus. Sarris told reporters that the talks had been “constructive” though inconclusive and that negotiations would continue.

Sources close to Anastasiades rebuffed reports that troika officials had rejected a so-called “Plan B” proposed by Nicosia, which had envisaged the use of some 5 billion euros in reserves held by Cyprus’s social security funds as well as a voluntary swap involving bank deposits and bonds indexed to the island’s natural gas revenues. Parallel reports suggested that troika officials had their own alternative plan that they were preparing to present to the Cypriot authorities.

According to sources, a new proposal aims to raise 8.7 billion euros by launching a special “code of cooperation” between Cyprus and the ECB, refinancing an old Russian loan worth 2.5 billion euros and imposing an emergency tax on Cypriot citizens which would bring in 3.7 billion euros.

Anastasiades was to hold a Cabinet meeting in Nicosia later in the day to brief ministers on the outcome of his talks with the troika ahead of an emergency session of Parliament scheduled for 6.30 p.m.

Meanwhile sources said that Cypriot banks were expected to remain closed until Tuesday to allow decisions to be reached on the fate of the country’s lenders.

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