The start of the Eurogroup meeting was delayed by at least three hours on Sunday night amid tense negotiations about a possible bailout for Cyprus.
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. It is thought that talks could begin at around 10 p.m. Greek time.
Ahead of the Eurogroup Anastasiades had been meeting with European Commission President Jose Manuel Barroso, European Council chief Herman Van Rompuy, European Central Bank head Mario Draghi, European Economic and Monetary Affairs Commissioner Olli Rehn and International Monetary Fund managing director Christine Lagarde.
It is though that the main sticking point in negotiations was the IMF’s insistence that Bank of Cyprus, the island’s largest lender, merge with Cyprus Popular Bank (Laiki) after its resolution and take on responsibility for the 9 billion euros in Emergency Liquidity Assistance (ELA) it had received 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.
Earlier, 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.”
Ahead of the meeting an EU official with direct involvement in the talks told Kathimerini that there has been progress on details of a bailout agreement between Cyprus and the troika but some major obstacles remained.
The main question surrounds the future of the island’s largest lender, Bank of Cyprus. If unsecured deposits (above 100,000 euros) at all Cypriot banks are taxed then large savings at Bank of Cyprus are likely to be taxed between 20 and 25 percent. If the levy is not imposed on deposits at other lenders, the haircut for Bank of Cyprus customers will be much larger.
The option of a full bail in of Bank of Cyprus depositors is still on the table. As with Laiki, which is to go through a resolution process, the full bail in option could lead to deposits above 100,000 euros being lost. The only compensation for unsecured depositors will be shares in the “good” bank that will be created by a possible merger between the «healthy» Laiki and Bank of Cyprus entities.