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Cyprus to hold bailout debate

  • Cyprus's parliament is to hold an emergency session over a bailout deal for the country's banks.

    Negotiations were under way on Sunday between political parties, a day after the announcement of a one-off levy of up to 10 percent to be imposed on savers.

    Earlier in the day, President Nicos Anastasiades said refusing the bailout would have resulting in a collapse of the country's banking sector.

    The speaker of the European Parliament has pushed for the levy to be revised in order to protect small-scale customers.

    The $13 billion deal marks a radical departure from aid packages and conditions issued in the past.

    People with less than $130,000 in their accounts will pay a one-time tax of 6.75 percent while those with larger amounts will lose 9.9 percent.

    The depositors will be compensated with the equivalent amount in shares in their banks.

    It is believed that a heavy presence of Russian money in Cypriot banks was a factor behind the levy.

    President Anastasiades, who was elected last month, and his Democratic Rally party need support from other factions in order to ratify the bailout.

    In addition, as with previous eurozone bailouts, the deal must also be approved by the lower house of parliament in Germany, the EU's biggest economy.

    The levy will not take effect until Tuesday, following a public holiday. However, steps were taken to control electronic money transfers over the weekend.

    Explore the history and geography of Cyprus through Cyprus Map