The finance ministers of the 17-nation eurozone agreed early Monday on a 10 billion euros (about $13 billion) bailout deal for Cyprus to prevent the country's banking system from collapsing and bankruptcy.
Anxiety had spread across Europe last Tuesday after the Cypriot parliament rejected a windfall levy on bank accounts that international creditors, including the EU and the IMF, had set as a condition for providing a 10 billion euro ($13 billion) bailout.
The plan to recapitalise Cypriot ailing lenders and keep the government afloat was supported unanimously by all finance ministers and the so-called troika of creditors: the International Monetary Fund, the European Commission and the ECB, said Jeroen Dijsselbloem, president of the Eurogroup of eurozone finance ministers, here.
Under the plan, the country's second largest bank - Laiki Bank - will be restructured by splitting it into "good" and "bad" banks. The bank's good assets will be merged into Bank of Cyprus and toxic assets will be later liquidated.
Holders of bank deposits of over 100,000 euros will have to take losses, as according to Cypriot media sources, the levy tax will stand at 30 percent. Deposits below 100,000 euros will be secured.
Dijsselbloem said the Laiki Bank's restructuring would contribute a financial aid of 4.2 billion euros for Cyprus.
The authorities of Cyprus should continue talks with Russia on the financial aid, he said, adding that he hoped Moscow would eventually contribute to international assistance for the tiny Mediterranean island nation of about 1 million.
Last week, Russia said it would consider financial aid to help Cyprus overcome its economic woes only after the EU and the island nation work out a joint plan for its recovery.