Bank of Cyprus appealed to the island's political leadership on Thursday to broker an immediate deal for funding with the EU to stave off financial ruin.
"It is imperative to move immediately towards brokering a deal with the Eurogroup which would ensure unobstructed liquidity to Cypriot banks to save the Cypriot economy," the island's largest lender said in a statement.
Meanwhile, European Commission President Jose Manuel Barroso said he was worried about the financial crisis in Cyprus but hoped a
solution could be found.
"I'm very
concerned with the recent developments in Cyprus, mainly because of the
consequences for the citizens of Cyprus," Barroso, the head of the
European Union's executive arm, told a conference in Moscow.
"We have in
the past solved bigger problems. I hope that this time a solution can also be
found."
Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to
avert financial chaos after it rejected the terms of a European Union bailout
and turned to Russia for aid.
On another note, crisis talks among the political leadership
in Nicosia are set to resume after late-night meetings to discuss a
"Plan B" broke up on Wednesday without result.
EU officials voiced frustration but little
sympathy for an ambitious but now bust banking system that extended itself well
beyond the island; Russia, whose citizens have billions to lose in those
Cypriot banks, called the EU a "bull in a china shop".
President Nicos Anastasiades, just a month
in office and wrestling with his country's worst crisis since the Turkish
invasion of 1974 that divided Greek- and Turkish-speaking Cypriots, is due to
meet party leaders at 9:30 a.m. (0730 GMT).
The deputy leader of his Democratic Rally
warned time was running out: "We don't have days or weeks, we have only
hours to save our country," Averos Neophytou told reporters.
Banks, shut since the weekend, are to stay
closed for the rest of the week and so not reopen till Tuesday after a holiday
weekend, a government official told Reuters, extending the misery of Cypriot
businesses already feeling the pinch.
Without a resolution, the fate of the small
nation of just 1.1 million has shaken confidence in the single-currency euro
zone and raised geopolitical tension between the EU and Russia.
Finance Minister Michael Sarris extended a
stay in Moscow, where Russian officials said he asked for a further 5 billion
euros on top of a five-year extension and lower interest on an existing
2.5-billion euro loan from Moscow.
In a vote on Tuesday, the island's tiny
legislature threw out a proposed tax on bank deposits in exchange for a
10-billion euro bailout from the EU, a stunning rejection of the kind of strict
austerity accepted over the past three years by crisis-hit Greece, Portugal,
Ireland, Spain and Italy.
Russian Prime Minister Dmitry Medvedev, who
was preparing to meet an EU Commission delegation in Moscow on Thursday, said
the bloc had behaved "like a bull in a china shop" and likened its
proposals, which would force Russian customers to contribute to the rescue of
Cypriot banks, to Soviet-era confiscations.
But the European Central Bank kept the
pressure on, warning that it would have to pull the plug on Cyprus unless the
country, one of the smallest of the 17 members of the euro zone, took a bailout
quickly.
Despite the looming threat of default and a
banking collapse, Cypriots on Tuesday balked at EU demands for a levy on bank
deposits to raise 5.8 billion euros, once taboo in Europe's handling of the
stubborn debt crisis.
REUTERS