NICOSIA, March 21 (Xinhua) -- Acting under an ultimatum by the European Central Bank that emergency liquidity will continue only until Monday, Cyprus has acted quickly to consolidate its banking sector.
Central Bank of Cyprus Governor Panicos Demetriades announced on Thursday that resolution measures will be imposed on Cyprus Popular Bank so that it will be in a position to continue offering banking services to its clients when banks re-open on Tuesday.
Urgent legislation on the consolidation of the banking sector is being considered at an emergency session of parliament which met as thousands of demonstrators gathered outside the building.
Demonstrators include hundreds of Popular Bank employees who are worried about their jobs as well as thousands of depositors and holders of bank bonds.
Demetriades did not elaborate on the consolidation plan, but Central Bank spokesman Aliki Stylianou had said earlier that under the scheme worked out deposits in the bank of up to 100,000 euros (129,000 U.S. dollars), along with good loans and some other assets will be transferred to the Bank of Cyprus.
This in effect means a merger of the two banks and a downsizing of the Cypriot banking system that has been demanded by Eurogroup as one of several conditions for a 10-billion-euro bailout for Cyprus.
Cyprus Popular Bank will keep the bad portfolios and deposits over 100,000 euros.
Meanwhile, Bank of Cyprus made a dramatic appeal to the government and the political leadership of the country to reach an immediate bailout deal which will ensure unobstructed liquidity to Cypriot banks so as to avert a collapse of the island's economy.
However, important decisions rest with the Eurogroup which is now holding a teleconference on Cyprus. It said it would announce its decision after the conference.