Cyprus bailout negotiations fail to reach agreement

Negotiations for a Cyprus bailout which went into the small hours of Sunday failed to reach agreement and hopes are now pinned on further talks in Brussels later in the day to stave off a financial meltdown.
Cypriot President Nicos Anastasiades flies to Brussels in a bid to beat a Monday deadline to close a deal before the European Central Bank stops emergency liquidity support to the island’s banks.
A government statement said after negotiations break up with the troika – the European Commission, the European Central Bank and the IMF, Anastasiades will arrive in Brussels at mid-morning to continue talks with European Union officials and the IMF chief Christine Lagarde ahead of a Eurogroup meeting scheduled to start at 1700 GMT.
Negotiations are at a very delicate phase. The situation is very difficult and the deadlines are very tight, the government statement said.
The official Cyprus News Agency had earlier blamed the IMF representative in the negotiations, Delia Velculescu, for blocking agreement.
The Cypriot government made a turn-around by accepting a 20 percent levy on deposits above 100,000 euros (130,000 U.S. dollars) at the Bank of Cyprus and 4 percent at other banks.
The IMF insists that the Bank of Cyprus be split in line with an arrangement at the Cyprus Popular Bank into good and bad sections, the good one to take over deposits below the 100,000 mark and good loans while the bad one to take lager deposits and bad loans.
The troika has agreed to provide a 10 billion euros bailout to Cyprus, which has to raise 5.8 billion euros on its own.
Sources said hopes for finalising the bailout rest on the IMF withdrawing its insistence on the Bank of Cyprus split-up as the European Commission and the European Central Bank do not consider it to be of critical importance.
A deal has to be in place before banks reopen on Tuesday and authorities will impose capital controls to avert massive capital outflow.