• Cyprus president announces criminal probe into crisis

• Most Cyprus banks to open Tuesday

• Eurogroup head hails Cyprus bail-out as a template

• Capital controls may "only last a few days": EU's Barnier

• Russia's Putin orders restructuring of €2.5bn Cyprus loan

• Russian premier Medvedev says "stealing continues"

Latest

21.37 That's where we leave our Live Blog for today. We'll be back tomorrow. Thanks for reading.

20.20 A brilliant comment piece from Jeremy Warner on Cyprus' woes:

No national banking system can survive such a restructuring. Thousands will lose their jobs, not just in the banks but in legal, accountancy and business services industries that the banks have supported. An immediate collapse of 10pc to 20pc in national income is in prospect, with unemployment soaring to more than a quarter of the population.

20.17 US stock markets have fallen following today's developments in Cyprus. The Dow Jones Industrial Average closed down 64.28 (0.44pc) at 14,447.75, the S&P 500, which had been within striking distance of an all-time high, dropped 5.20 (0.33pc) to 1,551.69, while the tech-rich Nasdaq finished 9.70 (0.30pc) lower at 3,235.30.

19.17 Anastasiades: "Despite our bitterness and disappointment with some of our partners, I don't think we should think of leaving the EU family. Difficult decisions will be implemented in the coming days. There will be a criminal investigation into how Cyprus was led to crisis."

19.14 Anastasiades adds: "This is a painful solution but the best we could get under the circumstances. We avoide the bankruptcy of Laika Bank and all the problems that would have brought. Banking system in recent days has worsened. From tomorrow, a new era for Cyprus begins, we have to look ahead."

19.12 Cypriot president Nicos Anastasiades says capital controls are temporary and that "lenders have faith in us".

18.33 So, the Cypriot president's statement had been delayed until 1830. But, there's no sign of it yet...

18.17 There's now a statement doing the rounds from the Eurogroup, clarifying its position following Dijsselbloem's comments earlier (see 15.15). Here's what they say:

Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday.

Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used.

18.11 Here's what the Cypriot central bank had to say about banks reopening:

We wish to clarify that due to their restructuring and merger, Laiki Bank and the Bank of Cyprus will remain closed for two days and will re-open for business on Thursday. All other banks will operate normally during business hours.

18.05 Bloomberg has tweeted that Bank of Cyprus and Cyprus Popular will be closed until March 28, while other banks are to operate normally tomorrow:

<noframe>Twitter: Bloomberg Athens - Bank of Cyprus, Cyprus Popular Closed to March 28 For Merger&bull; Other banks to operate normally tomorrow: statement</noframe>

18.01 Speaking at the LSE event, Mervyn King has warned that the world's economic crisis is far from finished and many unexpected "twists and turns" will occur before it can be safely declared over.

17.49 Meanwhile, there is a gaggle of central bankers (suggestions for a collective noun on a postcard, please) out in force at the London School of Economics tonight. The reason? For a discussion on "what should economists and policymakers learn from the financial crisis?"

Chairing the debate is Mervyn King, while Ben Bernanke, Lawrence Summers and Axel Weber are also speaking.

Our Harry Wilson tweets:

<noframe>Twitter: Harry Wilson - Lord Turner is looking nervously for a seat. Can see a few near me so the FSA chairman should be alright. <a href="http://search.twitter.com/search?q=centralbankergeddon" target="_blank">#centralbankergeddon</a></noframe>

While Ben Chu of the Independent tweets:

<noframe>Twitter: Ben Chu - Mark carney sitting next to jean claude trichet at lse lecture. Wonder if they're discussing raising interest rates? <a href="http://search.twitter.com/search?q=financialcrisis" target="_blank">#financialcrisis</a></noframe>

17.39 The European Central Bank has confirmed that it has decided to give Cypriot banks access to emergency central bank funding following the bailout deal. It said in a statement:

Today, the Governing Council decided not to object to the request for provision of Emergency Liquidity Assistance (ELA) by the Central Bank of Cyprus, in accordance with the prevailing rules. It will continue to monitor the situation closely.

17.28 It sounds like the Cypriot president may now be making his address at 18.15 GMT, rather than 17.00 as originally planned...

17.22 Bruno Waterfield has written his story on Dijsselbloem's comments. The full version is here and here's a taster:

Savings accounts in Spain, Italy and other European countries will be raided if needed to preserve Europe's single currency by propping up failing banks, a senior eurozone official has announced.

The new policy will alarm hundreds of thousands of British expatriates who live and have transferred their savings, proceeds from house sales and other assets to eurozone bank accounts in countries such as France, Spain and Italy.

The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, announced that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.

17.19 No sign of the Cypriot president giving his address yet. Paul Mason of the BBC tweets that people don't seem too bothered...

<noframe>Twitter: Paul Mason - In the street cafes of Nicosia ppl await speech of President with utter lack of interest. Many TVs tuned to pop videos in anticipation</noframe>

17.16 The US Treasury has added its tuppence-worth on the Cyprus deal, saying:

Growth and financial stability in the eurozone are of importance to the US. The agreement in Cyprus fully protects insured depositors, which is important, while resolving and recapitalizing troubled banks. It is critical to lay the foundation for a return to financial stability and growth in Cyprus. The European Central Bank commitment to provide liquidity is important in this regard. We will continue monitoring developments closely as details are finalized and the agreement is implemented.

17.08 Our Russia correspondent Tom Parfitt delves further into the paradoxical response from Russia today. While the country's premier Dmitry Medvedev lambasted the Cyprus bailout as tantamount to theft, prime minister Vladimir Putin came out in support of the rescue efforts, even offering to ease the terms of an existing €2.5bn loan. Tom writes:

President Vladimir Putin of Russia backed the EU’s bailout of Cyprus on Monday, even as his prime minister issued a sharp criticism of the deal saying a haircut on deposits was “the stealing of what has already been stolen”.

In what seemed a climbdown from earlier criticism, Mr Putin expressed support for the €10bn EU-IMF rescue deal, despite the heavy blow it will deal Russian businesses on the Mediterranean island.

The Russian president also approved the restructuring of an existing €2.5bn Russian loan to Cyprus to extend its payback deadline beyond 2016.

His spokesman, Dmitry Peskov, said: "Considering the decisions adopted by the Eurogroup, Putin considers it possible to support the efforts of the president of Cyprus and the European Commission aimed at overcoming the crisis in the banking system of this island state."

That was a surprisingly muted response as analysts’ predicted the discount on deposits of more than €100,000 demanded by the deal could punish Russians – who have an estimated total of €24bn in corporate and private accounts – hardest of all. Last week Mr Putin referred to an earlier plan to levy a tax on depositors as “unjust,unprofessional and dangerous”.

17.02 Is that the sound of a ferret reversing? Durk Veenstra, chief editor of Dutch news channel RTZ, has tweeted that Dijsselbloem's spokesperson has said his 'template' comments were taken out of context:

<noframe>Twitter: durk veenstra - Spokeswoman of <a href="http://search.twitter.com/search?q=Dijsselbloem" target="_blank">#Dijsselbloem</a> confirms individual quotes, but says comments about 'template' are taken out of context <a href="http://search.twitter.com/search?q=rtlz" target="_blank">#rtlz</a></noframe>

16.53 Here's what Bruno Waterfield, our man in Brussels, makes of those comments by Mr Dijsselbloem:

<noframe>Twitter: Bruno Waterfield - 1/2 Significance of <a href="http://www.twitter.com/j_dijsselbloem" target="_blank">@j_dijsselbloem</a> comments is mothballing of <a href="http://search.twitter.com/search?q=ESM" target="_blank">#ESM</a>, relax on markets pricing in high borrowing for weak banks &amp;</noframe>

<noframe>Twitter: Bruno Waterfield - 2/2 &amp; end of "doctrine", as Rehn described it last night, of preserving senior bondholders. Let's have some OSI next</noframe>

16.43 Most of Cyprus' banks will open on Tuesday, with Laiki Bank and Bank of Cyprus opening their doors on Thursday, according to Reuters citing a source at the Cyprus central bank.

16.40 Our foreign correspondent Nick Squires, meanwhile, has been speaking to outraged Cypriots in Nicosia about their new plight.

Standing in front of a cash machine on a street corner in Nicosia, Andreas Christou could hardly contain his fury.

“My money is in there and they won’t let me take it out!” he said, a few moments after withdrawing a paltry €100 – the maximum allowable after a draconian new capital control measure was introduced on Sunday.

The 52-year-old businessman holds an account with Laiki Bank, the hardest hit of Cyprus’s debt-laden lenders.

Mr Christou accused the troika that imposed the deal on Cyprus in exchange for a desperately-needed €10bn euro bail-out of behaving “like the Mafia”.

“This is not the Europe that we signed to. If Europe wanted to help, they should have imposed restrictions gradually, not by grabbing us by the throat. People are very angry and very disappointed, I’ve seen them crying over what has happened. We don’t want to be a member of Europe if this is what it means.”

Read his full story here.

16.24 For the full stories on what Mr Dijsselbloem said to send shockwaves through the markets, check out the FT and Reuters write-ups of their joint interview with the Dutch finance minister and Eurogroup head.

16.15 Global markets are still down on Dijsselbloem's proclamations (15.15). But did he say anything that outrageous? Some think not.

<noframe>Twitter: Declan Ganley - Dijsselbloem has in short, just told banks &amp; those that take private risk on them, that henceforth, rules of capitalism apply to them too.</noframe>

<noframe>Twitter: zerohedge - All D-Boom has done is point out you can "normalize" a broken bank balance sheet not only by growing assets, but by collapsing liabilities</noframe>

16.05 We've had some admirable efforts to describe the effect on the markets of Eurogroup head Jeroen Dijsselbloem's comments using only plays on his surname. In case you missed it, he told Reuters and the FT that the Cyprus bank restructuring plan should be seen as a template for other eurozone nations (15.15).

<noframe>Twitter: Sam Coates Times - In short: DijsselbOOOOOOM</noframe>

<noframe>Twitter: Matina Stevis - Wow, D-Bloemed. Jeez.</noframe>

<noframe>Twitter: Fabrizio Goria - Markets are in a <a href="http://search.twitter.com/search?q=Dijsselblood" target="_blank">#Dijsselblood</a> mode</noframe>

15.54 We've put together a slideshow on how events have unfolded in Cyprus over the last day or so- here are some of the best snaps.

Personnel carry in boxes of pizza to the European Council building as an emergency eurogroup meeting takes place in Brussels on Sunday. Picture: AP

Pedestrians are reflected on a shop window with a sign informing shoppers that only cash is accepted in Nicosia. Picture: Reuters

Anti-troika protestors hold a Hands Off Cyprus banner during a demonstration outside the EU offices in Nicosia. Picture: Reuters

15.37 The euro has also taken a tumble on Dijsselbloem's comments. By way of illustration...

The euro fell sharply against a basket of major world currencies as investors got wind of Mr Dijsselbloem's suggestion that other economies could face the same fate as Cyprus. Credit: Bloomberg

A sea of red as global markets fell on news that Cyprus should be considered a 'template' for the rest of the eurozone. Credit: Bloomberg

15.15 Meanwhile Dutch finance minister and Eurogroup head Jeroen Dijsselbloem has alarmed markets with comments that the Cyprus bail-out could act as a template for other rescues. In an interview with Reuters and the Financial Times, he said:

What we've done last night is what I call pushing back the risks.

If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.

If we want to have a healthy, sound financial sector, the only way is to say, 'Look, there where you take on the risks, you must deal with them, and if you can't deal with them, then you shouldn't have taken them on'.

The consequences may be that it's the end of story, and that is an approach that I think, now that we are out of the heat of the crisis, we should take.

Following a rally in European markets this morning, shares have dropped across the board. The FTSE 100 is now trading flat on its opening. The French CAC and German DAX have dipped 0.42pc and 0.07pc respectively. The MIB in Milan and IBEX in Madrid fell hardest, 2.38pc and 1.96pc respectively.

Dutch Finance Minister and President of the Eurogroup Council Jeroen Dijsselbloem gestures during a joint press conference after a Eurogroup Council meeting at EU headquarters in Brussels on March 25, 2013. Credit: AFP

14.45 David Cameron has voiced his approval of the new bail-out deal, even using the catastrophic state of Cyprus' economy as a justification for austerity measures here in Britain. The prime minister also repeated assurances that British military and foreign office personnel will be "protected" from the consequences of last night's deal.

It is good that an agreement has been reached overnight and I think that is welcome for people in Cyprus.

I think the first proposals of taxing people with bank accounts under £100,000 was a complete mistake and I am glad that has been avoided.

I think, from Britain's point of view, the situation in Cyprus is a reminder of a couple of important home truths.

The first is it was right not to join the euro, we are better off outside the euro. We can have our own economic policy, our own monetary policy and mend our fragile economy, which is badly in need of mending.

But I think the second lesson is that while it is very difficult, there isn't an alternative to getting on top of our deficit, to getting our public spending under control, to making our economy more prone to growth.

Prime minister David Cameron. Credit: Reuters

14.15 Russia correspondent Tom Parfitt throws more light on Russian premier Dmitry Medvedev's unusual turn of phrase as he slammed the Cypriot bail-out deal: "the stealing of what has already been stolen continues". Tom explains:

The seemingly clumsy phrase was in fact a sharp reference to a quote attributable to Vladimir Lenin, who used it to justify the confiscation of capitalists’ property.

“The old Bolshevik was right when he explained what Bolshevism was to the Cossack who’d asked him if it was true the Bolsheviks stole,” Lenin is said to have mused after the 1917 revolution. “‘Yes, [the Bolshevik] said. ‘We steal what has already been stolen.’”

That phrase, in turn, harked back to Karl Marx’s call in Das Kapital for “expropriation of the expropriators”.

Read his full piece here.

13.54 The central bank of Cyprus has appointed Andri Antoniades, a former chief executive of HSBC Cyprus, as the administrator for Laiki Bank. In a statement the Cypriot central bank said:

The CBC announces that in its capacity as the resolution authority, it has, as of today, appointed Ms Andri Antoniades as the special administrator to implement the restructuring of Laiki Bank.

13.33 More on Vladimir Putin's move to ease the terms of Russia's existing €2.5bn loan to Cyprus, despite the fury of his premier Dmitry Medvedev, who lambasted the bail-out deal as tantamount to stealing (10.12). Dmitry Peskov, Mr Putin's spokesman, said:

[Putin] considers it possible to support efforts ... aimed at overcoming the crisis in the economy and banking system of this island state

Russian President Vladimir Putin attends a ceremony to award young workers of culture and arts at the Novo-Ogaryovo state residence outside Moscow on Monday. Credit: Reuters

13.11 Earlier (11.19) we reported that EU Commissioner for the single market Michel Barnier insisted the capital controls to be imposed on Cyprus would be temporary. Here's what he said at a press conference in Brussels.

Any measures to restrict or limit freedom of movement may only be enacted exceptionally and temporarily and that is what has been requested by the Cypriot authorities.

This is a restriction on movement that may only last a few days.

Michel Barnier, European Commissioner responsible for single market. Credit: AFP/Getty Images

12.53 According to Bank of America analysts, Russian depositors in Cypriot banks will be worse off under the new deal than they would have been under the original proposals.

The original deal did not include the wind-down of Laiki bank, instead imposing a 9.9pc tax on deposits over and above €100,000. Now, those same desposits, if they are in one of the island's two largest banks, stand have as much as 30pc to 40pc wiped off their value.

<noframe>Twitter: Bloomberg Athens - Russia &ldquo;net loser&rdquo; from Cyprus deal; &ldquo;major&rdquo; haircuts, freezing of deposits are &ldquo;worse&rdquo; for Russia than original bailout plan: BofA note</noframe>

12.31 Jose Manuel Barroso, president of the European Commission, has posted his full speech online. Here's an excerpt:

The challenges for Cyprus are immense, but Cyprus can count on the European Union to support it. As I have underlined yesterday in the talks that preceded the Eurogroup discussion, we should think not only about financial stability. It is about restarting the real economy. Last night, we agreed on a 10 Billion Euro package worth 55% of the GDP of Cyprus. And we need to look at how we can mobilise all the means at our disposal. That is why I have decided to set up a Task Force for Cyprus to provide technical assistance to the Cypriot authorities.

We want to alleviate the social consequences of the economic shock by mobilising funds from European Union instruments and by supporting the Cypriot authorities' efforts to restore financial, economic and social stability. We will bring in further expertise to facilitate the emergence of new sources of economic activity. The Commission stands by the Cypriot people.

European Commission President Jose Manuel Barroso addresses a news conference this morning. Cyprus's recovery from its bailout and bank restructuring is uncertain and it is too early to say when economic growth will return, he said. Credit: Reuters

12.19 A confusing picture is emerging on what happened in last night's talks. The Guardian's Ian Traynor points out the conflicting accounts.

<noframe>Twitter: Ian Traynor - <a href="http://search.twitter.com/search?q=cyprus" target="_blank">#cyprus</a> EU sources say Anastasiades fought tooth and nail on bank closure, restructuring, downsizing. <a href="http://search.twitter.com/search?q=Barroso" target="_blank">#Barroso</a> says Ana fully supported it</noframe>

12.12 Cypriot president Nicos Anastasiades has taken to Twitter again (see 09.38), this time to tell everyone he will address the nation at 7pm tonight (5pm GMT) to explain the deal struck with the IMF and EU. His tweet translates to: "At 19.00 tonight, I will go to the Cypriot people to inform them of the agreement with the IMF and EU."

<noframe>Twitter: Nicos Anastasiades - &Sigma;&tau;&iota;&sigmaf; 19:00 &alpha;&pi;Ï&OElig;&psi;&epsilon;, &theta;&alpha; &alpha;&pi;&epsilon;&upsilon;&theta;&upsilon;&nu;&theta;Ï &sigma;&tau;&omicron;&nu; &kappa;&upsilon;&pi;&rho;&iota;&alpha;&kappa;Ï&OElig; &lambda;&alpha;Ï&OElig; &gamma;&iota;&alpha; &nu;&alpha; &tau;o&nu; &epsilon;&nu;&eta;&mu;&epsilon;&rho;Ï&sigma;&omega; &gamma;&iota;&alpha; &tau;&eta;&nu; &sigma;&upsilon;&mu;&phi;&omega;&nu;Î¯&alpha; &mu;&epsilon; &tau;&omicron; &Delta;&Nu;&Tau; &amp; &tau;&eta;&nu; &Epsilon;.&Epsilon;. <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a></noframe>

12.08 Our friends at think tank Open Europe do not see this deal ending well for Cyprus.

The most positive aspect of last night’s deal was that a deal was reached at all, and that some steps have been taken to counter moral hazard.

However, overall, this is a bad deal for Cyprus and the Cypriot population. Cypriot GDP is likely to collapse in the wake of the deal with the possible capital controls hampering the functioning of the economy.

The large loan from the eurozone will push debt up to unsustainable levels while the austerity accompanying it (along with the bank restructuring plan) will increase unemployment and cause social tension.

There is a strong chance Cyprus could become a zombie economy – reliant on eurozone and central bank funding, with little hope of economic growth.

Meanwhile, the country will remain at the edge of the single currency as tensions increase between members with Germany, the ECB and the IMF now looking intent on a more radical approach to the crisis.

12.01 German chancellor Angela Merkel has voiced her approval of the deal. Mrs Merkel has become something of a hate figure on the island, among a population which believes she maintained a tough stance to meet her own political ends at home, where federal elections will be held in September.

I am very pleased that a solution was found and that we have been able to avoid an insolvency. I believe the agreement that was reached is the right one.

German chancellor Angela Merkel. Credit: AFP

11.52 The Wall Street Journal's Istanbul bureau chief Joe Parkinson reports that border officials are confiscating cash sums over €10,000 as part of the capital control measures.

<noframe>Twitter: Joe Parkinson - <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> border officials at air/sea ports searching bags and under orders to confiscate any cash sums over 10k euros. <a href="http://search.twitter.com/search?q=capitalcontrols" target="_blank">#capitalcontrols</a> (1/2)</noframe>

<noframe>Twitter: Joe Parkinson - <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> customs officials on border with Turk-controlled north not searching people unless they have intel theyre carrying big currency sums</noframe>

11.47 President of the European Commission Jose Manuel Barroso is speaking in Brussels. Bruno Waterfield is listening to his speech.

<noframe>Twitter: Bruno Waterfield - <a href="http://search.twitter.com/search?q=EU" target="_blank">#EU</a> will bring expertise to bear to help <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> as it faces externally imposed economic shock, says <a href="http://www.twitter.com/barrosoEu" target="_blank">@barrosoEu</a>. Bad track record</noframe>

<noframe>Twitter: Bruno Waterfield - <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a>: <a href="http://www.twitter.com/BarrosoEU" target="_blank">@BarrosoEU</a> can't say GDP consequences of halving the size financial sector will be, just 'exceptionally difficult'</noframe>

<noframe>Twitter: Bruno Waterfield - <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a>: negotiations last night had 'full support' of Anastasiades says <a href="http://www.twitter.com/BarrosoEU" target="_blank">@BarrosoEU</a>. Apart from when he threatened to resign?</noframe>

11.40 Our foreign correspondent Nick Squires reports from Nicosia on the fury and fear among Cypriots in the wake of the bail-out deal.

11.35 Back to Russia now, where president Vladimir Putin has reportedy ordered his government to discuss the terms for restructuring the existing €2.5bn loan to Cyprus according to local news agency Interfax. This is the same loan that Cypriot finance minister Michalis Sarris failed to get new terms for in his visit to Moscow last week. He went to his Russian counterpart to plead for a five year extension (it is currently set to mature in 2016) and an interest rate cut, in addition to other aid, but returned empty-handed.

11.29 Christine Lagarde, managing director of the International Monetary Fund, described the deal as "a durable and fully financed solution to the underlying problems facing Cyprus and places it on a sustainable path to recovery." Jeremy Warner is not convinced.

How anyone could make such a statement with a straight face is a mystery to behold, for none of its claims bear scrutiny. Durable? How can this be durable when it offers no way out of the economic ruin that the single currency has visited on the island?

Fully financed? In the narrow sense that the €10bn of bailout money is now on the table, when previously it wasn’t, this may be true, but does anyone honestly believe this is going to enough to put Cyprus and its banks back on their feet?

Nor is there a snowball’s chance in Hades of the Cypriot economy being able to shoulder even this comparatively limited addition to the national debt. Further significant default at some stage in the future already looks inevitable.

Sustainable path to recovery? Yes sure, if you count an immediate 5-10 per cent collapse in output and massive surge in unemployment as a sustainable path to recovery. Under this deal, Cyprus is, in effect, kissing goodbye to one of the mainstays of its prosperity and growth – finance. It’s a bit like saying that closing down the City of London would put the UK on a sustainable path to recovery. Many might welcome the death of finance, but the impact on output, tax revenues, employment and public services would be devastating. The same is likely to be true in miniature of Cyprus.

Read his whole piece here.

11.19 Remember the punishing capital controls included in the Cypriot banking bill? Michel Barnier, the EU's head of financial regulation, said he expected their approval by the European Parliament later this week. He also said they may only be in place for a brief period. Speaking to reporters in Brussels, he said:

This is a restriction on movement that may only last a few days.

Here's a reminder of what they involve (courtesy of Yiannis Mouzakis).

• Restrictions in daily withdrawals

• Ban on premature termination of time savings deposits

• Compulsory renewal of all time savings deposits upon maturity

• Conversion of current accounts to time deposits

• Ban or restrictions on non cash transactions

• Restrictions on use of debit, credit or prepaid debit cards

• Ban or restriction on cashing in cheques

• Restrictions on domestic interbank transfers or transfers within the same bank

• Restrictions on the interactions/transactions of the public with credit institutions

• Restrictions on movements of capital, payments, transfers

• Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety

11.12 The Eurogroup statement (see 10.26) vows to unwind Laiki Bank "immediately". Austrian finance minister Maria Fekter has told reporters this will happen today, according to Reuters citing the Austrian Press Agency.

10.53 Last night European Commissioner Olli Rehn said new economic forecasts for Cyprus will need to be drawn up quickly to take account of the deal. Official forecasts have not yet surfaced, but we're already seeing bleak estimates by banks.

<noframe>Twitter: Fabrizio Goria - RT <a href="http://www.twitter.com/DavidTweed" target="_blank">@DavidTweed</a>: <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> to lose 20% of GDP by 2017 = depression: SocGen</noframe>

10.26 And here's the full statement on the Cyprus bailout from the Eurogroup of eurozone finance ministers. Excerpt below:

The Eurogroup welcomes the plans for restructuring the financial sector as specified in the annex.

These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100.000 in accordance with EU principles.

The programme will contain a decisive approach to addressing financial sector imbalances. There will be an appropriate downsizing of the financial sector, with the domestic banking sector reaching the EU average by 2018. In addition, the Cypriot authorities have reaffirmed their commitment to step up efforts in the areas of fiscal consolidation, structural reforms and privatisation.

10.20 Here's Cypriot finance minister Michalis Sarris expressing his relief after agreeing the eleventh-hour deal late last night.

10.12 Russian prime minister Dmitry Medvedev has reacted furiously to the bailout deal, saying:

In my view, the stealing of what has already been stolen continues.

Russian prime minister Dmitry Medvedev. Credit: AFP

10.07 The Wall Street Journal's Matina Stevis, who has been reporting from Nicosia all week, on her reaction to the deal:

<noframe>Twitter: Matina Stevis - Waking up in a country that will never be the same again. Sad to see it happening here, after seeing it in my own <a href="http://search.twitter.com/search?q=cyprus" target="_blank">#cyprus</a> <a href="http://search.twitter.com/search?q=greece" target="_blank">#greece</a> <a href="http://search.twitter.com/search?q=euro" target="_blank">#euro</a></noframe>

09.58 More from German finance minister Wolfgang Schaeuble (09.30), who is telling reporters that the Cyprus bail-in idea was not just a German idea.

Anastasiades came to understand that it was not just Germany and the IMF that wanted a bail-in, but also the others.

09.50 It's unclear whether the Church of Cyprus will have any financial involvement in the final deal, even though it offered up its entire wealth towards the cause (as we reported in Wednesday's blog). Regardless, Archbishop Chrysostomos II is still keenly involved in the situation, after advocating a eurozone exit over a bailout deal.

Greek news website ekathimerini reported last night that he intends to hold a dinner with Russian entrepreneurs in the hope of persuading them to keep investing in Cyprus. He told the newspaper he "intends to remind them that their capital has for a long time been growing through interest, they have benefitted from their presence in Cyprus and that had they gone to another country the interest they would have got would have been just above zero."

He also urged Cypriots to learn to lead more thrifty lifestyles, and repeated his belief that the previous government led by Demetris Christofias, should "be punished" for bringing the country into such a catastrophic financial situation.

Read the whole story here.

09.38 Cypriot President Nicos Anastasiades seems to have drawn encouragement from the Twittersphere during a fraught night involving threats of resignation and a Cyprus euro exit (see 07.10, 07.22).

His tweet translates as: "Thank you for your messages of support. They gave me strength during last night's struggle to secure the best possible outcome for Cyprus."

<noframe>Twitter: Nicos Anastasiades - &Epsilon;&upsilon;&chi;&alpha;&rho;&iota;&sigma;&tau;Ï &gamma;&iota;&alpha; &tau;&alpha; &mu;&eta;&nu;Ï&mu;&alpha;&tau;&alpha; &sigma;&upsilon;&mu;&pi;&alpha;&rho;Î¬&sigma;&tau;&alpha;&sigma;&eta;&sigmaf;. &Mu;&omicron;&upsilon; Î­&delta;&omega;&sigma;&alpha;&nu; &delta;Ï&nu;&alpha;&mu;&eta; &sigma;&tau;&eta; &delta;Ï&sigma;&kappa;&omicron;&lambda;&eta; &chi;&theta;&epsilon;&sigma;&iota;&nu;&omicron;&beta;&rho;&alpha;&delta;&iota;&nu;Î® &mu;Î¬&chi;&eta; &gamma;&iota;&alpha; &tau;&omicron; &kappa;&alpha;&lambda;Ï&tau;&epsilon;&rho;&omicron; &delta;&upsilon;&nu;&alpha;&tau;Ï&OElig; &alpha;&pi;&omicron;&tau;Î­&lambda;&epsilon;&sigma;&mu;&alpha; &gamma;&iota;&alpha; &tau;&eta;&nu; &Kappa;Ï&pi;&rho;&omicron;</noframe>

09.30 German finance minister Wolfgang Schaeuble is addressing reporters. He's said the new deal is better for Germany than the original agreement and that the goal is to complete European parliamentary approvals of the deal by the third week of April.

The result is a fair one for everybody involved.

German Finance Minister Wolfgang Schaeuble talks to the press prior to an extraordinary Eurozone meeting on Sunday at the EU Headquarters in Brussels. Credit: AFP

09.21 The Sun's Steve Hawkes is reporting that the Kremlin plans on "freezing assets" of German companies in Russia as payback for the bailout deal.

<noframe>Twitter: steve hawkes - Kremlin to "freeze assets" of German companies in Russia in retaliation to the terms of EU bailout in Cyprus.. this one definitely has legs</noframe>

09.00 Today is a (scheduled) bank holiday in Cyprus, and we're getting reports the ATM withdrawal limit has been set at just €120. We still have no word on when banks will re-open.

<noframe>Twitter: Tom Parmenter - People using cashpoints in Nicosia telling us daily limit for withdrawals set at &#8364;120 today for Bank of Cyprus</noframe>

08.58 All eyes will be on Russia today, whose citizens are thought to hold as much as €30bn of the island's €68bn deposits. Cypriot finance minister Michalis Sarris, who told CNBC this morning the Russians were "disappointed" with the bailout deal (see 07.52), spent much of last week in Moscow seeking help but left empty-handed.

<noframe>Twitter: Katie Martin - French foreign min: "I don't know what the Russians' reaction will be, but it could be harsh indeed"</noframe>

08.53 Here are some choice tweets reacting to the bailout deal.

<noframe>Twitter: Simon Nixon - I think we can safely say that Cyprus blinked and that Merkel/ECB didn't? <a href="http://www.twitter.com/Hugodixon" target="_blank">@Hugodixon</a> <a href="http://www.twitter.com/Kaletsky" target="_blank">@Kaletsky</a></noframe>

<noframe>Twitter: PaweÅ&sbquo; Morski - Gratuitous meanness: Laiki and BoC both passed EBA 2011 Stress Tests. <a href="http://t.co/ODbwlRziKx" target="_blank">http://t.co/ODbwlRziKx</a></noframe>

<noframe>Twitter: Georgie Markides - <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> joined the euro on Jan.1st 2008. In 2009 a recession began after 30yrs of stellar growth. The island now enters a death spiral</noframe>

08.45 Christopher Pissarides, chairman of the Council of the National Economy for the Republic of Cyprus, and Richard Corbett, adviser to Herman Van Rompuy, President of the European Council, have just discussed the deal on Radio Four's Today Programme.

Mr Pissarides' dismay with the deal was clear. He said:

You might say the Cyprus government does not have the money [to provide deposit insurance] but that’s why Cyprus joined the eurozone in the first place.

That’s why we are heading towards monetary union, to pool risks.

A German finance minister thinks “I do not like your economy, your economic development over the last 60 years. The way I am going to change it is to bankrupt two main banks then you sort out the mess afterwards.

It was not a ‘no’ with every other country which asked for help. Greece has a corrupt, non-functional economy. It got €140bn. Cyprus needs [another] €8 or €9bn. How could they [the eurozone] say that’s too much money?

Meanwhile Mr Corbett insisted that it was the Cypriot government which pushed for the bank levy on small depositors in the original deal.

The original proposal most of the rest of the EU thought was socially unfair, but the Cypriot government insisted on that.

08.35 It is still unclear how badly large depositors in Cyprus' two largest banks will be hit. According to Nicholas Papadopoulos, the chairman of the Cypriot parliament's finance committee, the figure could be as high as 30pc. Speaking on Irish radio this morning, he said:

I haven't heard a formal announcement of the haircut, but this [30pc] is the figure I heard.

08.24 European markets have just opened and are rising across the board on news of the bailout. The FTSE 100 is up 0.47pc, the IBEX in Madrid has risen 1.26pc, the MIB in Milan climbed 0.74pc. Germany's DAX and France's CAC are up 0.98pc and 1.4pc respectively.

08.08 It's worth remembering that although the deal does not need parliamentary approval in Cyprus, it does need sign-off from several eurozone national parliaments, such as Germany. The Associated Press reports that EU officials expect the whole programme to be approved by mid-April.

07.52 Cypriot finance minister Michalis Sarris told US broadcaster CNBC the Russians were "disappointed" by the bailout deal. Russians are thought to hold between €20bn and €30bn of the €68bn held in Cypriot bank accounts. He said:

The Russians were understandably disappointed with this turn of events. They have had a long, successful and happy history and association with Cyprus. This has come partly as a shock despite the fact that many of these things have been rumoured.

Comparing deals is not easy. They have different dimensions, different characteristics, circumstances change.

I think this is a good deal. It addresses issues more fundamentally and decisively and creates the prospects for a better future.

There were as many people who said "we have been with you through good times and we're going to stay with you through bad times. And there are others of course who say maybe we're disappointed and maybe we will look somewhere else.

Watch the whole interview here.

07.44 Reuters has recorded the press conference in Brussels announcing the bailout deal. You can watch it here.

07.22 The all-night talks were fraught with tension. The FT reports that Cypriot president Nicos Anastasiades would not budge on protecting large depositors in Bank of Cyprus and Laiki Bank until the last minute, and threatened to exit the euro.

The head of the Cypriot orthodox church Archbishop Chrysostomos II, who has offered to help bail Cyprus out using the church's wealth, had earlier expressed a preference for the island to leave the euro. In an attack on the single currency project, he said:

The euro cannot last.

I'm not saying that it will crumble tomorrow, but with the brains that they have in Brussels, it is certain that it will not last in the long term, and the best is to think about how to escape it.

Archbishop Chrysostomos II (L) offered the entire wealth of the church to help bail out the island's economy on Wednesday. Credit: AP

07.10 There was plenty of drama surrounding the bailout talks last night, which started four hours later than planned. Prior to the talks Cypriot President Nicos Anastasiades threatened to resign and told the troika their demands were too harsh. He was quoted as saying:

Do you want to force me to resign? If you want that, tell me.

I am giving you one proposal, and you do not accept it. I give you another and it's the same. What else do you want me to do?

07.01 Eurozone finance ministers have admitted there is "no date fixed" for Cyprus' banks to re-open, reports our Brussels correspondent Bruno Waterfield. The island's banks have now been closed for a week.

06.45 The Nikkei in Tokyo clawed back most of the losses made last week on news of the bailout deal. Stocks closed up 1.7pc, while shares in Hong Kong's Hang Seng rose 0.7pc.

Futures markets indicate that most European markets are expected to rise this morning, with the FTSE 100 forecast to climb 0.521pc, the MIB in Milan to rise 0.516pc and Madrid's IBEX to edge up 0.171pc. However the DAX and CAC are expected to slide 0.157pc and 0.172pc respectively.

Credit: Reuters

06.30 The language used by officials following the deal was muted but cautiously optimistic.

Cypriot finance minister Michalis Sarris said:

It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone.



Olli Rehn, EU economic and monetary affairs commissioner, said:

It's been another hard day's night. There were no optimal solutions available, only hard choices.

Dutch finance minister and head of the Eurogroup of eurozone finance ministers Jeroen Dijsselbloem

It’s been a particularly difficult road to get here.

We’ve put an end to the uncertainty that has affected Cyprus and the euro in recent days.

Dutch Finance Minister and President of the Eurogroup Council Jeroen Dijsselbloem (C) takes part in a joint press conference with International Monetary Fund (IMF) Managing Director Christine Lagarde (L) and EU Commissioner for Economic and Monetary Affairs Olli Rehn (R) after a Eurogroup Council meeting at EU headquarters in Brussels on March 25, 2013.

06.00 Good morning. Cyprus has struck an eleventh-hour deal with its EU-IMF lenders, avoiding imminent financial meltdown. The agreement, made in the early hours of this morning after almost 12 hours of talks and swiftly endorsed by the 17 eurozone finance ministers, secures a €10bn bailout in return for a sharply pruned banking sector.

The country's second-largest bank, Laiki, will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits - those under €100,000 - being transferred to the nation's biggest lender, Bank of Cyprus.

Although the deal avoided the controversial bank levy which saw the original proposal overwhelmingly rejected by the Cypriot parliament, even the best-protected senior bondholders investing in Laiki Bank would see their holdings "wiped out", said Jeroen Dijsselbloem, Dutch finance minister and head of the Eurogroup of eurozone finance ministers.

Since the new deal does not involve a new tax, it does not need parliamentary approval.

While the Bank of Cyprus survives, it will suffer a major "haircut" - a forced wipeout of investment value - on all deposits of more than €100,000.

These forced losses on large deposit holders in the island's two largest banks are expected to raise €4.2bn of the €5.8bn that Cyprus is required to contribute to the bailout.

The remaining €1.6bn is expected to come from tax increases and privatisations.