Cyprus may need billions of euros in aid to help shore up its banks
Cyprus has agreed a bailout deal with international creditors, becoming the fifth eurozone member to do so.
The country made the request to its European partners and the International Monetary Fund in June, for help to revive its banks.
Lenders have suffered huge losses due to their heavy exposure to the Greek economy and financial system.
The deal, expected to include 16bn euros (£13bn; $ 20bn) of loans, will be officially confirmed later on Friday.
But any deal would have to be ratified by parliaments in the eurozone countries.
Banks have lost large amounts on Greek government bonds. They are also facing big losses on loans made to businesses in Cyprus, which have been hard hit by the deep recession in neighbouring Greece, its biggest trading partner.
Banks derive about 40% of their revenue from Greece. Initial estimates had put the cost of their refinancing at about 10bn euros, or 55% of gross domestic product.
In June the country’s two largest lenders the Bank of Cyprus and Cyprus Popular Bank had asked for more than 2bn euros in government aid.
The Cypriot government has been holding negotiations for a possible loan from a country outside the EU, such as Russia or China.
The country has already borrowed 2.5bn euros from Russia, whose business people are important customers of Cyprus’s relatively large offshore financial sector which offers low tax rates.
Cyprus’s stock exchange was up 8.5% after the announcement.
Cyprus is the fifth country in the 17-member euro area to seek a bailout. The others are: Greece, Ireland, Portugal, and Spain.
Crisis-hit Cyprus agrees bailout http://news.bbcimg.co.uk/media/images/61133000/jpg/_61133847_cyprus_getty.jpg
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