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Protests took place across the city last night. Petros Karadjias/AP/Press Association Images

Cyprus parliament to vote on plans to 'armour the banking system'

Officials scramble to cement a revised plan to stop a possible collapse of the country’s banking system.

THE HOUSE OF Representatives in Cyprus is to vote on nine pieces of legislation prepared to protect the country’s financial services system and avoid a run on banks when they open next week.

According to official news agency CNA, parliament asked for more time to study the lengthy bills and will meet at 8am (Irish time). The proposals include the creation of a investment solidarity fund which would bundle state assets, including gas reserves. The country’s second-largest bank Laiki is also to be restructured as part of the so-called ‘Plan B’.

The crisis discussions come after lawmakers rejected an EU/IMF rescue package, worth €10 billion, which included a controversial levy on bank savings.

As the session gets underway in Nicosia, Finance Minister Michalis Sarris has been told by Moscow that the only assistance available to Cyprus is the possible extension of an existing loan of €2.5 billion.

Sarris held meetings with Russian officials over the past 48 hours but he has now returned to Cyprus. His counterpart in the Kremlin, Anton Siluavnov, told local news agencies that the country’s investors “showed no interest” in Sarris’s proposals.

Late last night, credit rating agency Standard & Poor’s lowered its long-term sovereign credit rating for the nation from CCC+ to CCC with a negative outlook.

In a statement it said that it believes the risks of default are rising. It explained: “the Cypriot parliament has rejected a proposed financial stability levy, a key financing item upon which EU-International Monetary Fund economic assistance was predicated.”

The European Central Bank has set a Monday deadline for parliament to secure a plan before it pulls emergency liquidity assistance, which would likely cause a default and bank collapse.

Anti-bailout protests took place outside government buildings last night. There were some clashes with police reported. Anger among citizens is rising as the banking crisis impacts their daily lives. Queues for bank machines grew and grew yesterday as financial institutions imposed a €260 limit on ATM withdrawals in order to cope with high demand. Shops and other retail outlets are refusing cheques and credit cards.

-Additional reporting by AFP

Thursday: Eurogroup ready to discuss new Cyprus proposal

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