Cyprus targets bank in rescue bid

Politicians have moved to restructure Cyprus's most troubled bank as part of a broader bailout plan which must be in place by Monday to avoid financial ruin.

Concerned customers rushed to get cash from ATMs as bank employees protested.

Cyprus has been told it must raise 5.8 billion euro (£4.9 billion) if it is to receive 10 billion euro (£8.5 billion) from its fellow eurozone countries and the International Monetary Fund. If it does not find a way by Monday, the European Central Bank said it will cut off emergency support to the banks, letting them collapse.

That would throw the country into financial chaos and, ultimately, cause it to leave the eurozone, with unpredictable consequences for the region.

Party leaders and the government were hashing out three new laws on Thursday night, ranging from restricting bank transactions to restructuring the most troubled bank, Cyprus Popular Bank, or Laiki.

The pressure has increased since politicians rejected an earlier proposal to seize up to 10% of people's bank accounts. Banks have been shut since last weekend to avoid a run and will not open until Tuesday at the earliest.

Uncertainty was growing among Cypriots as the deadline approached and reports spread that the country's second-largest bank would be restructured.

Queues of 40 to 50 people formed at the ATMs of Laiki, which responded by capping daily withdrawals at 260 euro (£221) per person from 700 euro (£595). Although ATMs have been functioning, many often run out of cash.

"We need cash. We have families, children, grandchildren and expenses, and the banks have been closed since Saturday," said Andri Olympiou after withdrawing money from a Laiki branch in Nicosia, the capital.

The central bank governor, Panicos Demetriades, urged lawmakers to vote immediately on a legal framework bill to rehabilitate Cyprus's banking sector.