Cyprus seeks 'Plan B' to avoid financial collapse

Banks in Cyprus will not open before Tuesday at the earliest as government officials try to find a new plan to stave off financial ruin, the central bank's spokeswoman said Wednesday.

New plan said to be in the works for country to qualify for bailout

Cyprus' President Nicos Anastasiades center, met with party leaders and the governor of the Central Bank of Cyprus Panicos Demetriades, second right, at the Presidential Palace, looking for an alternative bailout plan. (Petros Giannakouris/Associated Press)

Banks in Cyprus will not open before Tuesday at the earliest as government officials try to find a new plan to stave off financial ruin, the central bank's spokeswoman said Wednesday.

Aliki Stylianou said the banks would remain shut for another two days, Thursday and Friday. Monday is a national bank holiday in Cyprus.

The cash-strapped lenders have been closed since Saturday, when Cyprus said it would raid bank deposits to help fund its international bailout package, to avoid a bank run.

The Parliament this week rejected the plan to take a portion of bank deposits, leaving the country's bailout plan in doubt.

Cypriot officials are looking for alternative ways to scrounge up the €5.8 billion ($7.70 billion Cdn) that the country's euro area partners and the IMF expect in order to loan another €10 billion euros.

Banks face collapse

The money is needed to shore up the ailing banks and government finances. Without the funds, Cyprus' banks could collapse, the government would struggle to pay its bills and the country could become the first to be forced out of the European single currency.

Later Wednesday, three top government Cypriot officials said an alternate plan had been drawn up to raise funds needed for the country to qualify for an international bailout, and that it will be presented to political party leaders Thursday.

The officials said the new "Plan B" includes some Russian assistance and a smaller bank deposit tax. Parliament is expected to vote on the new bill Thursday.

The officials all spoke on condition of anonymity because the plan was not yet officially being made public.

Representatives of Cyprus' potential international lenders — the IMF, European Central Bank and European Commission, known as the troika — met with the country's president and other top officials to discuss the next steps.