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Details are a bit sketchy still but it appears the terms for their banks are now much closer to a traditional bankruptcy, with bondholders and deposits above €100'000 getting a decent haircut in Bank of Cyprus' case, while being wiped out in case of Bank Laiki.

Under the terms of the agreement the island's second largest lender Laiki (Popular Bank) will be wound up overnight, an operation Dijsselbloem said would deliver a 4.2 billion euros ($A5.25 billion) saving.

Even the best-protected senior bondholders investing in the bank would see their holdings "wiped out", Dijsselbloem told journalists. Loans to the government in Nicosia once the parliament there approves the deal in April, will be for 10 billion ($A12.49 billion).

The Bank of Cyprus, the island's No.1 lender, survives: but it will have to endure a major "haircut" - a forced wipeout of investment value, on all deposits of more than 100,000 ($A124,899).

That is a massive blow to its major investors - and the bank holds the lion's share of the island's Russian deposits.

While those local riches and Russians still holding large deposits who didn't receive a tipp-off in time will not be happy, the confiscational one-off tax for all depositors including small savers was abandoned.

So while Europols amply demonstrated how they love to play Calvinball, the final terms seem to make more sense. Given Cyprus had a weak hand they got what they wanted anyway:

Earlier, French Finance Minister Pierre Moscovici had argued that it was time to put an end to "casino economy" practices on Cyprus.

Casino economy = low taxes + light regulations + oversized banking sector

Hmmm... Wonder how other 'casino economies' and their depositors will deal with that message.
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