March 20 - Cyprus has pleaded for a new loan from Russia to avert a financial meltdown but there's no sign yet of a deal to avert financial meltdown following the rejection of an EU bailout. Sonia Legg reports.
No deal says Russia. A begging mission to Moscow by Cyprus's Finance Minister has failed to secure any new money or even an extension to a current loan. But Michael Sarris says he won't give up seeking help from Russia - a country with significant investment interests in Cyprus. Banks across the island remain closed until at least Thursday. The prospect of a bank run when they open almost a certainty says Jeremy Batstone-Carr from Charles Stanley. (SOUNDBITE) (ENGLISH): JEREMY BATSTONE-CARR, INVESTMENT STRATEGY, CHARLES STANLEY, SAYING: "Swiss two year bond yields at close to zero already suggest the market is primed for quite significant depositor outflows as investors and depositors lose faith in the sanctity of the depositor insurance programme which everyone thought existed on accounts valued less than 100,000 but may not now be sacrosanct." The likes of Spain and Italy are also at risk following Cyprus' rejection of an EU bailout which would have saved it from bankruptcy. Lawmakers decided that making Cyprus find 6bln euros by taxing bank depositors was not an acceptable condition. European markets rallied a little after three days of losses on growing expectations the crisis would be contained. Marshall Gittler from Cyprus based IronFX, says he's confident the EU will eventually compromise. (SOUNDBITE) (ENGLISH): MARSHALL GITTLER, GLOBAL HEAD OF FX, IRONFX, BASED IN CYPRUS, SAYING: "Every other time there has been a similar negotiation - they have gone to the brink - the opposition parties have rejected the agreement there have been back and forth demonstrations - but when push comes to shove and they are looking over the precipice they always decide not to jump so I think both sides will reach an agreement. There will be pain on both sides - the EU will have to give some, Cyprus will have to give some but nobody wants a collapse." Troika inspectors from the EU and IMF are discussing the crisis with the Cypriot government. The German Chancellor says the island's banks will need to offer something. (SOUNDBITE) (German) GERMAN CHANCELLOR, ANGELA MERKEL, SAYING: "We are of the opinion that the banking sector needs to make a contribution towards managing Cypriot debt so we will continue negotiations, primarily via the troika. We will look at any proposals Cyprus makes with respect. Germany wants a solution. Cyprus is a partner in the euro zone and therefore we are obliged to find a solution together." But her confidence isn't shared by everyone. And the ECB has added to the tension by saying it will pull the plug on Cypriot banks if they don't accept a bailout soon.