NICOSIA, - The parliament of Cyprus on Friday approved key legislation bringing its cooperative banks under the direct supervision of the central bank, narrowly avoiding a rejection which would have placed a 10 billion euro bailout programme in jeopardy.
In a marathon voting session, legislators agreed to a clause enabling co-op banks to receive 1.5 billion euros ($1.97 billion) in bailout money.
In an earlier vote, it had been narrowly rejected by lawmakers from the island's opposition left-wing parties, who oppose any bailout conditions.
Parliamentary approval for restructuring co-ops, which are small commercial lenders, is crucial to Cyprus receiving the next aid instalment of 1.5 billion euros from international lenders. The money will be ploughed into the lenders to recapitalise them.
In a second vote in the early hours of Friday, parliament approved the restructuring of the co-ops, finance ministry sources said.
Cyprus and lenders from the International Monetary Fund and the European Commission agreed on a 10 billion euro bailout to the island in March.($1 = 0.7623 euros) (Reporting by Michele Kambas; Editing by Anthony Barker and Eric Walsh)