In the very early hours of Friday morning, Cyprus' parliament overturned an earlier vote rejecting measures overhauling the supervision and ownership of the country's troubled co-operative and commercial banks. The legislation was one of the conditions of the country receiving a 1.5 billion euro ($1.98 billion) installment of Cyprus' a 10 billion euro loan.
The payment, which is expected to be given the go-ahead at a meeting of euro area finance ministers next week, will be used to restore the co-operative banks' depleted capital buffers. In exchange for the cash support, the government would take ownership of nearly all of the co-operative banks' shares.
Lawmakers had first narrowly defeated the bills in a vote earlier Thursday amid worries — especially among the left-wing AKEL party — that the law wouldn't prevent private investors buying up shares in the co-operative banks.
Finance Minister Harris Georgiades rushed to Parliament to join party leaders in an emergency, late-night meeting that eventually struck a compromise deal satisfying a key AKEL demand to enable co-operative banks to eventually buy back their shares and regain a degree of autonomy.
Lawmakers from AKEL and the smaller socialist EDEK party subsequently changed tack in a revote and approved the revised legislation.
Government spokesman Christos Stylianides said the government felt "relieved" that "reason and responsibility prevailed over populism."
"Rejection of the legislation would have struck a grave blow to our huge efforts to bring the country's economy back to growth," Stylianides said. "It would have put the entire rescue package in doubt and diminished the credibility of Cyprus...We hope that what happened yesterday becomes a lesson to us all and informs our future decisions."
No one expected the outcome of the first vote given the high stakes for the crisis-stricken country. But once the tally was in, it sowed confusion within Parliament and prompted speculation that Cyprus' 23 billion euro ($30.36 billion) financial rescue deal agreed with Cyprus' fellow euro countries and the International Monetary Fund would be put into jeopardy.
Another serious concern was that had the legislation not been approved immediately, depositors would rush once co-operative banks opened their doors Friday morning to pull all their money out amid fears of their imminent collapse.
As part of its rescue, Cyprus in March agreed on a deal that saw deposits over 100,000 euros in its two biggest banks take major losses. Second largest lender Laiki was shut down and folded into the bigger Bank of Cyprus which is undergoing major restructuring. Restrictions on withdrawals and transfers from banks were also imposed to prevent a run.