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Cyprus banks to open for first full day since lockdown
World

Cyprus banks to open for first full day since lockdown

3 min. 29.03.2013 From our online archive
Banks in Cyprus were set to return to normal trading hours Friday after a relatively calm six-hour opening on Thursday that saw the launch of strict capital controls to save the bailed-out island from a bank run.

(AFP) Banks in Cyprus were set to return to normal trading hours Friday after a relatively calm six-hour opening on Thursday that saw the launch of strict capital controls to save the bailed-out island from a bank run.

The measures, which include a daily withdrawal limit of 300 euros, a ban on cashing cheques and a 1,000-euro ceiling on money being taken abroad by travellers, took effect Thursday as banks opened their doors for the first time in nearly two weeks.

The strict controls, the first of their kind in the eurozone, are aimed at curbing the fallout over Cyprus's 10-billion-euro rescue by the "troika" of the European Union, European Central Bank and International Monetary Fund.

Cypriots largely stayed calm during Thursday's restricted banking hours, and President Nicos Anastasiades thanked the Mediterranean nation's people for their "maturity" after they queued patiently for limited cash.

But the country will remain under global scrutiny as the latest litmus test for the viability of the eurozone.

President gives "sincere thanks" to Cypriots

Cyprus's rescue package, agreed on Monday, is the first to impose a levy on bank deposits over a certain amount, and Cyprus is the first bailed-out eurozone nation to impose curbs on the movement of money.

There were queues of people when bank doors opened Thursday for the first time since March 16, but the lines had vanished when they closed six hours later, and security guards at most branches had little to do.

A number of customers were even making deposits.

Officials earlier said the capital controls were needed to prevent further damage to the fragile economy, which relies on a banking sector bloated with Russian money.

But after the banks reopened, Anastasiades, who was elected only one month ago, gave "sincere thanks and deep appreciation" to Cypriots for not panicking at a "critical time".

Salary cuts for government

A presidential aide said Anastasiades had decided to cut his own salary by 25 percent, while cabinet members would take a 20 percent reduction.

The cabinet has also appointed three ex-Supreme Court judges to probe the meltdown, presidential undersecretary Constantinos Petrides said.

The threat of years of hardship has sparked protests.

On Thursday night more than 100 members of the right-wing nationalist ELAM party demonstrated in central Nicosia against the bailout measures, chanting slogans such as "Troika, out!" and "This island is Greek!"

Foreign Minister Ioannis Kasoulides said Thursday the restrictions could be lifted within a month if things continue to go well.

However, he warned that a forecast in December that GDP would contract by 3.2 percent in 2013, would be changed and "definitely be much higher than this."

Island is facing depression, says expert

Cyprus must raise 5.8 billion euros to qualify for the full 10-billion-euro loan.

Depositors with more than 100,000 euros in the top two banks, Bank of Cyprus and Laiki or "Popular Bank", face losing much of their money.

Laiki will effectively be wound up and absorbed by the bigger bank.

Fitch Ratings agency downgraded Bank of Cyprus and Laiki's mortgage-covered bonds from B+ to B Thursday.

An official at a top grouping of banks meanwhile said there was still a real chance Cyprus could exit the eurozone.

"This is the first case where you can see some kind of exit as a very distinct possibility," said Philip Suttle, deputy managing director of the Institute of International Finance, which represents some 450 banks worldwide.

"Cyprus is suffering all the costs associated... with the euro and not the benefits," he added, warning the island was facing a "depression."