Cyprus banks open doors to public

The country’s banks have been closed for almost two weeks while politicians attempted to negotiate a way out of the financial crisis, which has been heightened by the removal of the head of the Bank of Cyprus.

Chief executive Yiannis Kypri was removed as part of the restructuring of the country’s largest commercial lender yesterday, along with the bank’s board of directors, as administrators were appointed to handle the banks’ restructuring.

In a statement, Mr Kypri admitted these were “very difficult times for everyone”.

He said: “The Bank of Cyprus was and must remain the basic support of the economy and our society in the effort to deal with the crisis our country is going through. I hope that the handling of this transition phase will respect the workers, shareholders and customers of the Bank of Cyprus.”

Banks closed on 15 March as politicians discussed how to raise the €5.8 bn needed to qualify the country for €10bn in bailout loans from fellow eurozone partners and the International Monetary Fund (IMF).

Panicos Demetriades, the central bank governor, said “superhuman” efforts were being made to ready the banks for their  reopening.

The Bank of Cyprus and second-largest lender Laiki will be restricted from making large-scale transfers whilst they are being restructured, a process during which big depositors could lose as much of 40 per cent of their savings.

Laiki’s “healthy” assets will be absorbed into the Bank of Cyprus whilst its non-performing loans and toxic assets will be placed into a “bad” bank.

Depositors with more than €100,000 could see up to 40 per cent of their funds converted into bank shares, while those with less than €100,000 will not lose any cash, but they will face limits on what deposits they can access.

Authorities are looking to increase a daily withdrawal limit from €100–300, but will be unable to cash cheques after banks reopen today. Payroll payments will be allowed in order to help businesses, which have suffered amid public uncertainty over spending. Cypriot newspaper the Kathimerini has reported that depositors will be prohibited from taking more than €3,000 in cash abroad on each trip, and limited to spending €5,000 on their credit or debit card.

The European Central Bank reportedly delivered extra banknotes to Cypriot banks yesterday evening to meet demand, as customers fearing for their savings are expected to besiege the banks.

Cypriots took to the streets of Nicosia in their thousands yesterday to protest against a bailout deal that will push their country into an economic slump and cost many their jobs.

Some 2,500 protesters gathered outside the presidential palace, waving banners and flags and chanting: “I’ll pay nothing. I owe nothing.”

Private security firm G4S is to dispatch 180 of its staff to all bank branches across the island during the reopening to prevent potential trouble, said John Argyrou, managing director of the firm’s Cypriot arm.

He added: “Our presence there will be for the comfort of both bank staff and clients, but police will also be present.

“There may be some isolated incidents, but it’s in our culture to be civil and patient, so I don’t expect anything serious.”

The restrictions are expected to be enforced for at least a week until the situation stabilises.

Business leaders and cabinet ministers met president Nicos Anastasiades yesterday to discuss how to restart the economy in the face of the crisis.

Commerce minister Giorgos Lakkotrypis announced that electricity prices are to be slashed by 5.75 per cent next month in order to assist squeezed consumers, with an additional reduction of 3 per cent over the next few weeks.