Draconian controls as Cyprus banks set to reopen

2013-03-28 09:33

Nicosia – Cypriots will finally get access to their bank accounts later today after a nearly two-week lockdown, but under tight restrictions unprecedented in the eurozone.

With world markets still jittery over the crisis, the banks – closed since March 16 – will reopen this morning.

But Finance Minister Michalis Sarris has imposed temporary limits on daily withdrawals to 300 euros (R3 550) to prevent a run on the banks that could wreak havoc on the island’s already fragile economy.

He also banned the cashing of cheques and ordered those travelling abroad not to take more than 1 000 euros out of the country.

Five shipping containers reportedly filled with billions of euros were delivered to the central bank in Nicosia late yesterday, an AFP photographer said.

Under a deal agreed in Brussels on Monday, Cyprus must raise 5.8 billion euros to qualify for a 10-billion-euro bailout from the “troika” of the European Union, European Central Bank and International Monetary Fund.

Depositors with more than 100 000 euros in the top two banks – Bank of Cyprus (BoC) and Laiki or Popular Bank – face losing a large chunk of their money.

Cyprus also agreed to major reforms to its banking system, which is heavily dependent on Russian money – an estimated $31 billion in corporate and private deposits.

Monday’s deal kept the Mediterranean island from crashing out of the euro – but it has provoked fury at home.

Yesterday, around 1 500 anti-austerity protesters marched on the presidential palace to protest the EU-IMF rescue package, which delivers a major hit to big depositors and threatens thousands of jobs.

Under the government-imposed restrictions, money transfers to accounts outside Cyprus are forbidden, with some exceptions, and there is a limit of 5 000 euros monthly in credit or debit card purchases while abroad.

Sarris said the strict capital controls would be temporary.

But in comments to the private television station Sigma last night he warned: “We will see worse days in 2013... the economy will go into deeper recession.”

In the Greek capital Athens last night, a bomb exploded near the home of former BoC executive Nikos Tsakos, a Greek ship owner who had served on the board of the Cypriot lender. Nobody was injured.

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