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Cyprus says banks to reopen tomorrow with tight controls

A limit of €300 will be placed on withdrawals.

Image: Petros Karadjias/AP/Press Association Images

CYPRUS CONFIRMED THAT banks would reopen tomorrow after a nearly two-week lockdown on the bailed-out country, but only under the first capital controls of their kind in the eurozone.

Finance Minister Michalis Sarris issued a decree today for temporary restrictions limiting daily withdrawals to €300, which he said were needed to prevent the “collapse of credit institutions.”

The central bank confirmed branches that have been shuttered since March 16 – leaving desperate Cypriot homes and businesses with limited cash – would be open from 10am GMT to 4pm GMT tomorrow.

Cash

At least two shipping containers reportedly filled with cash were delivered to the central bank in Nicosia tonight, an AFP journalist said.

The decree came as 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 bank depositors and will see thousands left jobless.

Protesters chanted “Troika out of Cyprus”, substituting “Troika” for “Turkey” in a chant Greek Cypriots traditionally use to condemn the 1974 Turkish invasion.

Under a deal agreed in Brussels on Monday, Cyprus is trying to raise €5.8 billion to qualify for a €10 billion bailout from the “troika” of the European Union, European Union and International Monetary Fund.

Depositors with more than €100,000 in the top two banks face losing a large chunk of their money while Cyprus agreed to major reforms to its crucial banking system, bloated with Russian money and exposed to Greek debt.

The deal kept the east Mediterranean island from crashing out of the euro but has caused anger at home.

Earlier this week officials had originally said that all banks would reopen on Tuesday, then that Bank of Cyprus and number two lender Laiki would stay closed on Thursday, and finally that all of them would stay shut until then.

The capital controls accompanying the reopening of the banks would last for four days before they were reviewed, Sarris said in a decree. In addition to the €300 daily limit, they ban the cashing of cheques.

They also prohibit people from taking more than €1,000 in cash abroad, with customs officers authorised to make checks at border crossings.

Non-cash payments or money transfers outside Cyprus are prohibited, with some narrowly defined exceptions, and there is a limit of 5,000 euros a month in credit or debit card purchases while abroad.

Bailout

Cyprus is the first eurozone country to impose capital controls after bailouts – unlike Greece, Spain, Portugal and Ireland, which have also received multi-billion-dollar rescue packages.

Bank employees union ETYK said staff were ready to go back to work but warned public not take out frustrations on them, saying that they too were “victims of criminal acts”.

Led by the opposition communist Akel party, some 1,500 protesters waved Cyprus and communist flags as they punched their fists in the air and chanted angry slogans against the “troika”.

The bailout involves the restructuring of the Bank of Cyprus and the eventual winding down of Laiki, or Popular Bank. The Bank of Cyprus will absorb the “good” parts of Laiki.

That process claimed Bank of Cyprus chief executive Yiannis Kypris today, who was sacked by the governor of the country’s central bank. A day earlier the bank’s chairman had his resignation rejected.

- © AFP, 2013

Read: Fears of Cyprus-style hit on bank deposits ‘scaremongering’, says MEP>

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