Cyprus banks reopen; some customers call it 'chaos'

Cyprus banks reopen; some customers call it 'chaos'
A guard outside one of the banks in Cyprus this morning.

Banks in Cyprus have reopened to customers for the first time in nearly two weeks, with people now able to access their accounts, albeit with strict restrictions on transactions.

Some customers wating outside the banks have called it "chaos" and "a very difficult day" for them just before the banks opened their doors.

Large lines had formed outside some bank branches, particularly those of Laiki, which is to be restructured, before they opened at noon.

Some Laiki branches in central Nicosia had not opened exactly on time, with customers waiting patiently outside.

Cash withdrawals will be limited to €300 per person each day. No cheques will be cashed, although people will be able to deposit them in their accounts, according to a ministerial decree released last night.

The banks will be open for six hours and the controls will be in place for four days.

Banks have been shut since March 16 while politicians wrangled over how to come up with enough funds to qualify for an international bailout.

That agreement was finally reached in Brussels early on Monday.

Guards from a private security firm were reinforcing police outside some ATMs and banks in the capital, Nicosia.

One 70-year-old pensioner who only gave his name as Ioannis stood outside a bank in the capital Nicosia some two hours ahead of the opening.

“I had to come this early, I came from my village 20 kilometres away, what do they want me to do, keep coming and going?” he said.

Outside a Bank of Cyprus Branch, among the first in line was a 52-year-old Greek businessman who said he flew in from Greece to take “as much money out as he could” from his account to pay bills and employees. He said he would be hit by the tax on deposits over €100,000 .

“This is chaos, we don’t know what to expect once banks open,” the businessman said who wouldn’t give his name because he didn’t want to discuss personal financial matters. “They shouldn’t have allowed things to get this far.”

“I believe this will be a very difficult day for both people and bank employees because no matter how much information there was, things were changing all the time,” said Costas Kyprianides, a grocery supplier in Nicosia. “Even us traders, like myself, have so many cheques which I need to deposit so I can make ends meet.”

Controls on financial transactions, imposed to prevent worried savers and businesses rushing to withdraw all their money, include limiting limiting payments abroad to €5,000. No cheques can be cashed, although they can be deposited in bank accounts, and travellers leaving the country can only take up to €1,000, or the equivalent in foreign currency, with them in cash.

The restrictions will be reviewed daily and are initially in place for seven calendar days, until next Wednesday, the Finance Ministry states.

Banks in Cyprus have been shut since March 16 to prevent people draining their accounts as politicians scrambled to come up with a plan to raise enough funds for Cyprus to qualify for €10bn in bailout loans for its stricken banking sector. An initial plan that would have seized up to 10% of people’s bank deposits was soundly rejected in Parliament, leaving politicians struggling to come up with an alternative.

The deal was finally reached in Brussels early Monday, and imposes severe losses on deposits of over €100,000 in the country’s two largest banks, Laiki and Bank of Cyprus. Laiki will be broken up, with its good assets being absorbed by Bank of Cyprus. The exact amounts of the losses have not yet been officially announced. Nonetheless, customers of those banks will still be able to access some of their funds.

Many Cypriots are struggling to work out exactly what they could and couldn’t do with the restrictions in place. Morning television talk shows hosted dial-ins with experts, with viewers’ queries ranging from where they would repay loans if they were taken out from Laiki, which is being restructured, to how they could pay tuition fees for children studying abroad and handle cheque payments. Across the country, people wondered whether they would be able to access their salaries, many of which were due this week.

During the bank closure, ATMs were working but quickly ran out of money. Those of the two troubled banks, Laiki and Bank of Cyprus, had imposed withdrawal limits of €100 a day.

The stock market announced it would remain closed today “in order to ensure the smooth functioning of the stock market and protect investors.”

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