Cyprus’s banks open after two weeks as controls curb panic

Source: Bloomberg Source: Bloomberg

Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits.

“We expected much more people,” said Argyros Eraclides, manager of a Bank of Cyprus Plc branch in the Stavrou area of Nicosia. “Fortunately there are only some people who needed cash for the day, but customers reacted fantastically. We expected some people to be more aggravated.”

Banks opened at midday local time today, with lines of about 15 to 20 people waiting to enter branches in the Cypriot capital. They close at 6 p.m. The Central Bank of Cyprus’s controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country.

Cyprus’s lenders had been closed since March 16, when the European Union presented a proposal to force losses on all depositors in exchange for a 10 billion-euro bailout. That plan touched off protests and political upheaval on the island, and was rejected by the country’s parliament. A subsequent agreement shut Cyprus Popular Bank Pcl, the second-largest lender, and imposed larger losses on uninsured depositors.

The controls will be in force for seven days, according to a statement from the Finance Ministry. The European Commission said in a statement today the control on capital movements must remain “proportionate” and be lifted as soon as possible.

President’s Thanks

Cyprus President Nicos Anastasiades thanked Cypriots for maintaining calm as banks opened, with many savers heeding the government’s call for citizens not to rush to banks or seeking to avoid potential chaos.

“I would like to thank the Cypriot people for their maturity and collectedness shown in their interactions with the Cypriot banks,” Anastasiades said on his Twitter account.

Security guards at banks in Nicosia were allowing about eight or nine customers in branches at any one time today, with orderly lines forming after an initial push at the doors to get in. Many were older customers without cash-machine cards, while others were waiting to pay bills or deposit checks.

“I only bought a few small items during these days to survive,” said pensioner Kyriakos Hadjisophocleos, 65, who was waiting on a bench in front of a Bank of Cyprus branch in Nicosia from 7:30 a.m. to get money to pay part of his 380-euro rent. “I had many coins saved up so I was using them. If the banks didn’t open today I would have had to borrow from some friends.”

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