Tuesday

28th Mar 2023

Cypriot banks re-open without panic

  • No sign of panic at the Bank of Cyprus (Photo: Petros3)

Cyprus' banks opened without panic on Thursday (March 28) after a 10 day lockout as the government struggled to agree a €10 billion rescue package.

With no reports of disruption and with small, orderly queues reported across the island, President Nicos Anastasiades tweeted his gratitude praising Cypriots for "their maturity and collectedness" in responding to the crisis.

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Anastasiades, who was elected President earlier in March, also agreed to an immediate 25 percent cut to his near €300,000 salary. His cabinet members have agreed to take a 20 percent pay cut.

Customers are now able to withdraw a maximum of €300 per day from their bank accounts, with travellers allowed to take up to €1,000 out of Cyprus.

Although the government insists that capital controls will only be in place for one week, analysts expect the controls to be in place for at least a month.

The emergency controls on currency flows in and out of Cyprus were imposed Wednesday night (March 27) as the government tried to avoid runs on its banks.

Under the terms of the bailout package, investors with deposits worth over €100,000 in the Bank of Cyprus and Laiki bank face losses of up to 40 percent.

Laiki will also be wound down with its assets and liabilities separated into a "good" and "bad" bank. The chief executive and board members of the two banks were dismissed on Wednesday.

Earlier on Thursday, data published by the Cypriot Central Bank revealed that eurozone investors pulled €863 million out of the country's banks in February, fully 18 percent of the total deposits held by residents from the 16 other eurozone countries.

Deposits belonging to eurozone investors have fallen sharply from a peak of €6.6 billion in June 2012 and now stand at €3.9 billion.

However, deposits from the rest of the world increased by €88 million in February, a sign that Russian investors did not resort to a flight of capital. Savings worth €67.5 billion remain on the books of Cypriot banks.

In another sign of the fragile state of the Cypriot economy, the country's stock exchange will remain closed until after the Easter weekend.

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