Cyprus to Impose Limits on Bank Withdrawals, Boost Security

Petros Giannakouris/AP Consumers use ATMs outside a closed branch of the Bank of Cyprus in Nicosia, Cyprus, on Wednesday. Cypriot authorities are preparing limits on how much money depositors can withdraw a day before banks are set to reopen.
By MENELAOS HADJICOSTIS

NICOSIA, Cyprus -- Cyprus will impose limits on money transfers and dispatch extra security guards to prepare for Thursday's reopening of the banks, which have been shut for almost two weeks to avoid a run during the country's financial drama.

A banking official said Wednesday that new controls will include restrictions on large-scale transfers from the country's two largest and most troubled lenders, Bank of Cyprus and Laiki. Both are being restructured and big depositors face losses of as much as 40 percent.

UPDATE: Banks in Cyprus are to open at noon for six hours on Thursday, a finance ministry official said. The official said Wednesday that the banks would operate noon to 6 p.m. local time (10 GMT to 16 GMT). Capital controls to prevent people draining their deposits are expected to be announced later Wednesday night.

(Original story continues below.)

But authorities are looking to increase the daily withdrawal limit from €100 to €300 (from $130 to $386), while payroll payments will be allowed in order to help businesses, which saw a huge slump as people cut down on their spending amid the uncertainty swirling about the banks.

The restrictions will be kept for at least a week until the situation stabilizes, said the official, who spoke only on condition of anonymity because the measures have yet to be officially announced.

Meanwhile, private security firm G4S will install 180 of its staff at bank branches across the island to keep a lid on possible trouble, said John Argyrou, managing director of the firm's Cypriot arm.

"Our presence there will be for the comfort of both bank staff and clients, but police will also be present," he said.

Argyrou said he doesn't foresee any serious trouble unfolding once banks open their doors because people had time to "digest" what has transpired.

"There may be some isolated incidents, but it's in our culture to be civil and patient, so I don't expect anything serious."

Another 120 staff from G4S would be assigned money transportation duties.


Banks were closed on March 16 as politicians scrambled to come up with a plan to raise €5.8 billion ($7.5 billion) that would qualify the country for €10 billion ($12.9 billion) in bailout loans from fellow eurozone partners and the International Monetary Fund.

Under the deal clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large Laiki and Bank of Cyprus depositors.

Cypriot officials said the deal would mean the country would shift its focus away from being an international center of financial services. That is expected to cost jobs, adding to the unemployment rate which now stands at around 14 percent.

Business leaders and cabinet ministers were meeting with President Nicos Anastasiades on Wednesday to find ways to get the economy going again.

To give consumers a break, electricity prices will drop 5.75 percent next month. Over the next couple of weeks, authorities will look into how they can reduce them by another 3 percent, said Commerce Minister Giorgos Lakkotrypis.

Interior Minister Socrates Hasikos said his ministry is looking to cut red tape in order to attract foreign investment. He said Chinese investors have shown interest in property sales, adding that a single real estate office has sold some 400 residences to Chinese buyers.

"There has always been interest from foreign investors," said Hasikos. "The question is how we as the government, as Cyprus, can convince all these investors ... that the environment is secure, that whatever happened has now passed and that they can continue securely investing in Cyprus."


Increase your money and finance knowledge from home

Forex for Beginners

Learn about trading currencies and foreign exchange transactions

View Course »

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Add a Comment

*0 / 3000 Character Maximum