Text size:

  • Small
  • Normal
  • Large

Feared run on Cyprus banks fails to materialise

In a Hollywood-style operation, armoured vehicles carrying billions of euro banknotes replenished banks on Wednesday night, with police cars escorting the cash convoy and a helicopter clattering overhead. Michael Theodoulou reports from Nicosia

NICOSIA // The feared run on Cypriot banks failed to materialise when they reopened at noon yesterday after a two-week lockdown.

Tight capital controls are in place to prevent money draining out of the traumatised island nation, and cash withdrawals are currently limited to €300 (Dh1,425) a day.

Cyprus's foreign minister, Ioannis Kasoulides, said last night that restrictions on financial transactions are to be fully lifted in a month.

In a Hollywood-style operation, armoured vehicles carrying billions of euro banknotes replenished banks on Wednesday night, with police cars escorting the cash convoy and a helicopter clattering overhead.

There were heightened security measures at banks, which urged customers not to vent their frustrations on hapless tellers, many of whom fear losing their jobs.

But despite the uncertainty caused by a controversial €10 billion bailout deal agreed with Brussels on Monday, the banks' reopening passed remarkably smoothly.

President Nicos Anastasiades, in power for just a month, tweeted his thanks to Cypriots for their "maturity and sense of responsibility" in not panicking at "a critical time".

He also announced that he was slashing his salary by 25 per cent while cabinet members would take a 20 per cent wage reduction.

International camera crews easily outnumbered customers queuing calmly outside neighbouring branches of the island's two main banks in Nicosia's central Eleftheria (Freedom) Square.

Many waiting in line were elderly people who said they had run out of cash because they did not have bank cards.

An employee of the Bank of Cyprus politely asked them to show "patience and understanding". Demetris Antoniou promised: "We will give you the maximum service we have."

Beside him, an unarmed local employee of the British-based security firm G4S smiled benignly behind his aviator sunglasses. "We never expected any trouble," he said. "Cypriots are law-abiding and peaceful."

Yet they are also distraught, dismayed and feel betrayed by their European Union partners.

Kostas Nikilaou, a 60-year-old pensioner, said the uncertainty of the past two weeks had been "like a slow death". He added: "I feel a sense of fear and disappointment having to queue up like this - it feels like a Third World country. This is what they [international lenders] imposed on us and we have to live with it."

Outside the Laiki Bank, Marios Panayides, a 65-year-old retired civil servant, said: "Our previous government made mistakes, but our EU partners have also been very harsh and shown very little solidarity."

Under the deal agreed on Monday, Cyprus has to raise €5.8bn to qualify for a €10bn EU-IMF bailout. This requires major reforms to its oversized banking sector, while depositors with more than €100,000 in the island's two largest banks, Bank of Cyprus and Laiki, many of them Russian, face losing a large chunk of their money.

But in Eleftheria Square, an MP for the ruling Disy party pointed out that the terms of the bailout targeted not only foreign tycoons but "ordinary Cypriot businesses".

"We want to believe that our partners in the EU will understand what they have done," Prodromos Prodromou said.

Cyprus's foreign minister was more blunt. "Europe is pretending to help us but the price to pay is too high: nothing less than the brutal destruction of our economic model," Ioannis Kasouldides told the French newspaper, Les Echos.

Under the bailout agreement, Laiki Bank will be wound down, with its good assets merged into Bank of Cyprus.

Cypriot officials insisted the strict capital controls, unprecedented in the EU, would be temporary, lasting just days. But many experts believe they may endure for weeks or even months.

"This is a typical set of exchange-control measures, more reminiscent of Latin America or Africa," Bob Lydon, general secretary of the international banking association, IBOS, told Reuters. "These are permanent controls until the economy recovers."

The imposition of capital controls has led economists to warn that a second-class "Cyprus euro" could emerge, with funds trapped on the island less valuable than euros that can be freely spent abroad.

Aside from restrictions on cash withdrawals, credit and debit card use abroad will be limited to €5,000 a month.

There is a ban on cashing cheques, and travellers from Cyprus will not be able to take out more than €1,000 in cash. To allow trade to continue, businesses will be allowed to pay for imports if they provide authorities with "the relevant documents".

The Cypriot stock market announced it would remain closed again yesterday "in order to ensure" its "smooth functioning" and "protect investors". It has been shut since March 16.

Police sources said passengers leaving Cyprus's airports are now subject to extra searches, with officers ordered to confiscate cash above the €1,000 limit.

mtheodoulou@thenational.ae

twitter: For breaking news from the Gulf, the Middle East and around the globe follow The National World. Follow us

Back to the top

More articles


Editor's Picks

 Iranian President Hassan Rouhani greets supporters after his arrival in Zahedan, the regional capital of Sistan and Baluchestan province on Tuesday, April 15, 2014. During Mr Rouhani's two-day visit, he will tour several other cities and hold meetings with local scholars and entrepreneurs. Maryam Rahmanian for The National

On the road with Hassan Rouhani

Iran's president is touring some of Iran's most underdeveloped provinces. Foreign correspondent Yeganeh Salehi is traveling with him.

 The Doha-based Youssef Al Qaradawi speaks to the crowd as he leads Friday prayers in Tahrir Square in Cairo, Egypt in February, 2011. The outspoken pro-Muslim Brotherhood imam has been critical of the UAE’s policies toward Islamist groups, adding to friction between Qatar and other GCC states. Khalil Hamra / AP Photo

Brotherhood imam skips Doha sermon, but more needed for GCC to reconcile

That Youssef Al Qaradawi did not speak raises hopes that the spat involving Qatar and the UAE, Saudi Arabia and Bahrain might be slowly moving towards a resolution.

 Twitter photo of  Abdel Fattah El Sisi on the campaign trail on March 30. Photo courtesy-Twitter/@SisiCampaign

El Sisi rides a bicycle, kicks off social media storm

The photos and video created a huge buzz across social media networks, possibly a marker of a new era for Egypt.

 An Afghan election commission worker carries a ballot box at a vote counting centre in Jalalabad on April 6. A roadside bomb hit a truck carrying full ballot boxes in northern Afghanistan, killing three people a day after the country voted for a successor to President Hamid Karzai. Eight boxes of votes were destroyed in the blast, which came as the three leading candidates voiced concerns about possible fraud. Noorullah Shirzada / AFP Photo

Two pressing questions for Afghanistan’s future president

Once in office, the next Afghan president must move fast to address important questions that will decide the immediate future of the country.

 Friday is UN Mine Awareness Day and Omer Hassan, who does demining work in Iraqi Kurdistan, is doing all he can to teach people about the dangers posed by landmines. Louise Redvers for The National

A landmine nearly ended Omer’s life but he now works to end the threat of mines in Iraq

Omer Hassan does demining work in Iraqi Kurdistan and only has to show people his mangled leg to underscore the danger of mines. With the world marking UN Mine Awareness Day on Friday, his work is as important as ever as Iraq is one of the most mine-affected countries in the world.

 Supporters of Turkey's ruling AKP cheer as they follow the election's results in front of the party's headquarters in Ankara on March 30. Adem Altan/ AFP Photo

Erdogan critic fears retaliation if he returns to Turkey

Emre Uslu is a staunch critic of Turkey's Prime Minister Recep Tayyip Erdogan. Now, with a mass crackdown on opposition expected, he is unsure when he can return home.

Events

To add your event to The National listings, click here

Get the most from The National