Cyprus banks open after 2 weeks

People lined up outside a branch of the COOP Bank in Nicosia, Cyprus, Thursday.
People lined up outside a branch of the COOP Bank in Nicosia, Cyprus, Thursday.EPA/STR

NICOSIA, Cyprus — An air of orderly, if edgy, resignation pervaded the streets of Cyprus on Thursday, the first day in nearly two weeks banks here were open.

Having waited since March 16 for access to his money, Dimitris Dimitriou was willing to stand in line for 45 minutes to get into his bank, as it and others across this Mediterranean island reopened after a long stretch.

Since the government froze bank accounts here two Saturdays ago amid an unprecedented financial crisis, Dimitiriou’s wholesale optical business has been slumping. Thursday, he desperately needed to see a teller to pay outstanding business transactions.


He and other Cypriots are having to work with — and around — strict new controls on the flow of money international lenders have imposed to prevent a bank run in this economically distressed country.

Cypriot authorities were bracing for as much as 10 percent of the $83 billion on deposit in the country’s banks to be pulled out on this first day of banking in the bailout era.

Dimitriou said he expected the government to continue to restrict the amounts of money people could take out well beyond a seven-day limit now in place.

Bank accounts were frozen in Cyprus while the government held emergency talks with European lenders to secure a financial bailout needed to keep the country’s banks from collapsing. The ensuing drama, including the government’s unprecedented plan to skim bank accounts to help pay for the bailout, shook confidence here and in other European countries where banks are in a precarious position.

As revised, the bailout terms would dip into deposit accounts at levels only above the 100,000 euro threshold that is guaranteed against losses.

The capital controls are aimed at clipping the wings of money that might otherwise fly from the county. They include prohibiting electronic transfer of funds from Cyprus to other countries, while capping at about $3,900 the amount of cash that can be taken abroad. Daily withdrawals from automated teller machines will be limited to 300 euros per person.


Credit and debit card charges will be limited to 5,000 euros per person per month. Banks will not cash checks. And while they will accept checks as deposits, many people might be reluctant to put more money into a bank here.

Analysts said the measures, usually imposed in emerging countries like Argentina, effectively created two classes of the same money: Euros in Cyprus are worth less than euros in France or Germany as long as the bulk of the money in Cypriot banks remains frozen.

The European Commission said it expected the measures to apply for seven days but added that it would ‘‘continue monitoring the need to extend the validity of or revise the measures.’’