After nearly two weeks, banks in Cyprus reopened this morning — with strict controls on withdrawals, and with lots of extra security and police. So far, though, Cypriots have reacted calmly, while queuing in long lines to finally retrieve what little cash they can access. CNN’s Ivan Watson reports from the remarkably normal scene in front of one branch office:
The Associated Press reported that second-largest bank Laiki, which got split into “good” and “bad” banks in the interim, delayed its opening for almost an hour due to computer problems. Eventually they opened, too, and again customers appeared calm, if annoyed:
Large lines had formed outside the banks ahead of the opening of banks for six hours from noon. Systems were frozen ahead of the start of business, and guards from a private security firm reinforced police outside some ATMs and banks in the capital, Nicosia.
Branches of the country’s troubled second-largest lender, Laiki, didn’t open on time due to a delay in the bank’s computer system. Laiki spokesman Costas Archimandrites said there had been an initial issue with the bank’s system but that 80 percent of branches had opened after about half an hour.
At one branch in central Nicosia which was still shut nearly an hour later, an employee emerged from the bank and pleaded for patience with the line of about 50 people. Most waited calmly, although some began to complain about being made to wait.
The restrictions are stiff, but should allow for small depositors to conduct their business as usual, or close to it:
Capital controls, imposed to prevent worried savers and businesses rushing to withdraw all their money, include limiting cash withdrawals to 300 euros ($383) per day per person and limiting payments abroad to 5,000 euros.
No checks can be cashed, although they can be paid in, and people leaving the country can only take up to 1,000 euros, or the equivalent in foreign currency, with them in cash.
The restrictions will be reviewed daily and are initially in place until next Wednesday, the decision published by the Finance Ministry states.
Reuters notes that a review of records shows that Eurozone depositors saw this coming — perhaps one reason the EU felt comfortable in insisting on the “haircut” approach:
Savers from other euro zone countries withdrew 18 percent of the cash they held in Cyprus in February, amid concerns the struggling island would impose a tax on bank deposits.
Figures from the Central Bank of Cyprus published on Thursday showed deposits from other euro zone states fell 860 million euros to 3.9 billion euros, making them the fastest category to leave the stricken country.
Deposits from non-euro zone countries actually rose, by less than 1 percent to 21 billion euros, while deposits from local residents fell less than 1 percent to 42.6 billion euros.
It looks like Cyprus passed the first acid test. The next will come when the restrictions get lifted or significantly relaxed. I’d bet that won’t be next week, though.