Cypriots patient as banks reopen

People gather in front of Laiki (Popula) Bank as the country's banks re-open following 12 days of closure. Source: Getty Images

PATIENT Cypriots formed orderly queues and waited in the sun for their banks to reopen after nearly two cash-starved weeks.

Despite fears of a bank run that led the island to impose harsh capital controls, some Cypriots were even depositing money instead of withdrawing it following the closure of the banks on March 16.

The calm held despite some branches opening later than the scheduled time of 10am, with packs of foreign journalists, who in some cases outnumbered those in the queues, showing more signs of agitation than the locals themselves.

Kyriakos Vourghouri, owner of a minimarket, waved a yellow deposit slip showing an amount of 678 euros ($869) as he emerged from the bank.

"I didn't withdraw any money. I deposited money," he said. "The problem is not in Cyprus, it is in Europe, which has become gangrenous."

Dozens of people queued outside the banks in Nicosia for about an hour before the opening time, which was finally announced late on Wednesday after repeated delays while Cypriot authorities tried to avert financial meltdown.

Banks posted armed guards outside many branches while tellers, who unlike in other European countries are not housed behind glass security, urged customers not to vent their frustrations on them.

Guards dished out Greek-language copies of a decree issued by Finance Minister Michalis Sarris, which imposes limits on how much of their capital they can touch, including a daily 300 euro withdrawal limit.

The calm after the storm defied the sombre predictions of one Cypriot queuing outside a branch of Laiki, or Popular bank, which will be wound up as part of the bailout deal Cyprus negotiated with its creditors.

"It will be a very bad day - there will be swearing and a lot of anger," Philippos Philippou, an unemployed electrician wearing a purple sweatshirt, said outside Laiki in Nicosia's Makarios Street.

But when he emerged from the bank along with his mother, Mr Philippou flashed a smile and said: "There is confidence, everything was fine."

Around 30 people queued up outside the branch, many of them women in comfortable walking shoes ready for a long wait.

A bearded man, wearing a blue sweatshirt, who would not give his name, said: "I will take all my money slowly, slowly."

Depositors face severe restrictions to prevent a run on the banks that could wreak havoc on the island's already fragile economy but most put on a brave face saying there was no point in queuing when the amounts involved were so small.

"I'm not going to the bank today. I have to be in the shop these hours. There's going to be queues so I'm not going to spend so many hours there to get 300 euros," said Roula Spyrou, 50, a jewellery shop owner.

But along Makarios Avenue, where many designer shops and cafes have closed in the past months as the island's debt crisis intensified, stores remained mostly empty on Thursday.

Under a deal agreed in Brussels on Monday, Cyprus must raise 5.8 billion euros to qualify for a 10-billion-euro bailout from the "troika" of the European Union, European Central Bank and International Monetary Fund.

Depositors with more than 100,000 euros in the top two banks - Bank of Cyprus (BoC) and Laiki - face losing a large chunk of their money. Laiki will be wrapped up and largely absorbed by the larger BoC.

Many customers were angry with the EU - and particularly its economic powerhouse Germany.

"Yesterday my house, tomorrow your house," said one man.

"It's not the European Union, it's a German union to destroy us, everyone wants to destroy Cyprus," said Giorgiano, a kiosk owner.

"It's the first time I feel like this since 1974," he added, referring to the occupation of northern Cyprus by Turkish troops.

An elderly man with white hair added: "I have a Mercedes but from now on I will never again buy anything from Germany."

Mr Vourghouri predicted that Germany will be the biggest loser because Chancellor Angela Merkel "ignited the fire."

"Look on the streets and you will see that 70 per cent of the cars are Mercedes and BMWs. People will stop buying them and dealerships will close one by one," he said, adding he too will stop buying German products. "From now on I will buy from Afghanistan or Nicaragua if I have to."
 

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Cypriots rage against 'economic WWIII'

Cyprus President Nicos Anastasiades entered emergency talks with creditors seeking to avert bankruptcy.

FIERCE negotiations to resurrect a deal for the EU and the IMF to bail out Cyprus appear to have wrapped up early, President Nicos Anastasiades has indicated on Twitter.

"Efforts have culminated", read a translation from the Greek, with EU sources subsequently stating that a preliminary agreement is in place to hit Bank of Cyprus depositors with a massive 40 per cent "haircut" on deposits of more than 100,000 euros pending endorsement by Eurogroup finance ministers.

Waiting Eurogroup finance ministers were set to go over the new plan with a view to approval.

During more than 10 hours of talks with bosses from the ECB, IMF and the EU, Anastasiades had fought for the survival of the island's No. 1 lender, the Bank of Cyprus.

The deal hammered out would see the bank, which carries one third of all holdings, survive.

But this would come at a massive price for investors, which one senior EU source said could be as high as 40 per cent.

With Cyprus' banks on the verge of collapse, residents in the capital are pessimistic over the future of their economy. Jessica Gray reports.

Another senior EU source said there would be no levy -- a major U-turn from last week's collapsed deal to clobber all savers on the island.

But Cyprus's second bank, Laiki, would be wound up as part of the agreement, he added.

Smaller account-holders will be covered by the EU's deposit guarantee legislation, which runs to the 100,000-euro threshold, while those above that level face a hefty haircut.

The negotiations were aimed at pulling together some seven billion euros, mainly from the Cypriot banking sector, to unlock a 10-billion-euro ($A12.51 billion) loans package from eurozone partners and the International Monetary Fund.

A major sticking point throughout the talks was a European Central Bank demand for the Bank of Cyprus to pay a nine-billion-euro bill due to Frankfurt.

Cypriot president Nicos Anastasiades warned he may be forced to quit as he battles Brussels bailout bosses.

Earlier, hundreds of Cypriot demonstrators have rallied outside EU offices and the presidential palace in Nicosia, calling on the government to defy international pressure to take a "criminal" bailout.

As they awaited the result of last-ditch talks in Brussels, the protesters slammed President Nicos Anastasiades and the so-called troika of the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB).

About 500 members of the communist Akel Party gathered outside the offices of the European Commission chanting: "Don't bow, people of Cyprus, stand up for your rights," and "Troika prints euros and buys nations".

"This is the Third World War in an economic form and we will stand up to it with all of our strength," protester Marina Charalambous said.

Another protester, Anda Dimitriou, said: "Cypriots are proud people, very hardworking people. Europe's stance is unacceptable and criminal."

A banking bust in Cyprus sent savers on to the streets in protest last week and sparked fears of another European crisis.

Athina Kariati, said Cyprus had to fight efforts to make it accept conditions including a "haircut" for bank depositors.

"They are going to let people starve in order to save the large capital," she said. "Right now we have to save our economy completely, refuse to pay the debt and nationalise the banks," she said.

Party member Andreas, a pensioner who declined to give his surname, said the troika were "not considering the people of Cyprus, but only figures and money".

"Their main concern is about Cypriot banks and that goes against the basic principle of the EU, guarding people's wellbeing," he said.

Akel, which has 19 seats in the 56-member parliament, had refused to sign a bailout agreement on the terms on offer while it was in power before Anastasiades's election last month.

"Anastasiades is responsible for this," said Charles Vassiliou, another Akel member.

"He listens to the troika. Akel would have handled the situation very differently. We would never have put Cyprus hostage to the troika. We would have quit the eurozone and gone back to the (Cyprus) pound."

Some demonstrators were gloomily fatalistic about Cyprus eventually being forced to abandon the European single currency that it adopted in 2008.

"We are bankrupt," said Starvros Georgiou.

"Sooner or later we will return to the pound with tremendous consequences."

The other protest at the presidential palace involved around 200 people, mostly bank workers whose jobs and pensions are on the line.

They held a banner saying: "We will not become slaves of the 21st century."

A female protester who declined to give her name compared the crisis to 1974, the year that Turkish troops occupied the island's northern third in response to an Athens-engineered coup in Nicosia aimed at union with Greece.

"Everything is pre-planned because the government wants to follow the troika. Everything is sold and betrayed as back in 1974," she said angrily.

"How can there be a light at the end of the tunnel when a government doesn't know how to negotiate, only because they want to follow troika. Anastasiades is committed to (German Chancellor Angela) Merkel."

Negotiations in Brussels among Eurogroup finance ministers on Cyprus were put back by at least two hours on Sunday as talks dragged on between Anastasiades and EU and IMF chiefs.

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