Millennium Post

Day after deal: Cyprus banks remain shut to prevent run

Cypriots woke on Tuesday to find banks under lockdown for an 11th day after authorities reversed course and kept them closed to prevent a run on deposits following the island's bailout.

All lenders except the debt-hit Bank of Cyprus and Laiki Bank had been due to open on Tuesday, but the central bank made an unexpected announcement overnight saying they would now all remain shut until Thursday.

It was a fresh blow for the punch-drunk east Mediterranean island after days in which Cypriots have queued at ATMs doling out dwindling amounts of cash, and been unable to carry out over-the-counter transactions.

The closure also has implications for businesses who have found it increasingly difficult to pay staff and keep their stocks up.'I want the banks to open. Cypriots have strong hands, strong minds, once the bank will open, we all go back to work. But now everything is frozen, I don't know if I am going to lose money,' said the owner of a small print shop.

Finance Minister Michalis Sarris made the decision to keep the banks closed on the recommendation of the central bank governor Panicos Demetriades in order to 'ensure the smooth functioning of the entire banking system'.There have been fears that the banks could be drained of cash when they reopen as frightened investors try to withdraw their deposits.

President Nicos Anastasiades meanwhile said in a televised address to the nation that Cypriots would face further capital controls, without specifying what they were.'This is a very temporary measure, which will gradually be relaxed. I can assure that we will do everything possible to return soon to complete normality,' he said.Cyprus secured a last-minute deal in Brussels in the early hours of yesterday for a USD 13 billion bailout that helped it avert bankruptcy and avoid crashing out of the single currency.

The deal involves depositors in the two banks — many of them Russian — paying huge levies on deposits over 100,000 euros. It also effectively shuts down Laiki, the island's second-largest lender also known as Popular Bank.
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