Cypriots Swarm To Banks As They Reopen After Almost Two Weeks

Customers go in groups of three into bank to avoid mayhem on first day of opening since financial crisis burst onto Cyprus.

NICOSIA, CYPRUS (MARCH 28, 2013) (REUTERS) - Cypriots crammed into banks across Nicosia on Thursday (March 28) eager to be the first ones in as the doors opened after almost two weeks.

Bank staff turned up for work early as cash was delivered by armoured trucks, and queues of at least a dozen people formed at branches in the Cypriot capital since early morning, with uniformed security guards on duty.

Banks were shut almost two weeks ago as the government negotiated a 10 billion euro ($13 billion) international bailout, the first in Europe's single currency zone to impose losses on bank depositors.Doors opened at noon (6:00 a.m. EDT) but initially at least there was no sign of any major run on the banks, as had been feared.

A lot of money had already left electronically. Figures published by the Central Bank of Cyprus on Thursday showed that savers from other euro zone countries withdrew 18 percent of their deposits from the stricken island in February, as talk of a tax on bank accounts rose.

A lot of money had already left electronically. Figures published by the Central Bank of Cyprus on Thursday showed that savers from other euro zone countries withdrew 18 percent of their deposits from the stricken island in February, as talk of a tax on bank accounts rose.

The capital controls decree was taped to the windows of bank branches and staff handed out copies to customers. In Nicosia, there was relief, but some apprehension about what might happen.

One businessman, who came to withdraw money to pay his staff who have not received their salaries for two weeks said he had to bring proof of his business. But he was not entirely sure it would be sufficient.

"From what we know, I think with the salaries we bring the special certificates and I hope they will give us the money for the salaries. But to take money for other purpose there is restrictions, for a few days," he said.

One Laiki customer said she feared for the future after losing substantial amounts of money.

"It's very difficult. But I think now will be more difficult. I think from now on it will be most difficult because I have a family that depends on me and we lost a lot of money," she said.

At Laiki bank, the second largest Cypriot bank which will close as a condition of the bailout measures, customers were made to wait longer as computers inside, according to a staff member, were not working.

Although the atmosphere was relatively calm one customer lost patience and began knocking on the door.

A Finance Ministry decree limited cash withdrawals to no more than 300 euros per day and banned the cashing of cheques.

The island's central bank will review all commercial transactions over 5,000 euros and scrutinise transactions over 200,000 euros on an individual basis. People leaving Cyprus may take only 1,000 euros with them.

With just 860,000 people, Cyprus has about 68 billion euros in its banks -- a vastly outsized financial system that attracted deposits from foreigners, especially Russians, as an offshore haven but foundered after investments in neighbouring Greece went sour.

The European Union and International Monetary Fund concluded that Cyprus could not afford a rescue unless it imposed losses on depositors, seen as anathema in previous euro zone bailouts.