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Feature: Cypriot banks reopen calmly (2)

By Petros Petrides, Liu Yongqiu (Xinhua)

09:35, March 29, 2013

In front of the branches of the Bank of Cyprus and the Cyprus Popular Bank in the central Eleftherias (Liberty) Square, it seems that there were more journalists from international media than bank customers. Many renowned TV channels made live telecast on the reopening of the banks there.

A Cypriot man raised a placard to tease the media: Why must international media be so greedy of horror scenarios?! Is decent and investigative journalism dead? Solidarity with the people of Cyprus, not their banks!

To prepare for the reopening of the banks, the Ministry of Finance announced limits on bank transactions in a bid to prevent a massive outflow of cash. Police announced that they had worked out a plan to prevent trouble at bank shops but there was no need to intervene.

Cyprus' authorities ordered all banks and cooperative credit societies to stay closed after the Eurogroup endorsed a 10-billion euro bailout involving a bank rescue by imposing losses on shareholders and depositors.

Attention is centered on the two largest lenders, the Bank of Cyprus and the Cyprus Popular (Laiki) Bank which operate as a single bank since Thursday morning under a merger plan.

Former Laiki branches still operated with their own signs over their premises, but bank accounts were unified and depositors were treated as owners of Bank of Cyprus accounts.

Cyprus' third bank in line, Hellenic Bank, which has announced that it has a healthy balance, seemed to be operating normally, though it is also subject to the same currency controls as all other banks, including about two dozen foreign banks.

A consignment of 5 billion euros in banknotes was urgently sent on Wednesday night by the European Central Bank from Frankfurt for the needs of all banks operating in Cyprus.

A decree issued by Finance Minister Michael Sarris said the limits on bank transactions were made necessary by a "lack of substantial liquidity and significant risk of deposits outflow."

It added that the possible outcome would be the collapse of credit institutions with chain effects that could lead to systemic instability of the financial system and to disastrous consequences for the country's economy and society.

The ministry initially said the limits would be in force for four days but later announced that it was extended to seven days "for purely technical legal reasons."

However, sources said that it may not be possible to lift controls on bank transactions until the bail out deal will be signed by the middle of April, allowing loan cash to flow in.

Exempted from the limits are new funds transferred from abroad.

【1】 【2】

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