Cyprus currency clampdown to go on for a MONTH: Banks open for the first time in two weeks
The Daily Mail
Talk about taking the fucking piss. People with £85 grand or over in the bank will lose 40%, nearly half of it. Surely that must be on a sliding scale or else you’d have a situation whereby someone with £85 grand in the bank would now have £51 grand and someone who had £84 grand would still have that amount banked? … You definitely couldn’t make that shit up.
And, you can only draw £250 of YOUR OWN money out a day. So, basically people who worked hard and saved their money, potentially wasted their time and the normal John on the street is being penalised for the governments corruption and mismanagement… Spose that would be about right.
Yet still the UK Zombies will say; “I know, bleeding liberty init… Never happen ere though”… Mugs.
- Draconian currency controls will remain in place till the end of April
- Armed police and security staff on guard as banks reopened yesterday
- Maximum cash withdrawal limit has been set at 300 euros (£250) per day
- Travellers leaving country can only take equivalent of 1,000 euros (£850)
- Curbs will be in place for at least seven calendar days and reviewed daily
- Cypriot President slashes his own salary by 25% in show of solidarity
- The stock market will remain closed today ‘in order to protect investors’
- Banks shut since March 16 as politicians struggled to secure EU bailout
PUBLISHED: 09:16, 28 March 2013 | UPDATED: 02:07, 29 March 2013
Cyprus was warned it faces another month of Draconian currency controls as its banks finally reopened yesterday after two weeks.
The clampdown, supposed to be in place for just a week, was extended until the end of April amid claims that the European Union is engineering the ‘brutal destruction’ of the country’s economy.
Billions of euros in banknotes were delivered to banks by armoured lorry in the expectation of crowds wanting to withdraw funds.
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But the controls, designed to stop a run on the banks, meant customers were banned from withdrawing more than 300 euros (£250) per day. Banks also refused to cash cheques and travellers were banned from leaving the country with more than 1,000 euros (£850).
Cyprus’s foreign minister Ioannis Kasouldides said the restrictions will continue for ‘about a month’.
The Cypriot stock exchange will also stay closed until after Easter to prevent a damaging run on shares which would compound the banking problems.
Uncertainty: An elderly woman looks at a savings book as people wait in line in front of a branch of the Laiki Bank in Nicosia, Cyprus
CYPRIOT PRESIDENT SLASHES HIS PAY BY 25% IN SHOW OF SOLIDARITY
Cypriot President Nicos Anastasiades (right) has cut his salary by a quarter in a show of solidarity with ordinary Cypriots feeling the effects of the country’s severe financial crisis.
Mr Anastasiades authorised the country’s accountant-general to make the pay cut.
His Cabinet ministers have also decided to slash their own wages by 20 per cent.
Under the terms of an £8.5billion EU bailout deal, savers with £85,000 in accounts will lose 40 per cent of it to help keep the economy of the Greek part of the island afloat – an unprecedented raid which has sparked fury in Cyprus and fears of new EU action against people in other near-bankrupt eurozone countries.
Mr Kasouldides said: ‘Europe is pretending to help us but the price to pay is too high: nothing less than the brutal destruction of our economic model.’
There were tense scenes outside some banks as customers were urged not to vent their frustrations on staff, many of whom will lose their jobs.
But the Cypriot president Nicos Anastasiades thanked his people for their ‘maturity and collectedness’ and for not panicking at ‘a critical time’.
Signs of strain: Two women appear anxious as they prepare to enter a Laiki branch in Nicosia
The wealthy former lawyer also announced he was slashing his £120,000 salary by a quarter while cabinet members will take a 20 per cent wage cut.
Dragons’ Den star Theo Paphitis, who was born in Cyprus, said the EU action was ‘catastrophic’ and would lead to the destruction of businesses.
‘This, in my view, is a definite stress test for the European Union. What we are seeing is them beating up on a small economy like Cyprus as a test to see what happens.
‘It’s a bit like testing the atomic bomb. You do a small test, somewhere the fallout is not going to be so harsh, and this is what is happening with the euro on the tiny island of Cyprus. If the stress test works they will feel they can take it over to Spain, Italy, Portugal and Ireland.’
Cypriots have been advised to beef up their home security as the risk of burglaries soars in the wake of mass of cash withdrawals from ATMs.
British expatriate Emma Simpson-Alkiviadous, 41, said: ‘It’s very unnerving. There is now so much cash being carried and stashed by people at home it’s become a thief’s paradise. We have been told to start making our home a fortress.’
Ready for their readies: Customers queue anxiously outside a branch of the Bank of Cyprus, in Nicosia, Cyprus, as it prepared to open for the time in two weeks during the country’s financial crisis
The country’s general accounting office said pensions and other social security payments, together with salaries for government employees, will be in bank accounts next Tuesday and Wednesday.
The restrictions will be reviewed daily and are initially in place for seven calendar days, until next Wednesday, the decision published by the Finance Ministry states.
‘You’ve no idea how much I’ve been waiting for this,’ said 64-year-old pensioner Froso Kokikou, waiting in line at a branch of Cyprus Popular Bank, also known as Laiki.
‘I feel a sense of fear and disappointment having to queue up like this; it feels like a Third World country, but what can you do? This is what they imposed on us and we have to live with it.’
Kostas Nikolaou, a 60-year-old pensioner, said the uncertainty of the past two weeks had been ‘like a slow death’.
He added: ‘How can they tell you that you can’t access your own money in the bank? It’s our money, we are entitled to it.’
Outside a Bank of Cyprus Branch, among the first in line was a 52-year-old Greek businessman who said he flew in from Greece to take ‘as much money out as he could’ from his account to pay bills and employees.
He said he would be hit by the tax on deposits over 100,000 euros.
‘This is chaos, we don’t know what to expect once banks open,’ said the businessman, who wouldn’t give his name because he didn’t want to discuss personal financial matters.
‘They shouldn’t have allowed things to get this far.’
The stock market announced it would remain closed on Thursday ‘in order to ensure the smooth functioning of the stock market and protect investors.’ It too has been closed since March 16.
‘The Central Bank decided on some limitations, so we are sure that slowly, slowly we are going back to functioning of the banks without serious problems,’ said the head of the parliament, Yiannakis Omirou.
‘Some problems I’m sure will be created but our people are ready to overcome the difficult moments we are passing.’
AT A GLANCE: WHAT BANKING RESTRICTIONS ARE IN PLACE
- Individuals cannot withdraw more than 300 euros per day from any one bank, unless they have withdrawn less than 300 euros the previous day.
- Cheques cannot be cashed, unless they were issued by a bank in another country.
- Non-cash payments or money transfers are prohibited unless:
– They are for commercial transactions. Payments below 5,000 euros have no restrictions. Payments from 5,001 euros to 200,000 euros must be approved by the central bank, which will consider the liquidity of the bank involved and make a decision within 24 hours.Payments above 200,000 euros will be decided upon on a case-by-case basis.
– They are for payroll, and supporting documents are presented.
– They are for living expenses or tuition fees of students who are close relatives of Cyprus residents. Transfers for living expenses are capped at 5,000 euros a quarter, and supporting documents must be supplied.
– They are for credit or debit cards. Payments are capped at 5,000 euros per month.
- Time deposits, where money is put in an account for an agreed period, cannot be withdrawn early unless the money will be used to pay off a loan to the same bank.
- Banks cannot make non-cash payments or money transfers that circumvent the capital controls.
- Capital controls are in place for all accounts, payments and money transfers in any currency.
The capital controls do not apply to:
- Any new money deposited from abroad after March 27
- Cash withdrawals via debit or credit card from an account in another country
- Diplomatic missions
Banks in Cyprus have been shut since March 16 to prevent people draining their accounts as politicians scrambled to come up with a plan to raise enough funds for Cyprus to qualify for 10 billion euros (£8.5billion) in bailout loans for its stricken banking sector.
An initial plan that would have seized up to 10 per cent of people’s bank deposits was soundly rejected in Parliament, leaving politicians struggling to come up with an alternative.
The deal was finally reached in Brussels early Monday, and imposes severe losses on deposits of over 100,000 euros in the country’s two largest banks, Laiki and Bank of Cyprus.
The rescue package will wind down Laiki and shift deposits below 100,000 euros to the Bank of Cyprus to create a ‘good bank’.
Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki’s debts and recapitalise Bank of Cyprus through a deposit/equity conversion.
The European Commission said in a statement that EU member states could restrict financial transactions ‘in certain circumstances and under strict conditions on grounds of public policy or public security’ but added that ‘the free movement of capital should be reinstated as soon as possible’.
Some individuals and businesses, spotting that Cyprus’s economy was in trouble and that a tax on deposits was being discussed, had managed to move their money out Cyprus well before the banks closed their doors last week.
According to European Central Bank figures, foreign depositors had already withdrawn 18 per cent of their cash from the nation’s banks during February before the current crisis hit.
Deposits in Cyprus’s banks also slipped 2.2 per cent last month, to 46.359 billion euros, the lowest figure since May 2010 and down from a peak of 50.5 billion euros in May 2012.
The figure excludes deposits from other banks and the central government.
Meanwhile, other Cypriots were struggling to work out exactly what they could and couldn’t do with the restrictions in place.
Morning television talk shows hosted dial-ins with experts, with viewers’ queries ranging from where they would repay loans if they were taken out from Laiki to how they could pay tuition fees for children studying abroad and handle cheque payments.
Across the country, people wondered whether they would be able to access their salaries, many of which were due this week.
‘I believe this will be a very difficult day for both people and bank employees because no matter how much information there was, things were changing all the time,’ said Costas Kyprianides, a grocery supplier in Nicosia.
‘Even us traders, like myself, have so many cheques which I need to deposit so I can make ends meet.’
During the bank closure, ATMs were working but quickly ran out of money.
Those of the two troubled banks, Laiki and Bank of Cyprus, had imposed withdrawal limits of 100 euros a day.
‘Up until last night things kept on changing,’ said store owner Antonis Arotokritou, wondering about how to go about dealing with cheques.
‘There’s an overall panic and uncertainty from both the bankers and the rest of the people.’
MARKETS POSITIVE ABOUT CYPRUS
World markets responded positively to the reopening of Cyprus’s banks today.
In Europe, the FTSE 100 was up 0.6 per cent at 6,427 while Germany’s DAX rose 0.4 per cent to 7,817.
The CAC-40 in France was 0.7 percent higher at 3,737.
The euro was also solid, trading 0.4 per cent higher at $1.2829.
In the U.S., the Dow Jones industrial average was up 0.2 per cent at 14,547 while the broader S&P 500 index was flat at 1,563.
Earlier this week, it emerged that bank account holders in Cyprus could be subjected to a weekly limit on cash withdrawals.
Cypriot finance ministers have drafted a series of capital controls that also include export limits on euros and a ban on cashing cheques.
Fixed-term deposits may also have to be held until maturity.
The Central Bank governor said measures to avert a run on deposits after a painful EU rescue plan will be ‘loose’ but would apply to all banks on the island.
The UK’s Department for Work and Pensions (DWP) announced on Monday that British pensions would not be paid into Cypriot bank accounts for the foreseeable future and advised expats to open UK accounts.
Chancellor George Osborne also revealed the Treasury is working on a solution for the 13,000 UK customers of Cyprus Popular Bank, part of Laiki Bank, who could lose up to 40 per cent of their savings above the 100,000 euros (£85,000) cut-off limit.
A spokeswoman for the DWP said a ‘watching brief’ is in place on the situation but payments into Cypriot bank accounts will not resume when banks on the island reopen.
In a statement to MPs, Pensions Minister Steve Webb said the Government is advising people to either switch their payments to a British account they already have or to open a new one.
About 6,000 of the 18,133 British expats on Cyprus use a British bank account already and so are not affected by the freeze.
All except the country’s two largest lenders had been due to open earlier this week after the country clinched an 11th-hour deal with the 17-nation eurozone and the International Monetary Fund.
But the Central Bank said that ‘for the smooth functioning of the entire banking system, the finance minister has decided, after a recommendation by the governor of the Central Bank, that all banks remain shut up to and including Wednesday’.