NICOSIA, Cyprus — Anxious Cypriots patiently waited in long lines to get at their accounts on Thursday after banks opened for the first time in nearly two weeks, following an international bailout to save the country’s financial system.
Fearing a run on its banks, the tiny Mediterranean country has imposed daily withdrawal limits of 300 euros ($384) for individuals and 5,000 euros for businesses – the first so-called capital controls that any country has applied in the eurozone’s 14-year history.
Financial strains are building on families and businesses, and the recession in Cyprus is likely to deepen. The mood outside banks was calmer than feared. Many people said the withdrawal limits were probably necessary to keep a bad situation from spiraling out of control.
Flower shop owner Christos Papamichael was among some 30 people waiting patiently for bank doors to open at noon Thursday. “Everything has been paralyzed ... No one thinks of buying flowers,” he said.
Banks had been shut in Cyprus since March 16 to prevent people from draining their accounts as politicians scrambled to save the country’s stricken financial sector. ATM machines were working, but with a limit on daily withdrawals.
An initial plan to seize up to 10 percent of all Cypriot deposits caused an international uproar and was scrapped. But in order to secure 10 billion euros ($12.9 billion) in loans from other euro countries and the International Monetary Fund, Cyprus agreed Monday to wind down its second-largest bank and seize billions from accounts holding more than the insured limit of 100,000 euros.
European financial markets, which have been on edge for weeks, rose slightly on Thursday. The FTSE 100 index of leading British shares rose 0.4 percent, while Germany’s DAX index rose 0.1 percent.
Government and bank officials had feared that up to 10 percent of the country’s deposits could be siphoned off when banks opened Thursday – but that did not appear to happen. Guards from private security firms reinforced police outside some ATMs and banks in the capital, Nicosia. No problems controlling crowds were reported.
The limits on withdrawals and other capital controls are expected to be relaxed gradually. Analysts said it’s anyone’s guess how people and businesses will react once that happens.
AP File Photo People wait outside a branch of Laiki Bank in Nicosia, Thursday. Banks in Cyprus reopened to customers for the first time in nearly two weeks Thursday, albeit with strict restrictions on transactions, after being closed to prevent people withdrawing all their savings during the countryís acute financial crisis. Large lines had formed outside the banks ahead of the opening of banks for six hours from noon.×