Cyprus rushing to finish controls ahead of reopening of banks

Cyprus is finalizing restrictions aimed at preventing depositors from making massive cash withdrawals when banks reopen on March 28 2013 after being closed for nearly two weeks.

The banks have been shut down while Nicosia secured a $13 billion bailout to avert an economic collapse. The government closed the banks out of fear of a run on deposits by panicked customers.

Meanwhile, the head of Cyprus’s biggest bank has been fired from his post in the aftermath of the bailout. Bank of Cyprus chief executive Yiannis Kypri has been dismissed by the nation’s central bank, following the appointment of a special administrator for the lender.

The bank’s chairman had submitted his resignation after the administrator was appointed, but the board rejected his request.

The Bank of Cyprus is being forced to restructure under terms of the rescue package Cyprus reached this week with its European neighbors, the European Central Bank and International Monetary Fund. It will absorb some of the assets of Cyprus’s second-largest bank, Cyprus Popular, which is being shut down, and will impose a tax of about 30 percent on big, uninsured accounts of more than 100 000 euro.

Finance Minister Michael Sarris said depositors with more than 100 000 euro in their accounts could lose as much as 40 percent of their money to help Cyprus pay for the bailout.

Several thousand youths protested this week outside parliament against the international lenders and the terms of the bailout.

Cyprus is the fifth of the 17 euro currency bloc nations where billions of dollars in bailouts have been needed to ward off bankruptcy, following Greece, Portugal, Ireland and Spain.

(G Schouten de Jel)