NERVOUS depositors in Cyprus rushed to ATMs yesterday to drain their accounts following a bailout agreement with international creditors that includes a levy on all the country's bank accounts.
Lines formed at many cash machines as people scrambled to withdraw their money after word that the €10bn rescue package Cyprus agreed with its euro area partners and the International Monetary Fund included one-off levy on deposit, an unprecedented step in the eurozone crisis.
The levy is expected to raise €5.8bn.
European officials said people with less than €100,000 in their accounts will have to pay a one-time tax of 6.75 per cent, those owning more money will lose 9.9 per cent. Cypriot bank officials said that depositors can access all their money except the amount set by the levy.
But that hardly assuaged people who continued to withdraw cash from ATMs until the machines ran out, unsure what or how much would be taxed. Officials said that withdrawing funds yesterday would not reduce anyone's levy.
The country's co-operative banks also shut their doors after depositors scurried in hopes of protecting their savings.
Unlike commercial banks which remain closed on weekends, co-operative banks customarily open for business on Saturday.
The co-operative banks, which represent about a fifth of the island's banking sector, remained open only for a short time. However, people continued to have access to their funds through ATMs.
"Politicians and senior bank bosses have covered each other's backs for years, now it's ordinary people who are paying the price and are being punished," said Christos Demetriades, 58, outside a shut Nicosia co-operative bank branch.
One disgruntled customer at a branch in the southern coastal town of Limassol briefly parked his tractor in front of its shut doors in a show of frustration.
Cyprus's Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown.
"This was the least worst option," he told state broadcaster CyBC. "We battled to prevent the country from completely going bankrupt."