Orderly queues as Cypriot banks open
Cypriots formed orderly queues outside their country's banks after they reopened for the first time in nearly two weeks, confounding fears that there would be scenes of unrest and violence.
Analysts said it was little surprise that there was no run on the banks, however, in light of the draconian capital controls that the Cypriot government hurriedly imposed late on Wednesday night. It decreed that cash withdrawals would be limited to €300 per person per day and ruled that no cheques can be cashed.
Overseas credit payments were limited to €5,000 and Cypriots travelling abroad can take only €1,000 with them.
Cypriots did not besiege the banks to try to withdraw their life savings because they knew that the capital controls prevented it.
Although people waited patiently outside banks across the Mediterranean island, anger and frustration simmered just below the surface.
There are real fears that the country of 850,000 people is about to plunge into a deep recession, as people who have lost their savings drastically cut back on spending, the financial sector shrinks and businesses shed thousands of jobs.
The two worst-hit lenders are Laiki Bank, which is to be dissolved, and Bank of Cyprus, which will have to absorb Laiki's assets.
Laiki depositors face losses of up to 80pc on accounts above €100,000, while Bank of Cyprus savers have been warned they may lose 40pc of their savings above the €100,000 mark. The closure of the banks for 10 days has caused huge problems for Cypriot businesses, which have been unable to make payments.
"I have to make a deposit so that I can make payments to my creditors," said Petros Stylianides (46), who owns an insurance brokerage, as he queued outside a Bank of Cyprus branch in Nicosia. "I hope the bank will be safe. But then we thought everything was safe."
Police were put on standby and 180 security guards from G4S, the British company involved in a security debacle at the Olympics last year, were posted inside the banks but they were hardly necessary.
Many people were furious with the harsh terms of a €10bn bailout agreed in Brussels earlier this week and felt that it had been driven by Germany's determination to impose its brand of fiscal austerity on the fragile economies of southern Europe.
Angela Merkel, the German Chancellor, was the target of particular resentment.
"Merkel says every single Cypriot is guilty of dirty banking. But it is the Germans who should be ashamed," said a furious Cleri Machlouzarides, a chartered architect, outside a branch of Laiki Bank. (© Daily Telegraph, London)