Extra security, limits on transfers as Cyprus banks prepare to reopen

Nicosia (Cyprus): Cyprus will impose limits on money transfers and dispatch extra security guards to prepare for Thursday’s reopening of the banks, which have been shut for almost two weeks to avoid a run during the country’s financial drama. A banking official said Wednesday that new controls will include restrictions on large-scale transfers from the country’s two largest and most troubled lenders, Bank of Cyprus and Laiki. Both are being restructured and big depositors face losses of as much as 40 percent. But authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros (from $130 to $386), while payroll payments will be allowed in order to help businesses, which saw a huge slump as people cut down on their spending amid the uncertainty swirling about the banks. [caption id=“attachment_676997” align=“alignleft” width=“380”]  Banks had to be shut after a run on them by panicked depositors. AP[/caption] The restrictions will be kept for at least a week until the situation stabilizes, said the official, who spoke only on condition of anonymity because the measures have yet to be officially announced. Meanwhile, private security firm G4S will install 180 of its staff at bank branches across the island to keep a lid on possible trouble, said John Argyrou, managing director of the firm’s Cypriot arm. “Our presence there will be for the comfort of both bank staff and clients, but police will also be present,” he said. Argyrou said he doesn’t foresee any serious trouble unfolding once banks open their doors because people had time to “digest” what has transpired. “There may be some isolated incidents, but it’s in our culture to be civil and patient, so I don’t expect anything serious.” Another 120 staff from G4S would be assigned money transportation duties. Banks were closed on March 16 as politicians scrambled to come up with a plan to raise 5.8 billion euros ($7.5 billion) that would qualify the country for 10 billion euros ($12.9 billion) in bailout loans from fellow eurozone partners and the International Monetary Fund. Under the deal clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large Laiki and Bank of Cyprus depositors. Cypriot officials said the deal would mean the country would shift its focus away from being an international center of financial services. That is expected to cost jobs, adding to the unemployment rate which now stands at around 14 percent. Business leaders and cabinet ministers were meeting with President Nicos Anastasiades on Wednesday to find ways to get the economy going again. To give consumers a break, electricity prices will drop 5.75 percent next month. Over the next couple of weeks, authorities will look into how they can reduce them by another 3 percent, said Commerce Minister Giorgos Lakkotrypis. Interior Minister Socrates Hasikos said his ministry is looking to cut red tape in order to attract foreign investment. He said Chinese investors have shown interest in property sales, adding that a single real estate office has sold some 400 residences to Chinese buyers. “There has always been interest from foreign investors,” said Hasikos. “The question is how we as the government, as Cyprus, can convince all these investors …that the environment is secure, that whatever happened has now passed and that they can continue securely investing in Cyprus.”