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Cyprus Popular Laiki bank limits ATMs to 260 euros

21 March, 2013

The Cyprus Popular Bank (Laiki), the island’s second biggest lender that faces being wound down if rescue funds are not secured by Monday, has limited cash withdrawals from ATM machines to just 260 euros per day, following a rush by customers after media rumours said the bank was closing down.
A central bank spokesperson denied the “reports and frantic rumours”.
"We deny these reports. Efforts are under way right now to find the best possible solution for this bank," spokeswoman Aliki Stylianou told state television.
But the reports and rumours, initiated by politicians and spread by social media and websites, prompted hundreds of the bank’s staff to try to charge at the parliament resulting in scuffles with the police.
Bank of Cyprus, the island’s biggest lender that has an equally huge exposure to toxic Greek government bonds that were written down and resulted in billions of euros in losses, appealed to the island's political leadership to broker an immediate deal for funding with the EU to stave off financial ruin.
The Eurogroup of euro zone finance ministers imposed a bank levy on savings deposits last Friday night as part of a 10 bln euro bailout plan, a proposal that was rejected by Cyprus parliament as it would affect all the population, as well as foreign depositors, especially from Russia.
"It is imperative to move immediately towards brokering a deal with the Eurogroup which would ensure unobstructed liquidity to Cypriot banks to save the Cypriot economy."
The bank’s vice president, Evdokimos Xenophontos, urged politicians to reconsider their rejection, but this time to propose a levy only on native Cypriot depositors, so as to prevent a massive exodus of Russians, currently the second biggest market of tourists and a significant contributor to the island’s financial services sector.
Xenophontos said after a meeting with President Nicos Anastasiades on Wednesday that he was optimistic a deal would be reached and the crisis could be overturned.
“We should be ready to make sacrifices and I’m referring to Cypriot savers. We cannot do this to the foreign depositors who have trusted us. This would be robbery.”
“If the foreigners leave, they will never come back. But if we protect them, even if they leave, they will return,” he said, adding that deposits below 100,000 euros should be spared.
The European Central Bank's chief negotiator on Cyprus, Joerg Asmussen, said the ECB would have to pull the plug on Cypriot banks unless the country took a bailout quickly.
"We can provide emergency liquidity only to solvent banks and... the solvency of Cypriot banks cannot be assumed if an aid programme is not agreed on soon, which would allow for a quick recapitalisation of the banking sector," Asmussen said earlier in the week.