Banks in Cyprus operated smoothly Friday for a second day, with tight controls, after being closed for 14 days.
No incidents or major problems occurred, while the banks returned to their usual opening hours for the public, after being extended yesterday.
The queues formed in the banks were smaller than yesterday. Most people were seen waiting patiently outside the branches of Laiki Bank, which according to Eurogroup’s decision will be resolved in a good and bad bank immediately – with full contribution of equity shareholders, bond holders and uninsured depositors of less than 100,000 euro.
Meanwhile, police remained today on alert with the streets around banks being patrolled by police cars to prevent any possible incidents.
But as time passed, business at Cypriot bank branches went back to normal, with no incidents or major problems.
The banks had been closed since March 16, after the first Eurogroup decision on Cyprus on March 15, which imposed a levy of around 6% to all Cypriot bank deposits under 100,000 euro and 10% on deposits more than 100,000 euro. The Cypriot Parliament had rejected the legislation.
As a result, Eurogroup reached an agreement with the Cypriot authorities on March 25th on the key elements necessary for a future macroeconomic adjustment programme of 10 billion euro. A haircut of around 40% on deposits over 100.000 euro at Cyprus’ largest bank, Bank of Cyprus will be imposed, whereas Laiki Bank will be resolved in a good and bad bank immediately – with full contribution of equity shareholders, bond holders and uninsured depositors – based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework.
Laiki deposits of up to 100.000 euro are guaranteed.
The program also provides for downsizing of the public sector and privatizations. Excluded from international markets, Cyprus applied in June 2012 for financial assistance, after its two largest banks sought state aid, following massive write downs of their Greek bond holdings amounting to €4.5 billion or 25% of the island`s GDP, as a result of the Greek sovereign debt haircut.
