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Cyprus seeks banks overhaul as clock ticks

March 22, 2013
By ELENA BECATOROS , THE ASSOCIATED PRESS

NICOSIA, Cyprus - Cypriot politicians moved Thursday to restructure the country's most troubled bank as part of a broader bailout plan that must be in place by Monday to avoid financial ruin. Concerned customers rushed to get cash from ATMs as bank employees protested.

Cyprus has been told it must raise 5.8 billion euros ($7.5 billion) if it is to receive 10 billion euros ($12.9 billion) from its fellow eurozone countries and the International Monetary Fund. If it does not find a way by Monday, the European Central Bank said it will cut off emergency support to the banks, letting them collapse.

That would throw the country into financial chaos and, ultimately, cause it to leave the eurozone, with unpredictable consequences for the region.

Article Photos

AP PHOTO
People wait to use the ATM of a closed branch of Laiki Bank in southern port city of Limassol, Thursday. The European Central Bank says it will keep emergency aid for Cyprus' troubled banks in place at least until Monday but will have to cut it off after that unless an international rescue program is drawn up.

Party leaders and the government were hashing out three new laws on Thursday night, ranging from restricting bank transactions to restructuring the most troubled bank, Cyprus Popular Bank, or Laiki.

The pressure has increased since lawmakers on Tuesday rejected an earlier proposal to seize up to 10 percent of people's bank accounts. Banks have been shut since last weekend to avoid a run and will not open until Tuesday at the earliest.

Uncertainty was growing among Cypriots as the deadline approached and reports spread that the country's second-largest bank would be restructured.

Queues of 40 to 50 people formed at the ATMs of Laiki, which responded by capping daily withdrawals at 260 euros ($340) per person from 700 euros ($906). Although ATMs have been functioning, many often run out of cash.

"We need cash. We have families, children, grandchildren and expenses, and the banks have been closed since Saturday," said Andri Olympiou after withdrawing money from a Laiki branch in Nicosia, the capital.

 
 

 

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