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Cypriots feel bailout pain

business Updated: Mar 29, 2013 21:28 IST
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Shaking his head in disgust, Stavros Agrotis, an independent financial executive here, peered Thursday morning at the stock chart of Bank of Cyprus on his computer screen — a bright red line sloping sharply downward, before it stopped trading altogether in recent days.

“The screen says 20 cents, but according to the troika it’s zero,” he said angrily. “We were a member of the European family,” he continued. “Now it seems they want to push us out of the euro.”

While Agrotis and his compatriots may be feeling enormous pain, the broader reaction by investors in Europe and beyond was more or less muted on Thursday, as it has generally been since the Cypriot bailout negotiations burst into chaotic public view the weekend before last. For the broader world of finance, the prevailing view — for now, at least — seems to be that the implosion of this tiny island economy of €20 billion ($25.6 billion) need not wreak broader market havoc.

Within Cyprus, though, as the realisation sinks in of how badly the national economy might be ravaged by the combination of capital controls on the flow of money out of the country and an indefinite freeze on the bulk of bank deposits, frustration is flaming into full rage. Some establishment figures are now openly discussing the option of leaving the euro currency union and defaulting on the country’s loans.

“Two weeks ago exiting the euro was never mentioned; now a lot of people are considering it,” said Nicholas Papadopoulos, the chairman of the Cypriot Parliament’s finance committee. “Europe has destroyed our banking system; now we need to consider all our options.”

It seems like everyone on this shellshocked island is groping for answers. “People have lost all their money,” screamed a young financier Wednesday night, as he knocked back drink after drink at a local nightclub — which, despite the earsplitting din of Greek rap music, was half empty. “To me, that feels like war.”

Meanwhile, banks resume normal hours
Banks in Cyprus resumed normal trading hours on Friday after a near two-week lockdown and a day that averted a feared run on deposits following an EU-led bailout to rescue the island from bankruptcy.

Small queues built up outside the banks of the capital Nicosia as their doors reopened for a second day under draconian capital controls which include a daily withdrawal limit of €300 ($385).

Banks on the east Mediterranean island are to open from 8:30 am (0630 GMT) to 1:00 pm (1100 GMT) on Friday.

Cypriots largely stayed calm during Thursday’s restricted banking hours, and President Nicos Anastasiades thanked his people for their “maturity” after they queued patiently for limited cash.

Security had been beefed up when bank doors swung open for the first time since March 16. (AFP)

No intention of leaving euro, says president
Cyprus has “contained” the risk of bankruptcy in the wake of a tough rescue package with the European Union and has no intention of leaving Europe’s single currency, the island’s president said on Friday.

Conservative leader Nicos Anastasiades assured Cypriots and wealthy foreign depositors that restrictions on bank transactions, imposed this week, would gradually be lifted, but gave no time frame.

He hit out at banking authorities in Cyprus and Europe for pouring money into a crippled Cypriot bank that now faces closure under the terms of a €10 billion ($13 billion) bailout plan that averted the immediate risk of meltdown. “How serious were those authorities that permitted the financing of a bankrupt bank to the highest possible amount?”

He said the immediate danger of national bankruptcy had been averted, and that, “The situation is contained.”

He added: “We have no intention of leaving the euro. In no way will we experiment with the future of our country.” (Reuters)