Cyprus Banks to Re-Open Thursday Amid Heightened Security

Michael Teague  |

On Thursday, banks on the European island nation of Cyprus are set to reopen after nearly two weeks of government-mandated closure that began on March 16.

Since that time, the country’s citizens have been able to withdraw no more than 100 Euros a day from cash machines, and have had to deal with the threat of some form of mandatory tax on their private bank accounts hovering over them while their elected officials frantically sorted everything out.

Cyprus had to come to the European table with almost 6 billion Euros of its own if it was to receive the rest of the badly needed bailout money from the “Troika”- the now somewhat famous group consisting of the E.U., the International Monetary Fund, and the European Central Bank.

The original terms of the deal were straightforward, with a 6.75 percent levy on all private accounts holding less than 100,000 Euros, and a 10 percent those accounts with 100,000 Euros or more.

But this was not well received, neither by the island’s citizens, nor the citizens of other troubled European countries who have largely depended on bailout money from the same troika, who feared a similar fate.

The Cypriot government brought talks down to the wire, but a deal was announced ahead of Monday’s E.U. deadline, the terms of which are still apparently being determined on a week-to-week basis, given the fluidity of the situation.

For the country’s two largest banks, Laiki and Bank of Cyprus, restrictions will be placed on large-scale cash transfers, with both banks slated for restructuring.  Laiki will get the chance to divest of its underperforming loans and toxic assets, while its healthy assets will be absorbed by Bank of Cyprus.

Meanwhile, the daily withdrawal limit will be lifted to $300 Euros a day, and authorities will attempt to ease costs on the average citizen by reducing electricity prices almost 6 percent.

Essentially, in order to meet the conditions of the E.U. bailout, it seems as though the country will have to do no less than restructure its economy to be less dependent on massive influx of cash that was a perk of being an alleged international tax haven and money laundry service.

More importantly, the mandatory bank tax will now mostly affect the Island’s largest depositors, some to the tune of 40 percent.

The island has prepared for the big reopening tomorrow by supplementing the national police force with assistance from the private security firm G4S, who has a Cypriot branch and will be sending in 300 of its staff to keep order at ATM lines as well as protect money delivery and pickup.

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