title: 'Cyprus more uncertainty as banks stay shut' published: true publish_date: '31-08-2016 14:56' taxonomy: category:

  • Business tag:
  • Featured
  • Cyprus
  • Bank of Cyprus 'Post Type':
  • blog

    The Bank of Cyprus chairman Andreas Artemis has submitted his resignation, according to state media reports. It comes as Cyprus' central bank has confirmed that all Cypriot banks will remain closed until Thursday, as wary depositors face yet more uncertainty over the exact terms of the bailout deal. The Cyprus News Agency said that Mr Artemis' resignation would go before the board later Tuesday. It is another blow to Cypriot stability. Cyprus only just secured a 11th-hour bailout deal from the EU, European Central Bank and the IMF early Monday to stave off bankruptcy. A senior European Central Bank (ECB) official denied on Tuesday that the controversial levy on deposits - seen by many as 'daylight robbery' - could be used as a template for other eurozone bailouts. The Bank of Cyprus chairman Andreas Artemis has submitted his resignation, a bank source has told Reuters. Capital Controls Cypriots are still unsure as to whether they will have full access to their money when the banks do open again in two days' time, after being closed since March 16. President Nicos Anastasiades said "very temporary restrictions" would be put on capital flows to ensure the whole system functions "smoothly", although he gave no details. These could potentially include a weekly limit on cash withdrawals. Cyprus' Finance Minister Michalis Sarris said that restrictions are also expected to be "a bit stricter" on the country's two largest banks, Bank of Cyprus and Laiki, and would remain in place until the banking system "stabilises". Markets spooked Whilst so much confusion persists, fears that bank accounts could be raided in any future eurozone bailouts spooked markets on Monday. ECB executive board member Benoit Coeure was forced to say on Tuesday, that the head of the Eurogroup of finance ministers, Dutch Finance Minister Jeroen Dijsselbloem, "was wrong" to make comments which markets interpreted to mean that the Cyprus rescue plan could serve as a template for other members of the 17-nation eurozone. Denial of levy 'template' "Mr. Dijsselbloem was wrong to say what he said," Coeure told Europe 1 radio. Mr Dijsselbloem had said on Monday, just hours after the bailout deal had been reached, that: "What we've done last night is what I call pushing back the risks.  If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders." Russia Russia signalled on Monday it would backstop the EU/IMF bailout of Cyprus despite anger that the rescue package would impose heavy losses on uninsured depositors, many of them Russian. Cyprus is seeking a five-year extension, a 10 percent writedown and a cut in the interest rate to 2.5 percent from 4.5 percent. This will only be possible if its banking system is stabilised, said Russian Finance Minister Anton Siluanov. Losses unknown The total amount of losses that Cypriot depositors will have to face is not yet clear. Nor is just how much damage the chaos and confusion of the last two weeks has inflicted on Cyprus, and the rest of the eurozone. Small depositors of under €100,000 have been largely spared, but deposits of more than €100,000 face losing potentially 30-40% in a bank levy. Cyprus' second largest bank, Laiki is to be split into a 'good' and 'bad' bank. The country's largest lender, Bank of Cyprus, is being heavily restructured.

Leave a Comment