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No decision yet on Cyprus bank reopening: Central Bank

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(Globalpost/GlobalPost)

No decision has yet been taken on whether commercial banks in Cyprus will open as scheduled on Tuesday after a 10-day lockdown imposed on fears of a run on deposits, the Central Bank said.

Contacted by AFP, a Central Bank official said there had been "no decision yet" on whether banks would reopen, following a bailout agreement for the debt-hit island reached with the eurozone earlier Monday.

The island's economy has been reeling from the prolonged bank closure and ever smaller ATM withdrawal limits on accounts on its troubled two largest banks, with many businesses refusing all but cash transactions and taking on no new stock.

The Bank meanwhile announced the appointment of an administrator to wind up second largest lender Laiki under a painful restructuring plan that was a condition of the eurozone bailout.

"The CBC announces that in its capacity as the resolution authority, it has, as of today, appointed Ms Andri Antoniades as the special administrator to implement the restructuring of Laiki Bank," a statement said.

"She is a member of the Institute of Certified Chartered Accountants with 28 years of banking experience; 25 years with HSBC acting as CEO for the last five years and three years as General Manager with NBG Cyprus Ltd."

Under the terms of an 11th-hour deal agreed with the European Union and International Monetary Fund early Monday to save the island from bankruptcy, Laiki, or Popular Bank, will be restructured into "good" and "bad" banks.

The "good" bank is to be merged with the sound parts of largest lender Bank of Cyprus with the threat of substantial job losses in the medium term.

The international lenders demanded the drastic reforms as part of a painful package of conditions for releasing 10 billion euros ($13 billion) in emergency funding, without which both banks would have gone bust along with the government.

"Unemployment was already 15 percent. With Laiki it will instantly be 17.5 percent," Fiona Mullen, an economist specialising in Cyprus, told AFP.

"It will be 20 percent within three months and 26 percent within a year."

Mullen, a partner at Strata Insight energy policy risk consultancy, said capital controls including drastic limits on withdrawals from bank ATMs were likely to remain in place for several weeks.

"That means it's difficult for businesses to pay salaries and buy goods and things like that."

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http://www.globalpost.com/dispatch/news/afp/130325/no-decision-yet-cyprus-bank-reopening-central-bank