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Banks back to normal but curbs hurt Cyprus businesses

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(Globalpost/GlobalPost)

Businesses and families in Cyprus are suffering despite the return to normal banking hours on Friday, as draconian capital controls make it hard to pay salaries and bills, trade groups said.

A day after banks first reopened following a 12-day lockdown, small queues built up again outside banks with customers facing curbs which include a daily withdrawal limit of 300 euros ($385).

Banks on the east Mediterranean island were open from 8:30 am (0630 GMT) to 1:30 pm (1130 GMT) on Friday, their normal hours. On Thursday they were open from the unusually late time of noon to 6:00 pm.

The imposition of the controls near the end of the month has caused extra difficulties, as that is the time in Cyprus when wages and rents are normally paid.

"There will be some difficulties and discomfort as regards the payment of wages," Michalis Antoniou, assistant director of the Employers’ and Industrialists Federation, told AFP.

"Next week we expect things to get back to normal and have an economic system in operation. But normal after the shock is not the same as before the tragedy -- there will be a before and and after 15th March."

An initial bailout plan sealed on the night of March 15-16 was rejected by lawmakers before Cyprus finally agreed a 10-billion-euro ($13-billion) EU-IMF bailout in Brussels on Monday.

The deal calls for the winding down of Cyprus's second largest bank, Laiki, which will be absorbed by the island's biggest lender, Bank of Cyprus.

Cypriot authorities repeatedly delayed the reopening of the banks until they finally announced the capital controls on Wednesday in a bid to avert a devastating bank run that could wreck the already fragile economy.

The curbs also include a ban on the cashing of cheques and almost all electronic transfers abroad.

And while the restrictions are officially for one week, the foreign minister warned on Thursday that they could last for at least one month as Cypriot officials try to avert a devastating bank run.

Leonidas Paschalides, one of the directors of the Cyprus Chamber of Commerce, said restrictions on money transfers requiring clearance by banks were causing concerns for businesses.

"It was announced that clearance should be given within 24 hrs. Practice will show what the delays will be," Paschalides said.

"If permits are not given quickly, then some companies may have more problems, such as these dealing with perishable food -- if delays are observed maybe priority will have to be given to certain businesses."

Payments between Cypriot banks are not limited but some clients at Laiki said they had not been able to make rent payments in this way for the past two days.

On Friday morning many businesses and service stations in Nicosia still displayed signs saying they would only take cash payments.

But there was one bright spot as public services were again accepting cheques.

That was good news for importers who have for nearly two weeks been unable to pay customs fees to release their goods at the port of Limassol.

Some 2,500 shipping containers are currently backed up at the port, compared with the usual number of about 1,200, according to the Cyprus Mail newspaper.

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, but the armed guards had little to do.

There were queues of people, but the lines had vanished when they closed six hours later, and a number of customers were even making deposits.

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http://www.globalpost.com/dispatch/news/afp/130329/banks-back-normal-curbs-hurt-cyprus-businesses