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Cyprus bank workers protest over pension fears

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(Globalpost/GlobalPost)

Bank workers were to hold a work stoppage on Thursday over fears that pensions may be at risk under Cyprus's bailout, as the island looked set to top the agenda at a European Central Bank policy meeting.

Bank employees' union ETYK called the two-hour stoppage over concerns that pension funds at Laiki and Bank of Cyprus are not being protected under the island's 10-billion-euro ($12.8 billion) bailout deal with the International Monetary Fund, European Commission and ECB.

The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.

There has been no labour unrest in Cyprus so far, but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.

The country's new Finance Minister Haris Georgiades vowed Wednesday to implement the bailout terms in full.

"We... shall do whatever it takes to fix our public finances and put our economy back on track for growth," he said after swearing in to his new post.

Georgiades, a British-educated economist who had been serving as labour minister, took over from Michalis Sarris, who announced Tuesday he was resigning to cooperate with a judicial probe into the causes of the crisis.

Sarris had been chairman last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.

Cyprus is already in recession, with unemployment at around 15 percent and expected to grow sharply this year and next. Forecasts before the deal was agreed saw GDP contracting by 3.5 percent this year.

Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.

The central bank has been progressively easing these restrictions, and has now raised the limit on business transactions from 5,000 euros to 25,000 and allowed people to write cheques of up to 9,000 euros.

But under the terms of the deal, those with savings larger than 100,000 euros in Bank of Cyprus, the country's largest, face losing up to 60 percent of their deposits over that amount.

Those in second lender Laiki will have to wait years to see any of their money over 100,000 euros as the bank is shuttered.

Cyprus was expected to top the agenda at the European Central Bank's policy meeting in Frankfurt on Thursday.

Markets panicked when Eurogroup chief Jeroen Dijsselbloem appeared to suggest that the Cyprus deal which rattled world markets might be used as a template for future eurozone bailouts.

The consequences of the Cyprus bailout for the eurozone were expected to be the main focus of ECB chief Mario Draghi's's monthly post-meeting news conference.

On the political front, Turkish President Abdullah Gul said Wednesday the crisis was a chance to work towards a peace deal on the island, divided since Turkish troops invaded its northern third in 1974 after a Greek Cypriot coup.

"The economic crisis should also be an important lesson to all of us because at the end of the day if the island were united then there would be a greater economic potential," he said.

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http://www.globalpost.com/dispatch/news/afp/130404/cyprus-bank-workers-protest-over-pension-fears-0