http://www.theguardian.com/world/2013/mar/26/cyprus-banks-closed-prevent-run-dep...Cyprus banks remain closed to prevent run on deposits
Planned opening of Bank of Cyprus and Laiki delayed for at least two days to ensure the whole system functions 'smoothly'
Laiki, one of the two largest Cypriot banks, is to remain closed until Thursday at least. Photograph: Milos Bicanski/Getty Images
Josephine Moulds, Helena Smith in Nicosia, Ian Traynor in Brussels, Miriam Elder and Jill Treanor
Tuesday 26 March 2013 22.35 AEST
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Banks in Cyprus will remain closed at least until Thursday and will then be subject to strict controls to prevent a bank run in the wake of the island's €10bn (£8.5bn) bailout.
All but the country's two biggest banks were slated to open on Tuesday, but the central bank now says all lenders will remain closed to ensure the banking system functions "smoothly". Asked whether Cyprus's banks will reopen on Thursday, Cyprus's finance minister Michalis Sarris said: "Yes, I think they will."
Speaking on Radio 4's Today Programme, Sarris said capital controls will be imposed on Cyprus "for several weeks", restricting the flow of money around the system.
The freezing of the Cypriot banking system follows an international rescue deal that involves restructuring the country's two largest lenders, with heavy losses for wealthy savers. President Nicos Anastasiades acknowledged on Monday that the country had come "a breath away from economic collapse" before its last-minute bailout.
This involved an agreement to radically restructure the country's largest lender, the Bank of Cyprus, and shut down its second largest bank, Laiki, in return for a €10bn bailout from the European Union, the European Central Bank and the IMF.
In a radical departure for a eurozone bailout, depositors in Laiki Bank could lose any savings above €100,000. Bigger savers in Bank of Cyprus will also be forced to contribute to the lender's recapitalisation. Sarris suggested on Monday they could face losses of around 40% on their assets.
After an initial rally on relief that Cyprus had secured a deal, markets took fright when the head of the group of eurozone finance ministers indicated that the rescue could be a template for similar situations.
The euro dropped 1% against the dollar on Monday and remained below $1.29 in early trade on Tuesday. Shares across the eurozone regained some of their losses. The FTSE 100 was up 0.1% and the German DAX was 0.3% higher, but Spain's IBEX was 0.4% lower in early trade.