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Cyprus to impose curbs on fund transfers
Aggregated Source: Shanghai Daily: Business

CYPRUS will impose limits on money transfers and dispatch extra security guards to prepare for today's reopening of the banks, which have been shut for almost two weeks to avoid a run during the country's financial drama.

A banking official said yesterday that new controls will include limits on large-scale transfers from the country's two largest and most troubled lenders, Bank of Cyprus and Laiki. Both are being restructured and big depositors face losses of 40 percent.

But authorities are looking to increase the daily withdrawal limit from 100 euros to 300 euros (from US$130 to US$386), while payroll payments will be allowed in order to help businesses, which saw a huge slump as people cut down on their spending amid the uncertainty swirling about the banks.

The curbs will be kept for at least a week until the situation stabilizes, said the official, who spoke on condition of anonymity because the measures have yet to be officially announced.

Private security firm G4S will place 180 of its staff at bank branches across the island to prevent possible trouble, said John Argyrou, managing director of the firm's Cypriot arm.

"Our presence there will be for the comfort of both bank staff and clients, but police will also be present," he said.

Argyrou said he doesn't foresee any serious trouble unfolding once banks open their doors because people had time to "digest" what has transpired.

"There may be some isolated incidents, but it's in our culture to be civil and patient, so I don't expect anything serious."

Another 120 staff from G4S would be given money transport duties.

Banks were closed on March 16 as politicians scrambled to come up with a plan to raise 5.8 billion euros that would qualify the country for 10 billion euros in bailout loans from fellow eurozone partners and the International Monetary Fund.

Under the deal clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large Laiki and Bank of Cyprus depositors.

Cypriot officials said the deal would mean the country would shift its focus away from being an international center of financial services. That is expected to cost jobs, adding to the jobless rate of 14 percent now.

Business leaders and Cabinet ministers met with President Nicos Anastasiades yesterday to try and get the economy going again.


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