All Cyprus banks will remain closed until Thursday, March 28, the central bank has announced.
Temporary measures will be placed on transactions when they reopen despite an EU/IMF bailout deal.
Earlier, the Cypriot authorities said all but the biggest two, Bank of Cyprus and Laiki Bank, would open on Tuesday, March 26.
The central bank now says all will remain closed to ensure the whole banking system functions “smoothly”.
The bailout deal will see larger depositors in the two biggest banks, Bank of Cyprus and Laiki, lose money.
All Cyprus banks will remain closed until Thursday, March 28, the central bank has announced
President Nicos Anastasiades said “very temporary restrictions” would be put on capital flows, but gave no details.
Controls to prevent money leaving the country are already in place.
Certain limits on the size of cash withdrawals are expected to continue.
Banks have not been open since March 15. Their reopening had been expected after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
It was conditional on Cyprus itself raising 5.8 billion euros, most of which looks likely to come from depositors with more than 100,000 euros in Bank of Cyprus and Laiki or Popular Bank.
The banks remained closed after the country’s first money-raising solution, which would have hit smaller deposit holders as well as larger holdings, was rejected by parliament.
The new deal for Cyprus, unlike previous agreements, does not require parliamentary approval. It will also include austerity measures and tax increases.
Laiki will be shut down, and deposits under 100,000 euros, which are guaranteed by the state under EU law, will move into the Bank of Cyprus to create a “good bank”.
Deposits above that insured amount will be frozen and used to pay Laiki’s debts and recapitalize the Bank of Cyprus, with depositor losses eventually converted into shares.
Major depositors, many of whom are wealthy Russians, will not be able to access accounts exceeding the 100,000-euro limit until the restructuring of the banks is complete.
A government spokesman said the losses on uninsured depositors would be “under or around 30%”.
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Cyprus banks are to reopen on Tuesday, March 26, although the two at the centre of the crisis, Bank of Cyprus and Laiki, will remain shut until Thursday, March 28.
President Nicos Anastasiades has said temporary limits will be placed on financial transactions after a bailout deal imposing a tax on bank deposits.
He said “very temporary restrictions” would be put on capital flows, but gave no details.
Controls to prevent money leaving the country are already in place.
Certain limits on the size of cash withdrawals are expected to continue.
Cyprus banks are to reopen on March 26, although Bank of Cyprus and Laiki will remain shut until March 28
The banks’ reopening came after Cyprus agreed a deal with the IMF and the EU that releases 10 billion euros in support.
It was conditional on Cyprus itself raising billions of euros, which it will do by way of a tax on deposits of more than 100,000 euros.
The banks shut a week ago after the country’s first money-raising solution, which would have hit smaller deposit holders as well as larger holdings, was rejected.
On Monday morning, hopes that the deal would solve the crisis lifted shares.
But later, stock markets were rocked after Jeroen Dijsselbloem, head of the Eurogroup of eurozone finance ministers, suggested that the deal for Cyprus model could form a template in any future bailout.
Jeroen Dijsselbloem, the Dutch finance minister who as head of the Eurogroup played a key role in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems.
“If there is a risk in a bank our first question should be <<OK, what are you in the bank going to do about that?>>,” he told Reuters and the Financial Times.
Jeroen Dijsselbloem later added a clarification, saying that Cyprus was “a specific case with exceptional challenges”.
He said the pattern for bank rescues should see shareholders take the first hit, then bondholders, who lend money through financial markets, and only then should depositors with large bank balances be tapped.
The Cyprus deal puts the burden for dealing with problem banks on their shareholders and creditors – in this particular case, customers with large bank balances – rather than the government and taxpayers, or bondholders, who lend through financial markets.
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Cyprus’ parliament vote on bailout deal that has sparked huge public anger has been delayed until Tuesday.
President Nicos Anastasiades has been meeting MPs in Nicosia and has indicated he wants the terms amended.
The 10 billion-euro ($13 billion) bailout agreed with the EU and IMF had demanded that all bank customers pay a one-off levy and led to heavy cash withdrawals.
Nicos Anastasiades’ party has 20 seats in the 56-member assembly and needs other parties’ support to ratify the deal.
Asian and European stock markets fell amid uncertainty in Monday’s trading.
Meanwhile, Russian President Vladimir Putin on Monday called the proposed levy “unfair, unprofessional and dangerous”, his spokesman said.
Russian banks and businesses have significant deposits in Cyprus.
The debate and vote in Cyprus’ parliament has now been postponed until 18:00 local time on Tuesday. It was initially to have been held on Sunday.
President Nicos Anastasiades is at present holding talks with ministers and lawmakers at the parliament building in Nicosia, which has been cordoned off to prevent protests.
There are suggestions Mr Anastasiades is looking at lowering the cost to those with smaller savings.
Under the currently agreed terms, depositors with less than 100,000 euros in Cyprus accounts would have to pay a one-time tax of 6.75%. Those with sums over that threshold would pay 9.9%.
The president may want to lower the former rate to 3%, while raising the levy on the larger depositors to 12.5%.
An EU source told Agence France-Presse there could be a three-way split on the level of levy, grouped into accounts holding less than 100,000 euros, between 100,000 and 500,000 and more than 500,000.
Joerg Asmussen, a member of the European Central Bank’s governing council, said there could be a change to the deal.
He said: “It’s the Cyprus government’s adjustment programme. If Cyprus’ president wants to change something regarding the levy on bank deposits, that’s in his hands. He must just make sure that the financing is intact.”
German government spokesman Steffen Seibert echoed his comments, saying: “How the country makes its contribution, how it makes the payments, is up to the Cyprus government.”
Nicos Anastasiades insists that without the bailout Cyprus could face bankruptcy and a possible exit from the eurozone.
The banks are closed on Monday for a national holiday and could remain shut on Tuesday to avoid mass withdrawals.
Cyprus’ parliament vote on bailout deal that has sparked huge public anger has been delayed until Tuesday
Opposition leader George Lillikas, an independent, said the president had “betrayed the people’s vote”.Under the bailout’s current terms, depositors will be compensated with the equivalent amount in shares in their banks, and Nicos Anastasiades promised that those who kept deposits in Cypriot banks for the next two years would be given bonds linked to revenues from natural gas.
Cyprus announced the discovery of a field containing between 5 and 8 trillion cubic feet of natural gas under the Mediterranean Sea in 2011 but Turkey disputes its drilling rights.
Reports have suggested that eurozone leaders, particularly in Germany, insisted on the levy because of the large amount of Russian capital kept in Cypriot banks, amid fears of money-laundering.
However, German Finance Minister Wolfgang Schaeuble said he and the International Monetary Fund had been in favor of “respecting the deposit guarantee for accounts up to 100,000” euros.
He said it was the Cypriot government, the European Commission and the European Central Bank that had decided on the levy terms and that “they now must explain this to the Cypriot people”.
Russian presidential spokesman Dmitry Peskov said on Monday: “Assessing the possible decision of imposing additional tax by Cyprus on deposits, [President] Putin said that this decision, if taken, would be unfair, unprofessional and dangerous.”
PM Dmitry Medvedev said: “It looks simply like the confiscation of other people’s money.”
The Moody’s ratings agency estimates that, at the end of 2012, Russian banks had placed $12 billion in Cypriot banks, with corporate deposits at $19 billion. So Russian corporate and individual investors could lose up to $2 billion.
The Russian government also gave Cyprus a 2.5 billion euro loan in 2011. Russian Finance Minister Anton Siluanov told the Interfax news agency on Monday that Moscow would consider extending the loan period and restructuring the repayments.
The proposed savings levy has drawn criticism from economic analysts. Michael Hewson, of CMC Markets, told the Press Association: “If European policymakers were looking for a way to undermine the public trust that underpins the foundation of any banking system they could not have done a better job.”
It is clear that negotiators of the bailout in Brussels drastically underestimated the reaction in Cyprus, says our correspondent, Mark Lowen.
A tiny eurozone economy feels it is being blackmailed by the most powerful, and the growing resentment will do nothing to foster European solidarity.
If the levy goes ahead, it will affect many non-Cypriots with bank accounts.
However, depositors in the overseas arms of Cypriot banks will not be hit.
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