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| Calm Gives Way to Tension in Cyprus as Banks Reopen | Calm Gives Way to Tension in Cyprus as Banks Reopen |
| (35 minutes later) | |
| NICOSIA — Banks in Cyprus opened Thursday for the first time in almost two weeks, giving depositors access to their money with strict controls imposed by international lenders to prevent a bank run in the economically troubled country. | NICOSIA — Banks in Cyprus opened Thursday for the first time in almost two weeks, giving depositors access to their money with strict controls imposed by international lenders to prevent a bank run in the economically troubled country. |
| As the opening hour of noon approached, the earlier calm outside the banks began giving way to an edgier mood. Lines of 50 or more people had formed in front of the main branches of Bank of Cyprus and Laiki Bank, the country’s two largest banks. Customers at the front pressed their noses to the glass doors. | |
| Similar scenes were playing out at the city’s other bank branches. | Similar scenes were playing out at the city’s other bank branches. |
| Inside the Bank of Cyprus main branch, tellers and security guards looked grim, bracing for the onslaught. Suddenly, two police motorcycles, blue lights flashing, appeared and circled the central square. | Inside the Bank of Cyprus main branch, tellers and security guards looked grim, bracing for the onslaught. Suddenly, two police motorcycles, blue lights flashing, appeared and circled the central square. |
| One of the customers in line, a 27-year-old businessman who would give only his first name, Miltos, shook the stack of papers in his hand. It represented nearly €40,000, or about $51,000, in bills he owed the suppliers of his small telecommunications company. | One of the customers in line, a 27-year-old businessman who would give only his first name, Miltos, shook the stack of papers in his hand. It represented nearly €40,000, or about $51,000, in bills he owed the suppliers of his small telecommunications company. |
| The bank closure since March 16 had damaged his business “terribly,” Miltos said. Unless he could persuade Bank of Cyprus to let him transfer more than the €5,000 limit for the month that the government has decreed, he said he feared he might soon have to declare bankruptcy. | The bank closure since March 16 had damaged his business “terribly,” Miltos said. Unless he could persuade Bank of Cyprus to let him transfer more than the €5,000 limit for the month that the government has decreed, he said he feared he might soon have to declare bankruptcy. |
| On Wednesday, the government imposed stiff capital controls to clip the flight of money, including prohibiting electronic transfer of funds from Cyprus to other countries and capping at €3,000, or about $3,900, the amount of cash that can be taken abroad. | On Wednesday, the government imposed stiff capital controls to clip the flight of money, including prohibiting electronic transfer of funds from Cyprus to other countries and capping at €3,000, or about $3,900, the amount of cash that can be taken abroad. |
| Withdrawals at automated teller machines will be limited to €300 per person; for the past few days withdrawals have been capped at €100. | Withdrawals at automated teller machines will be limited to €300 per person; for the past few days withdrawals have been capped at €100. |
| Credit and debit card charges will be limited to €5,000 per person per month. Banks will not cash checks; they will accept checks as deposits, but many people will no doubt be reluctant to put more money into a bank here. | Credit and debit card charges will be limited to €5,000 per person per month. Banks will not cash checks; they will accept checks as deposits, but many people will no doubt be reluctant to put more money into a bank here. |
| Bank clients also will not be able to withdraw money from fixed-term deposits before their maturity date. | Bank clients also will not be able to withdraw money from fixed-term deposits before their maturity date. |
| Maroulla Chrysanthou, a retiree from Nicosia who lives with her divorced son and her daughter, woke up early Thursday morning to head to the bank. She does not have an A.T.M. card and has not been able to get her money from the bank since they closed. | Maroulla Chrysanthou, a retiree from Nicosia who lives with her divorced son and her daughter, woke up early Thursday morning to head to the bank. She does not have an A.T.M. card and has not been able to get her money from the bank since they closed. |
| “My children brought me here, as I can’t walk easily,” she said, sitting patiently in the sun. “I’ve been here since 10 o’clock, reading my book and waiting. What else can I do?” | “My children brought me here, as I can’t walk easily,” she said, sitting patiently in the sun. “I’ve been here since 10 o’clock, reading my book and waiting. What else can I do?” |
| Ms. Chrysanthou said that for the 12 days while the banks were closed, her family was just barely covering its needs. | Ms. Chrysanthou said that for the 12 days while the banks were closed, her family was just barely covering its needs. |
| “We got by with what we had and my children were withdrawing some money so we could buy basic stuff,” she said. When asked how much she planned to take from her account, she said: “As much as I can.” | “We got by with what we had and my children were withdrawing some money so we could buy basic stuff,” she said. When asked how much she planned to take from her account, she said: “As much as I can.” |
| Yiannis Koumis, 27, works as a cashier at Laiki Bank, one of Cyprus’s biggest and most troubled banks. Under the terms of a €10 billion bailout that Cyprus secured from international creditors on Monday, Laiki’s good assets will be merged into Bank of Cyprus, and thousands will lose their jobs. | Yiannis Koumis, 27, works as a cashier at Laiki Bank, one of Cyprus’s biggest and most troubled banks. Under the terms of a €10 billion bailout that Cyprus secured from international creditors on Monday, Laiki’s good assets will be merged into Bank of Cyprus, and thousands will lose their jobs. |
| As he headed to work for the first time in more than two weeks, Mr. Koumis said employees still did not know what their future would be. “We have orders to work for the next four days and then all we have is uncertainty,” he said. | As he headed to work for the first time in more than two weeks, Mr. Koumis said employees still did not know what their future would be. “We have orders to work for the next four days and then all we have is uncertainty,” he said. |
| He said employees were given three pages of instructions to follow when customers come in to demand their money, outlining the transactions they are permitted to carry out. “We are only allowed to accept checks from Laiki and not to cash them, but deposit them in clients’ accounts,” Mr. Koumis said. | He said employees were given three pages of instructions to follow when customers come in to demand their money, outlining the transactions they are permitted to carry out. “We are only allowed to accept checks from Laiki and not to cash them, but deposit them in clients’ accounts,” Mr. Koumis said. |
| Some people said Thursday they would wait to go to the bank until all the fuss died down. “I don’t want to wait two or three hours in line today, so I’ll go next week,” said Christoforos Parisis, the manager of the Icebody Shop clothing store. He said he had withdrawn as much money as possible from teller machines while the banks were closed. | Some people said Thursday they would wait to go to the bank until all the fuss died down. “I don’t want to wait two or three hours in line today, so I’ll go next week,” said Christoforos Parisis, the manager of the Icebody Shop clothing store. He said he had withdrawn as much money as possible from teller machines while the banks were closed. |
| But being without cash has been a hardship, he said. “There’s no money, no nothing,” he said. “It affects me and my business very much. And we don’t know what will happen after.” | But being without cash has been a hardship, he said. “There’s no money, no nothing,” he said. “It affects me and my business very much. And we don’t know what will happen after.” |
| Under European Union treaties, restricting the free movement of capital is normally forbidden. But the European Commission issued a statement Thursday morning that the unprecedented imposition of capital controls in the euro area in Cyprus was legal. | Under European Union treaties, restricting the free movement of capital is normally forbidden. But the European Commission issued a statement Thursday morning that the unprecedented imposition of capital controls in the euro area in Cyprus was legal. |
| The commission stressed, however, that the measures should be rescinded as soon as possible. | The commission stressed, however, that the measures should be rescinded as soon as possible. |
| “In current circumstances, the stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest and public policy justifying the imposition of temporary restrictions on capital movements,” said the commission, one of three members of the so-called troika, including the European Central Bank and the International Monetary Fund, that oversees bailouts of euro-area states. | “In current circumstances, the stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest and public policy justifying the imposition of temporary restrictions on capital movements,” said the commission, one of three members of the so-called troika, including the European Central Bank and the International Monetary Fund, that oversees bailouts of euro-area states. |
| The commission said it expected the measures to apply for seven days, but added that it would “continue monitoring the need to extend the validity of or revise the measures.” | The commission said it expected the measures to apply for seven days, but added that it would “continue monitoring the need to extend the validity of or revise the measures.” |
| Experts predict a much bigger bank run whenever the controls are eventually lifted or eased further. | Experts predict a much bigger bank run whenever the controls are eventually lifted or eased further. |
| “If you don’t impose the controls, the money is going to fly,” said Mujtaba Rahman, a senior analyst at the Eurasia Group. “But when you remove those controls, clearly the money is going to leave anyway. So they’re in a Catch-22.” | “If you don’t impose the controls, the money is going to fly,” said Mujtaba Rahman, a senior analyst at the Eurasia Group. “But when you remove those controls, clearly the money is going to leave anyway. So they’re in a Catch-22.” |
| To make sure enough cash is on hand, the European Central Bank sent an airplane filled with about €1.5 billion in a container to Larnaca airport near Nicosia on Wednesday. The container was loaded onto a truck and escorted by police to the Cypriot central bank for safekeeping, said a person with knowledge of the operation who was not authorized to speak publicly. | To make sure enough cash is on hand, the European Central Bank sent an airplane filled with about €1.5 billion in a container to Larnaca airport near Nicosia on Wednesday. The container was loaded onto a truck and escorted by police to the Cypriot central bank for safekeeping, said a person with knowledge of the operation who was not authorized to speak publicly. |
| The person said the European Central Bank had indicated it would continue flying cash to the country as needed. | The person said the European Central Bank had indicated it would continue flying cash to the country as needed. |
| The Cypriot finance minister, Michalis Sarris, said Wednesday that a flood of withdrawals was bound to happen quickly anyway, but that the restrictions would at least help stem a mass flight of deposits. | The Cypriot finance minister, Michalis Sarris, said Wednesday that a flood of withdrawals was bound to happen quickly anyway, but that the restrictions would at least help stem a mass flight of deposits. |
| “Each day that banks remain closed creates more uncertainty and more difficulties for people, so we would like to do our utmost to make sure that this new goal that we have set will work,” Mr. Sarris said. | “Each day that banks remain closed creates more uncertainty and more difficulties for people, so we would like to do our utmost to make sure that this new goal that we have set will work,” Mr. Sarris said. |
| Despite those strictures, the Cypriot authorities are bracing for as much as 10 percent of the €64 billion on deposit in the country’s banks to be pulled out on Thursday. | Despite those strictures, the Cypriot authorities are bracing for as much as 10 percent of the €64 billion on deposit in the country’s banks to be pulled out on Thursday. |
| The freezing of accounts at all banks since March 16 means businesses have not been able to pay their employees. Importers have also not been able to pay their bills, raising concerns about shortages of basic goods on an island that imports almost everything it consumes. | The freezing of accounts at all banks since March 16 means businesses have not been able to pay their employees. Importers have also not been able to pay their bills, raising concerns about shortages of basic goods on an island that imports almost everything it consumes. |
| By imposing capital controls, European and Cypriot officials have effectively created two classes of euro: cash that can be freely spent, and cash that is locked up by capital controls, diminishing its value. | By imposing capital controls, European and Cypriot officials have effectively created two classes of euro: cash that can be freely spent, and cash that is locked up by capital controls, diminishing its value. |
| Andreas Riris in Nicosia and James Kanter in Brussels contributed reporting. | Andreas Riris in Nicosia and James Kanter in Brussels contributed reporting. |