The sudden postponement of the much anticipated bank reopening on Tuesday by all except Laiki and Bank of Cyprus was sure to hammer businesses already reeling from more than a week of no access to their deposits.
Government officials decided on a further postponement of the banks’ opening, pushing it back until Thursday, because of fears that the financial institutions would face a run by desperate customers trying to get their money out.
This decision was announced shortly after midnight Tuesday and was made after a bank bailout deal that calls for big losses for depositors.
ATMs continue to operate across the country, but the Bank of Cyprus and Laiki Bank have limited daily withdrawal limits to 100 euros (130 dollars). A large number of shops and businesses in Cyprus have stopped accepting credit or debit cards and are only taking cash.
Finance Minister Michalis Sarris made the decision to keep the banks closed on the recommendation of the central bank governor Panicos Demetriades in order to “ensure the smooth functioning of the entire banking system”.
There have been fears that the banks could be drained of cash when they reopen as frightened investors try to withdraw their deposits.
President Nicos Anastasiades meanwhile said in a televised address to the nation that Cypriots would face further capital controls, without specifying what they were.
“This is a very temporary measure, which will gradually be relaxed. I can assure that we will do everything possible to return soon to complete normality,” he said.
The bailout, agreed by eurozone finance ministers, would revamp the country’s banking system and force big losses for bondholders and depositors at both the Bank of Cyprus and Laiki.