Cyprus readies capital controls

 NICOSIA: Cyprus is finalising capital control measures yesterday to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders.

Cypriots have taken to the streets of Nicosia in their thousands to protest against a bailout deal they fear will push their country into an economic slump and cost many their jobs.

European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

With banks due to reopen today, Finance Minister Michael Sarris said he expected the control measures to be ready by yesterday.

“I think they will be within the realms of reason,” he said, without going into details.

“Banks will open on Thursday … We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals,” Sarris said in a Cyprus television interview.

The central bank governor said earlier that “loose” controls would apply temporarily to all banks. 

Earlier, the finance minister said they could be in place for weeks. 

Banks have been shut since final bailout talks got under way in mid-March.

Russia, whose citizens have billions of euros in Cypriot banks, cautioned Nicosia against imposing onerous controls on healthy banks.

“If there are such measures, this will not foster trust but only provoke additional problems for participants, depositors,” Russian Finance Minister Anton Siluanov, in South Africa for a summit of the BRICS emerging powers group, told reporters late on Tuesday.  –Reuters

State-controlled Russian bank VTB has a subsidiary in Cyprus, Russian Commercial Bank, which has not been affected by the bailout deal. – Reuters