25 07 2014

Cyprus Headlines:

July 25, 2014 - Australia seeks to stop animal rights groups with tough video laws Australia is considering tougher la ... +++ July 25, 2014 - CBC extends suspension of FBME operations The Central Bank (CBC) has extended ... +++ July 25, 2014 - Crunch time for Gaza truce talks as death toll passes 800 By Nidal al-Mughrabi and Dan Willia ... +++ July 25, 2014 - Wreckage of Air Algerie plane carrying 116 people found in Mali By Hamid Ould Ahmed and Tiemoko Dia ... +++ July 25, 2014 - Talks in deep freeze for summer By Stefanos Evripidou THE PEACE tal ... +++ July 25, 2014 - Our View: The state has every right to impose punishments on football clubs EVEN FIFA, the world governing body ... +++ July 25, 2014 - No headway on foreclosures bill By Angelos Anastasiou DISCUSSIONS l ... +++ July 25, 2014 - CMP issues plea for more aid By Stefanos Evripidou INTERNATIONAL ... +++ July 25, 2014 - Quackery ‘getting out of control’ By Stefanos Evripidou THE ECONOMIC ... +++ July 25, 2014 - CTO wades into airport charges wrangle By Constantinos Psillides A PROPOSA ... +++ July 25, 2014 - Shacolas plans €60m expansion in stores and malls THE Shacolas Group said it was plan ... +++ July 25, 2014 - Police investigating claim that officer punched male nurse LARNACA police said yesterday they ... +++ July 24, 2014 - Rise in air traffic at Larnaca There was a rise in air traffic at ... +++ July 24, 2014 - DEFA invites bidders for gas supply The Natural Gas Public Company (DEF ... +++ July 24, 2014 - Russian BoC shareholders organise to protect their rights By George Psyllides Russian minorit ... +++ July 24, 2014 - No plans for casino at Ledra Palace By George Psyllides Buena Vista Hos ... +++ July 24, 2014 - Olympic champion Farah pulls out of Commonwealth Games By Michael Hann Olympic and world l ... +++ July 24, 2014 - Militants order female genital mutilation in Iraq By Stephanie Nebehay Militant group ... +++ July 24, 2014 - Missing Air Algerie plane from Burkina Faso has crashed By Hamid Ould Ahmed An Air Algerie ... +++ July 24, 2014 - Death row Christian woman flies out of Sudan, meets Pope By Giselda Vagnoni and Khalid Abdel ... +++

NEW: Limits now in place for re-opening of banks

Author: 
Stefanos Evripidou

 

AFTER ALMOST two weeks with no banking system and limited ATM withdrawals, banks across the country will once again open their doors to the public today, introducing temporary capital controls for the first time in the eurozone.

Finance Minister Michalis Sarris last night signed into law a temporary decree capping cash withdrawals per person per bank per day at €300, effectively banning cheques and controlling cash outflows from the country, allowing only €1,000 per person per journey abroad. 

According to sources, the decree will apply across the banking system but allows a significant amount of discretion in its application. 

The thinking behind this is to allow healthy banks to get on with business while ensuring the newly restructured Bank of Cyprus will enjoy adequate protection during the first moments of its operation, as well as to prevent outflows of cash abroad. 

The heads of the 26 banks represented in Cyprus were invited to the Central Bank yesterday for a briefing on the new capital controls drawn up by the finance ministry and banking supervisory authority after days of intense preparation. 

Bank branches will open later than usual today, from12pm until 6pm, to give bank staff time to become acquainted with the new restrictions on money outflows.  

The Legal Service worked on overdrive last night, combing over the finer details to ensure the provisions would withstand legal examination. 

Meanwhile, truck loads of euro notes arrived at the Central Bank in Nicosia from the European Central Bank in Frankfurt under heavy police escort, including helicopters, ahead of today’s big opening. 

The millions in hard cash is expected to be distributed among the commercial banks and cooperatives, opening today for the first time since the Eurogroup’s March 16 bombshell decision to impose a haircut on all depositors across the banking sector.  

Following the uproar both within Cyprus and abroad, the Eurogroup reached a different outcome in the early hours of last Monday morning, with a new decision on the winding down of Laiki and the restructuring of Bank of Cyprus (BOC), with big depositors from both banks expected to take substantial hits. 

Laiki’s uninsured depositors can expect a massive wipeout while the authorities have suggested Bank of Cyprus’ big depositors may see around 40 per cent of their savings over €100,000 converted into BOC bank shares. All insured depositors with under €100,000 will be saved, while no haircut or levy will be imposed on the deposits of any of the remaining 24 banks on the island. 

According to the decree, the lack of substantial liquidity and significant risk of deposits outflow posed an “immediate risk of a complete destabilisation of the financial system of the country and the collapse of the entire financial sector, which is likely to have disastrous consequences for the country’s economy and society”. 

Citing the need to safeguard public order and security, the finance minister ordered the application of a number of temporary restrictive measures on transactions. 

These include a maximum cash withdrawal of €300 or its equivalent in foreign currency per person in each bank. If the full amount is not withdrawn each day, the difference can be carried over to the next day and withdrawn either from an ATM or bank teller or through credit cards against the balance in a current account. 

The cashing of cheques is prohibited. However, it is believed that if a person wants to deposit a cheque in their account, this is permissible provided the money will not be drawn from the Bank of Cyprus and placed in another bank. Again, the aim is to curb capital outflows from the newly restructured BOC. 

 Transferring deposits or funds to accounts held abroad or in another bank is also prohibited except for normal business payment transactions of up to €5,000 per day. 

Payments from €5,001 to €200,000 are subject to the approval of a special four-member committee, due to be appointed today. 

According to sources, effectively, the bank will have discretion to approve these transactions though they must send the daily total and number of such payments to the special committee which officially, will give a response within 24 hours, taking into account the liquidity buffer situation of the bank. 

For payments over €200,000, the request will have to be sent to the committee for approval. 

Distributing company payrolls will also be permitted on the provision of supporting documents by the company. 

Transactions will also be permitted for student living expenses up to €5,000 per quarter and tuition fees of first degree relatives studying abroad on the basis of supporting documents provided the money is wired to the beneficiary.  

Payments and or transfers outside the Republic, via debit, credit or prepaid cards are allowed up to €5,000 per month per person in each bank. 

Other payments or transfer of funds require the prior approval of the committee, taking into account the liquidity buffer situation of each credit institution in question.   

It will not be possible to prematurely break fixed-term deposits unless the funds are used to repay a loan within the same bank. 

For as long as the temporary decree is in place, when fixed deposits reach maturity, the depositor will only have access to either €5,000 or 10 per cent of the total, depending which is higher. 

The depositor must put that amount either in a current account or a new fixed-term deposit in the same bank, depending on his choice. As for the remaining amount of money, this will be kept in the original fixed deposit for an extra month.  

For those travelling abroad, each person per journey may take with them a maximum of €1,000 or the equivalent in a foreign currency. Any extra amount requires the prior approval of the committee. The Customs Department will be responsible for ensuring implementation of this rule. 

According to the decree, any financial transactions, payments or transfers not finalised before the decree came into force will be subject to the new restrictions. 

Banks are warned that they must “not execute cashless transfers that facilitate the circumvention of the restrictive measures”. 

The measures apply to all accounts, payments and transfers regardless of currency.  

Exemptions from the new set of stringent measures include: all new funds transferred from abroad; cash withdrawals or cashing cheques from foreign institutions abroad (likely aimed at tourists); payments authorised by the committee; cash withdrawals from accounts that banks hold with the Central Bank; the Cyprus Republic and the Central Bank.    

Speaking on state broadcaster before the decree was issued, Yiangos Demetriou, head of internal audit at the Central Bank, said the measures would be reviewed after four days.

 

Truckloads of cash arriving at the central bank on Wednesday evening By Christos Theodorides

Source Cyprus Mail

This Post about NEW: Limits now in place for re-opening of banks has had 93 views

What Next?

Related Articles