Friday, March 22, 2013 CYPRUS MAIL
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Home Fears cause ATM run By Peter Stevenson RUMOURS were circulating about the fate of Laiki Bank from early yesterday as long queues formed at almost every one of the bank’s ATMs islandwide. “There are rumours flying about that petrol stations have started demanding cash payments for fuel so I thought it would be best to draw some money out,” 49-year-old housewife Lisa Thoukidides told the Cyprus Mail. “On top of that there are more and more rumours circulating that the bank will default so it’s probably safer to get as much cash out as possible,” she said. For 27-year-old Pakistani student Sikander Azam it was the first time he was withdrawing money since news broke over the weekend about a possible haircut to deposits. “Today was the first I heard about Popular Bank possibly closing so I came to withdraw as much money as possible,” he said. A 60-year-old pensioner, Anna, expressed the hope that bankers and politicians showed their love for their country, as much as she loves it, in order to save the island. “I’ve been through tougher times and survived, like the invasion
in 1974, so I’m sure I’ll survive this,” she said. “I’m not withdrawing money out of panic but because I need money to buy things with, and right now it looks like most places are only accepting cash,” she added, noting that she feels a lot safer holding on to the cash herself. For some it was a case of following the example set by others, as 23-year-old Athina explained her decision to queue up was fuelled by fear. “After hearing the rumours about the possible closure of the bank I feared I would lose whatever little I had left in the bank and so I came to take it out,” she said. It was the second time within hours that she had made a bank-run after rumours began on Wednesday night. Kyriacos Panagos, a 26-year-old lawyer said he was ready to cut his losses and move to London. “I have been withdrawing as much money as possible since rumours began at the weekend,” he said. “As far as I’m aware one of our banks will be forced to close so I felt the best option would be to withdraw as much as I can,” he added. “I’m ready to move to London, it looks like Cyprus is dead.”
People queue up patiently at a Popular Bank ATM in Nicosia yesterday
(CNA)
‘A disaster for the economy’ (continued from front page) rest of the banking system would be severe: “The bank is a systemic bank and we believe this problem will be transferred to the other banks very quickly. “So effectively no bank will be able to operate normally from now on and I don’t really know until when.” Phidias argued the decision to break up Laiki was a political one that “has nothing to do with the financials”. He argued that Laiki’s restructuring plan devised by Alvarez and Marsal and submitted to the European Commission indicated that the bank had become profitable, if one took out of the equation its Greek operations, which are now in the process of be-
The bank chief said businesses would have been able to operate if a haircut on deposits had been implemented ing handed over to Greek banks. “The last decision that the Eurogroup took could have been implemented and could have provided the banks with ample liquidity to continue to operate normally,” he said, adding: “I’m sure Laiki would have been viable if we had support from the emergency liquidity assistance”. The bank chief said businesses would have been able to operate if a haircut on deposits had been implemented. A small bank levy would not have
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stopped businesses from operating but the current decision before parliament “will be disastrous for the economy of Cyprus”. Asked if a bank levy would have led to a loss of respect for the Cypriot banking system, he replied, somewhat candidly: “There is no respect for the banking system of Cyprus at all. I don’t think it would really undermine anything, it’s a matter of surviving, and enabling the businesses in Cyprus to survive.” Asked what will happen to Laiki if the current bill is passed, he said: “It will not open, and it will await for deposits and assets to be transferred to another bank. Those that will be transferred can operate in another bank, which-
ever bank that is, and the remainder will be frozen until a liquidator or I don’t know who will try to recover the bad loans. “I don’t think any loan will be good for too long. There will be no money to make good loan payments. If the bills are passed, the economy of Cyprus will never be the same ever again,” said the bank chief. Regarding the bill on capital constraints, he said: “How long can you actually keep limits on how much of your deposits you can withdraw on a daily basis? How long can you tell people you can only take €200 out a day? “First, this is not a democracy, and second, this is a raid on your deposits. You have money in the
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bank and you cannot take it from any bank, if this is a democracy, and this is Europe, then congratulations to the European Union.” Another Laiki employee who did not wish to be named said, before uninsured depositors risked a 10 per cent hit. Now, at best, they will get a 50 per cent haircut, at worst 90 per cent. “Even those insured depositors who get their money back. Will anyone keep their money in Cyprus after this? “The whole banking system will be destroyed. The cooperative bank has €5 billion in government bonds. We all know what will happen there. Nothing is secure, they just killed everyone, they killed
the market,” he said. “And what about the big companies that have deposits in Laiki. “Tomorrow they will lay off thousands of employees because they’ll only have access to €100,000”. The bank employee argued that the troika was demanding a bail-in for Cyprus because this was a quick way to shred the island’s banking sector and a litmus test for future bailouts.“They are testing the model for the next country that will need a bailout. Italy will be next, everyone knows that, and then France. “Italy has two trillion euro worth of loans. Do you think Germany has money to save it with a bailout? “So, they are testing the bail-in. Merkel’s adviser estimates that a 25 per cent bail-in on deposits will save Italy,” he said. He added, “I believe the whole euro system will collapse soon”.