NICOSIA, Cyprus — All banks in Cyprus except the two largest in the country are to reopen for business today , more than a week after they shut down to prevent a drain on deposits by customers worried they would lose part of their savings.
The decision to reopen the banks at 8:30 a.m. today was announced after a deal was clinched in the early hours of Monday in a Brussels meeting between the 17-nation eurozone’s finance ministers. Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks to secure the 10 billion euro ($13 billion) bailout.
The deal came less than 24 hours before the European Central Bank was to pull emergency funding for Cypriot banks, which it gives to the Central Bank of Cyprus to distribute. That would have led to the banks’ collapse, dragging down the rest of the economy and potentially forcing the country out of the euro.
Several hours after the deal in Brussels was first announced, the European Central Bank dropped its threat, saying it “decided not to object” to the Central Bank of Cyprus continuing to provide emergency credit.
As part of the reopening process, a central bank official said Laiki, which will be restructured, and Bank of Cyprus will remain closed until Thursday, and a withdrawal limit from their ATMs of 100 euros ($130) a day will also remain in place until then.