Cyprus: a haircut for the people, a pay cut for President Nicos Anastasiades – but banks open amid tight security and cash restrictions that could last a month

Cyprus’s banks finally opened for business today, 12 days after they were locked down as the island’s financial crisis intensified. Savers formed orderly queues in the morning sun before the doors opened at 12pm. Many of those queueing were elderly people without cash cards who have been starved of money since their government began negotiating a €10bn bailout with Europe to keep the country afloat.

There was little sign of the panic many Cypriots were fearing as private security guards and police kept a watchful eye on the crowds. The capital controls imposed on Wednesday appeared to have prevented a run on the banks, but Cyprus’s Foreign Minister delivered a fresh blow when he said that the restrictions could be in place for up to a month, much longer than had been originally announced.

President Nicos Anastasiades praised his compatriots for their “maturity and collectedness”, while announcing that he would be taking a 25 per cent pay cut as part of the belt-tightening all Cypriots will now face. He also imposed a 20 per cent haircut on his cabinet ministers’ salaries.

“I’m here to get money, I don’t have any money to eat, I haven’t for 10 days,” said Fotino, 52, clutching her bank book as she waited to enter the Bank of Cyprus in Nicosia’s Freedom Square.

A few doors down near a branch of Laiki bank a man railed against the EU and Germany, which led the push to make Cyprus raise €5.8bn to qualify for €10bn in funding from the International Monetary Fund and European Central Bank. “Everybody wants to destroy Cyprus,” he shouted, shaking with rage. The bank will be closed as part of the bailout deal, its accounts with more than €100,000 frozen alongside those in the Bank of Cyprus.

Others were keen to avoid such scenes, especially as the capital control measures meant they would not be able to access most of their money for many days to come.

People with bank account in Cyprus can now only take out €300 a day from banks. They are not allowed to take more than €1,000 cash out of the country, and credit card spending abroad is limited to €5,000 a month. Overseas money transfers are also severely restricted.

“There’s going to be queues so I’m not going to spend so many hours there to get €300,” said Roula Spyrou, a jewellery shop owner.

The measures were initially in place for four days, but the Cypriot foreign minister, Ioannis Kasoulides , said this evening that it could take up to a month to lift all the restrictions. “A number of restrictions will be lifted and gradually – probably over a period of about a month – the restrictions will be fully lifted,” he said.

Large amounts of money had already left the country before the bailout deal was struck. Figures released by the Central Bank showed that savers from other eurozone countries withdrew 18 per cent of their deposits in February.

Cyprus is expected to start receiving the funds from the ECB and IMF in May. It needed the money to stay solvent and in the single currency, after its bloated financial sector suffered massive losses during the crisis in Greece. The President’s office yesterday announced that it had appointed a panel to investigate who was to blame for the crisis at the banks.

Laiki bank is due to be wound down, with deposits under €100,000 transferred to the Bank of Cyprus to form a “good” bank. Deposits over €100,000 in both banks will take a loss, but the government has not yet said how much will be docked from the accounts.