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Cyprus reopens its banks; limits in place

Banks in Cyprus reopened for the first time in nearly two weeks Thursday and prohibited people from withdrawing all their savings and triggering further chaos in the country's financial system.

The limits on transactions, which include caps on withdrawals and money leaving the country, are a first in the 14-year history of the euro.

Across Cyprus, large but orderly lines formed ahead of the opening of banks for six hours from noon, and guards from private security firms reinforced police outside some ATMs and banks in the capital, Nicosia.

People filed calmly into banks across the country once they had opened, and no crowd issues were reported.

In Nicosia, one 70 year-old pensioner who only gave his name as Ioannis arrived at the bank some two hours ahead of the scheduled opening time.

"I had to come this early, I came from my village 20 kilometres away, what do they want me to do, keep coming and going?" he said.

Banks have been shut since March 16 to prevent people draining their accounts as politicians scrambled to come up with a plan to allow Cyprus to qualify for 10 billion euros ($12.9 billion) in bailout loans for its stricken banking sector.

The deal was finally reached in Brussels early Monday, and imposes severe losses on deposits of over 100,000 euros in the country's two largest banks, Laiki and Bank of Cyprus. Laiki will be broken up, with its good assets being absorbed by Bank of Cyprus. The exact amounts of the losses have not yet been officially announced.

Although the banks have opened, customers are severely limited in access to their accounts. Capital controls, imposed to prevent worried savers and businesses rushing to withdraw all their money, include limiting cash withdrawals to 300 euros ($383) per day per person and limiting payments abroad to 5,000 euros.

No checks can be cashed, although they can be paid in, and people leaving the country can only take up to 1,000 euros, or the equivalent in foreign currency, with them in cash.

The Canadian Press

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