NICOSIA, Cyprus (AP) — Cypriot businesses were under increasing strain to keep running on Tuesday after financial authorities stretched the country's bank closure into a second week in a harried attempt to stop depositors from rushing to drain their accounts.
Finance Minister Michalis Sarris told The Associated Press the restrictions would help stem any mass deposit withdrawal that is "bound to happen" and that they would be removed in a "relatively short period of time."
[...] late Monday, authorities announced that the bank closures would be extended until Thursday, giving officials more time to initiate a major overhaul of the banking sector and devise capital controls to limit the amount of money that can be taken out of accounts.
Under the deal for a 10 billion euro ($12.9 billion) rescue clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks.
Much of the 5.8 billion euros will be raised by forcing losses on accounts of more than 100,000 euros ($129,000), in the country's second-largest lender, Laiki, with the remainder coming from tax increases and privatizations.
Cyprus' government spokesman Christos Stylianides told Greek state Net TV that losses on Bank of Cyprus deposits above 100,000 euros will hover at around 30 percent.
Fitch credit rating agency warned Tuesday that it may downgrade Cyprus further into "junk" status amid concerns that the shock from the banking sector's "systemic failure" heightens the risk to public finances.
Finance Minister Michalis Sarris told The Associated Press the restrictions would help stem any mass deposit withdrawal that is "bound to happen" and that they would be removed in a "relatively short period of time."
[...] late Monday, authorities announced that the bank closures would be extended until Thursday, giving officials more time to initiate a major overhaul of the banking sector and devise capital controls to limit the amount of money that can be taken out of accounts.
Under the deal for a 10 billion euro ($12.9 billion) rescue clinched in Brussels early Monday, Cyprus agreed to slash its oversized banking sector and inflict hefty losses on large depositors in troubled banks.
Much of the 5.8 billion euros will be raised by forcing losses on accounts of more than 100,000 euros ($129,000), in the country's second-largest lender, Laiki, with the remainder coming from tax increases and privatizations.
Cyprus' government spokesman Christos Stylianides told Greek state Net TV that losses on Bank of Cyprus deposits above 100,000 euros will hover at around 30 percent.
Fitch credit rating agency warned Tuesday that it may downgrade Cyprus further into "junk" status amid concerns that the shock from the banking sector's "systemic failure" heightens the risk to public finances.
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