Cyprus's banks opened for the first time in almost two weeks,with new rules curbing access to cash preventing an initial panicto withdraw deposits.

“We expected much more people,” said Argyros Eraclides, managerof a Bank of Cyprus Plc branch in the Stavrou area of Nicosia.“Fortunately there are only some people who needed cash for theday, but customers reacted fantastically. We expected some peopleto be more aggravated.”

Banks opened at midday local time today, with lines of about 15to 20 people waiting to enter branches in the Cypriot capital. Theyclose at 6 p.m. The Central Bank of Cyprus's controls include a300-euro ($383) daily limit on withdrawals and restrictions ontransfers to accounts outside the country.

Cyprus's lenders had been closed since March 16, when theEuropean Union presented a proposal to force losses on alldepositors in exchange for a 10 billion-euro bailout. That plantouched off protests and political upheaval on the island, and wasrejected by the country's parliament. A subsequent agreement shutCyprus Popular Bank Pcl, the second-largest lender, and imposedlarger losses on uninsured depositors.

The controls will be in force for seven days, according to astatement from the Finance Ministry. The European Commission saidin a statement today the control on capital movements must remain“proportionate” and be lifted as soon as possible.

Cyprus President Nicos Anastasiades thanked Cypriots formaintaining calm as banks opened, with many savers heeding thegovernment's call for citizens not to rush to banks or seeking toavoid potential chaos.

“I would like to thank the Cypriot people for their maturity andcollectedness shown in their interactions with the Cypriot banks,”Anastasiades said on his Twitter account.

Security guards at banks in Nicosia were allowing about eight ornine customers in branches at any one time today, with orderlylines forming after an initial push at the doors to get in. Manywere older customers without cash-machine cards, while others werewaiting to pay bills or deposit checks.

“I only bought a few small items during these days to survive,”said pensioner Kyriakos Hadjisophocleos, 65, who was waiting on abench in front of a Bank of Cyprus branch in Nicosia from 7:30 a.m.to get money to pay part of his 380-euro rent. “I had many coinssaved up so I was using them. If the banks didn't open today Iwould have had to borrow from some friends.”

Stocks and the euro rose, with the single currency climbing 0.2percent to $1.2804 at 2:21 p.m. in Frankfurt. Spanish bonds slid,with the 10-year yield rising two basis points, or 0.02 percentagepoints, to 5.09 percent.

The Cyprus Parliament last week gave wide-ranging powers to thecentral bank governor, Panicos Demetriades, and Finance MinisterMichael Sarris, who have spent the last days deciding whichmeasures to implement.

Those chosen include bans on terminating time deposits andcashing checks. Customers can transfer abroad at most 5,000 eurosper month from a given financial institution.

“People have organized their budget for the week through the ATMmachines and the radio has been calling on people not to run to thebanks today,” Maria Kyriacou, a Cypriot ruling-party lawmaker, toldBloomberg Television.

Chaos Fear

“I will not go to the bank today because I'm afraid that it willbe chaos,” said Maria Charalambous, a grocery store owner. “You donot know who will be behind you in the line and you could end upgetting robbed. I will wait and see.”

Cypriot banks lost 1 billion euros in deposits in February amidrising uncertainty over the country's ability to secure a bailout,European Central Bank data showed today.

Cyprus in June became the fifth euro-area nation to request arescue, after Greece's debt restructuring trashed the financialhealth of lenders including Bank of Cyprus, the nation's biggestlender, and Cyprus Popular.

The 18 billion-euro economy is the third-smallest in the17-nation euro area. Before the bailout, which was coupled with anausterity package, the European Commission predicted a contractionof 3.5 percent in 2013. Economists said afterward that the damagewill be greater.

Moody's Investors Service yesterday lowered the highest ratingthat can be assigned to a domestic debt issuer in Cyprus to Caa2,citing a growing risk that the country would exit the euro. Thecompany said Cyprus's Caa3 government bond rating and negativeoutlook remain unchanged.

Listed Greek companies reported the amounts of the deposits theyheld in Cypriot banks at the request of the Hellenic CapitalMarkets Commission. Jumbo SA, Greece's biggest toy retailer, saidit holds about 58 million euros at Bank of Cyprus and predictedsales in Cyprus would drop as much as 25 percent by the end of thecurrent fiscal year.

Deposits at Alpha Bank SA's Cypriot unit stood at 2.7 billioneuros at the end of 2012, Chief Financial Officer Vassilios Psaltissaid yesterday. Alpha, Greece's third-largest lender and the onewith the biggest presence in Cyprus, reported a 1.1 billion-euroloss for the year.

“I won't go to the bank today because I have no money,” AntonisEvripidou, 53, a taxi driver in Nicosia, said today. “I owe money.Things will only get worse. This is only the start.”

Bloomberg News

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