Angry Cypriots queued to withdraw money yesterday as banks reopened for the first time in nearly two weeks under a regime of strict capital controls.

While officials had feared a run on the banks, Cypriot depositors formed orderly lines of up to a few dozen, patiently waiting to access their accounts, and there were no reported incidents of violence.

'Mature behaviour'
Cyprus's foreign minister, Ioannis Kasoulides, hailed the "mature and responsible behaviour of citizens of Cyprus", drawing comparisons between their calm under the current circumstances and their resilience after the Turkish invasion of 1974.

Despite an exterior of calm, many people waiting at banks expressed growing fury at the government for a crisis that has crippled the island’s financial sector and brought business to a halt.

Residents of Cyprus will only be able to withdraw a maximum of €300 in cash per day from each bank where they hold an account, and local businesses will have to limit transactions to a maximum of €5,000 a day.

Credit card transactions will be limited to €5,000 a month, while Cypriot customs officials will ensure that travellers take just €1,000 in bank notes out of the country per trip.

In the well-heeled south of Nicosia, a crowd of about 30 people were pressed up against the revolving door outside Laiki Bank, where they were let in a few at a time by guards.

Meanwhile, data from the Central Bank of Cyprus published yesterday showed that savers from other euro zone countries withdrew 18 per cent of the cash they held in Cyprus, or €860 million, in February but that deposits from non-euro zone countries rose fractionally to €42.6 billion. Overall, deposits were down almost €1 billion to €67.5 billion.

Defended controls
The finance ministry defended the use of capital controls, describing them as necessary to stop a run on the banks and insisting they would be temporary. "The Central Bank of Cyprus and the government of Cyprus will review them each day with a view to progressive lifting of the measures as soon as circumstances allow," the ministry said.

The European Commission threw its support behind the measures for the first time, arguing yesterday that they did not violate EU legislation. Some experts had previously argued that they did. – (Financial Times Service)