Cyprus' Banks Might Never Reopen, Warns Germany

Cypriot officials acknowledge tomorrow's planned opening may not occur
By Kate Seamons,  Newser Staff
Posted Mar 20, 2013 6:55 AM CDT
Updated Mar 20, 2013 7:51 AM CDT
Cyprus' Banks Might Never Reopen, Warns Germany
Protester stand in front of a banner which reads "Cyprus Says No" during a crucial parliamentary vote on a plan to seize a part of depositors' bank savings.   (AP Photo/Petros Giannakouris)

On the heels of yesterday's crushing rejection of its controversial bank deposit tax, the what-the-heck-is-Cyprus-going-to-do watch continues. The BBC reports that President Nicos Anastasiades is in crisis talks with party leaders and examining "alternative plans." The country's banks remained closed through tomorrow, and officials now say the closure could be extended until Tuesday. But Germany's finance minister last night issued a much more dire warning: Cypriot banks may never reopen. Wolfgang Schäuble's key statement, per the BBC:

  • "The ECB (European Central Bank) has made it clear that without a reform program for Cyprus the aid can't continue. Two big Cypriot banks are insolvent if there are no emergency funds from the European Central Bank. Someone has to explain this to the Cypriots and I think there's a danger that they won't be able to open the banks again at all."

One of its plan B options may involve Russia, which received a Cypriot delegation in Moscow. The Wall Street Journal reports that the group intended to discuss a "long-shot plan" in which Russia would hand over billions and get a share in the country's banks and offshore energy fields in return. But as of today, "There were no offers, nothing concrete," says Cyprus' finance minister, "we're happy with a good beginning." The other plan Bs the BBC floats: bank mergers or a bond issue. In the meantime, the country is considering "contingency measures" that could be put in place should the banks reopen, such as daily withdrawal maximums and slowing the pace with which transactions clear. (Read more Cyprus stories.)

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