Banks remained closed Tuesday in Cyprus as the Mediterranean island nation began to cope with life under terms of the $13 billion bailout it secured to avert an economic collapse.
The country began to shut down its second largest bank, Cyprus Popular, and restructure its largest, the Bank of Cyprus. The Cypriot central bank named a special administrator to run the Bank of Cyprus, prompting its chairman to resign.
Meanwhile, the Fitch credit rating service downgraded both banks to the default level, in part because of losses imposed on the banks' bond holders under terms of the rescue package Cyprus agreed to with their European neighbors, the European Central Bank and International Monetary Fund. In addition, Cyprus finance minister Michael Sarris said large depositors at the banks, those with more than $130,000 in their accounts, could lose as much as 40 percent of their money to help Cyprus pay for the bailout.
Several thousand youths protested outside parliament against the island's three international lenders and the terms of the bailout. Demonstrator Antonis Sahariu said Europe is for the masses, not just the wealthy.
"(We protest) against the measures that the EU and the Troika want to impose. Europe is for the people and not for just a few!"
The decision to keep banks closed until Thursday has added to the growing frustration among Cypriots. Accountant Takis Yalouris said the bank closures have sent businesses reeling.
"This is bad for the economy. They should not leave the banks closed for an extended period. Business is dead, and people are angry. This uncertainty is disturbing people.''
Cypriot President Nicos Anastasiades said in a televised speech Monday night that when the banks do reopen, capital restrictions will be imposed to prevent depositors from making massive cash withdrawals. But he said the restrictions would be "very temporary." He described the bailout terms as "painful" but the best the country could negotiate.
"The agreement that we came to is painful but, under the circumstances, the best we could secure."
Cyprus is the fifth of the 17 euro currency bloc nations where billions of dollars in bailouts have been needed to ward off bankruptcy, following Greece, Portugal, Ireland and Spain.