Cyprus 'to limit funds that can be taken abroad'

Bank of Cyprus branch Bank of Cyprus is the country's largest bank

Cyprus may be set to impose a limit on the amount of money that can be taken out of the country, one of its main newspapers has reported.

The Kathimerini newspaper also said that authorities would impose a ban on cashing cheques, as the government prepares to announce capital controls on the banking sector.

The central bank said the report was only based on draft proposals.

Earlier on Wednesday, the boss of the Bank of Cyprus was sacked.

Cyprus is introducing capital controls as it seeks to raise 5.8bn euros ($7.4bn; £4.9bn) to qualify for a 10bn-euro bailout from the European Union, European Central Bank and the International Monetary Fund, the so-called troika.

Depositors in Cypriot banks with more than 100,000 euros could see 40% of their funds converted into bank shares, while those with less than 100,000 euros will not lose any funds - but face limits on what funds they can access.

The exact details of the capital controls are expected to be finalised later on Wednesday.

Speaking to the Financial Times, Cypriot Finance Minster Mr Sarris said that the controls would be reviewed after seven days, and that some banks could be exempted altogether.

According to the newspaper report Cypriots will be prohibited from taking more than 3,000 euros in cash abroad on each trip, and limited to spending 5,000 euros on their credit or debit card.

Concern about the ongoing situation in Cypriot has continued to weigh on the Athens stock market, with Greek shares ending down 4% on Wednesday.

Bank merger

Bank of Cyprus chief executive Yiannis Kypri confirmed he had been removed as head of the bank, which is the country's largest commercial lender.

Reuters reported that Mr Kypri had issued a statement about his removal, which said: "The reason I was given was that, based on the resolution decree recently passed by parliament and upon demands of the troika, an administrator had been appointed at the Bank.

"Until now I have not received a formal letter from the governor of the Central Bank on the matter."

A European Commission spokesman denied that the troika had demanded Mr Kypri's removal.

The BBC's Paul Mason: "Every figure in this document has the word 'euro' and two x's"

"These reports are not correct and decisions like this would any case be the responsibility of the Bank of Cyprus," a Commission spokesman said.

An administrator has been appointed to Bank of Cyprus to restructure the bank. It is being merged with the "good" parts of the failed Laiki Bank, which will be closed down.

Bank of Cyprus chairman Andreas Artemis handed in his resignation on Tuesday, along with four other directors, but the bank's board rejected the resignations.

Now Panicos Demetriades, the central bank governor, has sacked the entire board, according to the Cyprus News Agency.

Demonstrations

Mr Demetriades was widely criticised on Tuesday for suggesting that Bank of Cyprus was going to be wound up in the same way as is planned for Laiki Bank.

His comments led to demonstrations, calls for his resignation from Bank of Cyprus staff, and a hastily-drafted denial from Finance Minister Michalis Sarris.

Mr Demetriades said "superhuman" efforts were being made to get the banks ready for reopening on Thursday.

"Indications are that banks will open tomorrow with some restrictions on capital," said central bank spokeswoman Aliki Sylianou, speaking to the country's state broadcaster on Wednesday.

The banks have been shut since 15 March while the controversial 10bn-euro bailout was being negotiated.

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