NICOSIA (AFP) - Cyprus scrambled on Wednesday to finalise capital controls to avert a run on banks, a day before they are due to reopen after a nearly two-week lockdown while the island secured a huge bailout.
The main opposition party was also due to hold a major rally, following protests by thousands of bank workers and students on Tuesday against the 10-billion-euro (S$16 billion) EU-IMF rescue package.
The central bank governor said on Tuesday that authorities were making "superhuman" efforts to get shuttered banks ready to open on Thursday as promised, and give relief to struggling homes and businesses.
But they have yet to detail measures to stop Cypriots draining their accounts, including the so-called "haircuts" that major depositors in the two biggest banks, including many Russians, face as part of the bailout.
Finance Minister Michalis Sarris told the Financial Times newspaper that the capital controls will be imposed for a seven-day period and then reevaluated, and that they will be "very differentiated" according to various banks.
"We are trying to figure out a sensible set of measures that is flexible enough to allow the functioning of the economy," Mr Sarris told the FT in an interview published on Wednesday.
Cyprus officials have defended the controversial bailout as necessary to stave off bankruptcy and prevent the Mediterranean nation's exit from the euro, an event that would have caused chaos on global markets.
In a separate interview with state television, Mr Sarris warned that uninsured savers at the country's second biggest bank, Laiki or Popular bank, faced losses of up to 80 per cent on deposits over 100,000 euros.
"Realistically, very little will be returned," he said.
"The amount (returned) could be 20 per cent. Certainly, for depositors above 100,000 euros it could be a very significant blow."
Savers in Bank of Cyprus, the island's biggest bank, have already been warned they stand to lose 40 per cent of their savings over 100,000 euros.
The bailout deal struck in Brussels on Monday involves tough reforms to the bloated Cypriot banking system, with Bank of Cyprus absorbing the salvageable parts of Laiki, which will be wound up.
On Tuesday, central bank governor Panicos Demetriades said the delay in reopening the banks was to ensure good capital controls but also so strengthen the Bank of Cyprus.
"A superhuman effort is being made for the banks to open on Thursday," he said.
But hundreds of Bank of Cyprus employees rallied outside the central bank on Tuesday amid fears for their jobs after an administrator was appointed for the debt-hit lender.
Bank of Cyprus chairman Andreas Artemis tendered his resignation on Tuesday over concerns about the impact of the bailout but the board of directors refused to accept it.
Thousands of students staged their own rally in Nicosia on Tuesday against the "troika" of the European Union, European Central Bank and International Monetary Fund over the years of austerity they face as a result of the bailout.
Many Cypriots feel their country was unfairly treated compared to other euro nations that have been bailed out such as Greece and Spain.
The communist Akel party has announced that it would stage a major demonstration against the rescue package at 6:00 pm (midnight Singapore time) on Wednesday outside the presidential palace.
In Greece, subsidiaries of the three main Cypriot banks - Bank of Cyprus, Laiki and Hellenic Bank - reopened after they were taken over by a Greek lender even as the Cypriot branches stayed closed.
The international ripples from the crisis continued as London announced that British pensions will not be paid into the Cypriot bank accounts of expatriates for the foreseeable future.
Britain has also flown 13 million euros into Cyprus for personnel at the two military bases it still keeps on the island, a colony until 1960, finance minister George Osborne said.
Swedish foreign minister Carl Bildt was due to arrive in Cyprus for talks with President Nicos Anastasiades on Thursday.
Stock markets have, however, largely recovered from a dip caused by comments by Eurogroup chief of finance ministers Jeroen Dijsselbloem on Monday which were interpreted as suggesting actions in Cyprus could act as a template for future bailouts.