Cyprus became the latest euro zone domino to teeter in 2012 just when the worst of the crisis appeared to be over. In March 2013, a compromise rescue plan backed by euro zone finance ministers called for Cyprus to wind down one largely state-owned bank, Popular Bank. The raid on Popular Bank was intended to raise most of the 5.8 billion euros that Cyprus was required to raise as part of the bailout.
Closure fears spark run on Popular Bank in Cyprus
Anxious Cypriots queued outside Popular Bank ATM machines to withdraw their cash as fears rose that the country's financial crisis would mean its second-largest lender closes for good.
"It's all about cash now. Only a gambler will take cheques in this situation," said retired government official Phaedon Vassiliades as he withdrew money from the bank's ATM at Nicosia's Ledra Street tourist hot spot on Thursday.
Behind the wheelchair-bound Vassiliades, a queue of apprehensive men and women waited to claw back as much as they could, while tourists took pictures on mobile phones and cameras.
"There are rumours that Laiki Bank [the Greek name for Popular Bank] will never open again. I want to take out as much as I can," Vassiliades said.
"I have nearly €60,000 (HK$601,000) as savings in this bank and some credit societies. I don't know if I will ever get it back now. This is what I had and now it seems it is all gone."
Similar queues of Popular Bank depositors formed across central Nicosia, with some using multiple ATM cards to withdraw whatever they could, often to the annoyance of those waiting.
Depositors spoke of panic after reports that the government, struggling to halt a potential financial meltdown since an EU bailout package was first announced, was considering merging Popular Bank with the Bank of Cyprus. The latter is the island's largest bank.
In an effort to end the panic, a central bank spokeswoman, Aliki Stylianou, denied the rumours of the bank's closure.
Popular Bank later imposed a limit on cash withdrawals of €260 per day, saying the curb was due to "high demand for cash" from customers taking out their daily limits of up to €700.
Popular Bank customers said they did not trust the government's efforts.
"Cyprus is sinking. [The EU and the international community] are prepared to let Cyprus sink," said Gautam Kapoor, a Briton working for a Greek metals company, as he waited outside another Popular Bank ATM.
"The markets have already factored in the Cyprus debacle. Nobody is going to have trust in Cyprus again. I just want to withdraw cash as much as possible as even fuel stations and department stores are now accepting only cash."
The manageress of a nearby service station confirmed she would take only cash. "I have to pay cash to my fuel supplier so I'm accepting only cash," she said.