Cyprus bank workers to strike over pension

Finance minister Harris Georgiades has vowed to do "whatever it takes" to sort out Cyprus' economy. Source: AAP

BANK employees in Cyprus have stopped work over fears pensions are at risk under the country's crippling bailout, as the new finance minister vows to do "whatever it takes" to right the economy.

Bank employees' union ETYK called a two-hour stoppage on Thursday over concerns pension funds at Laiki and Bank of Cyprus are not being protected under the island's 10 billion-euro ($A12.30 billion) bailout deal with the International Monetary Fund, European Commission and European Central Bank.

The strike comes despite reassurances last week from President Nicos Anastasiades that every effort would be made to preserve pension funds at the two banks.

There has been no labour unrest in Cyprus so far but the terms of the bailout will force the island to make painful reforms, raising taxes, downsizing the public-sector workforce, privatising some state-owned firms and drastically reducing the size of its bloated banking sector.

The country's new Finance Minister Haris Georgiades vowed on Wednesday to implement the bailout terms in full and warned of "difficult days ahead".

"We ... shall do whatever it takes to fix our public finances and put our economy back on track for growth," he said after being sworn in to his new post.

"Even though today's circumstances might be bleak, the medium- and long-term prospects remain excellent. We have received a blow but I'm absolutely confident we shall overcome."

Georgiades, 40, is a British-educated economist who had been serving as labour minister.

He takes over from Michalis Sarris, who announced on Tuesday he was resigning to co-operate with a judicial probe into the causes of the crisis.

Sarris had been chairman last year of failed bank Laiki, the collapse of which was a major contributor to the crisis.

Cyprus is already in recession, with unemployment at around 15 per cent and expected to grow sharply this year and next.

Forecasts before the deal was agreed saw GDP contracting by 3.5 per cent this year.

The deal will see Cyprus receive a 10-billion-euro loan with an interest rate of between 2.5 and 2.7 per cent, repayable over 12 years after a grace period of 10.

Under the final agreement, Cyprus won a two-year extension, from 2016 to 2018, to get its public finances in order.

It should get the first payment next month after the rescue is formally ratified, the European Commission said.

Banks have been operating under stringent capital controls since they reopened last Thursday, after a near two-week lockdown prompted by fears of a run on deposits.

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