By Michele Kambas and Karolina Tagaris
NICOSIA (Reuters) - Public shock in Cyprus about the tough terms of an international bailout is turning into anger as millions of euros remain locked in the country's banks.
Cypriots were stunned by last month's collapse of its second-biggest lender, Popular Bank, and a decision to slap losses on large deposits at the Bank of Cyprus in return for financial aid from the European Union and IMF.
They are now demanding answers after allegations earlier this week that a company connected to the family of President Nicos Anastasiades shifted money out of one of the distressed lenders just before the banking system was effectively locked down on March 15.
Anger and impatience is rising as the results of an official inquiry into what caused the crisis, and exactly who knew what and when, is unlikely to be ready for weeks.
Banks reopened last week but Cypriots can withdraw only 300 euros ($390) a day under a range of controls imposed to prevent panicked residents from emptying their accounts or moving all their savings abroad. Anxiety is being deepened by confusion over how the hastily-imposed rules should operate.
Hundreds of bank workers protested outside parliament on Thursday, worried that they could lose much of their pension savings under the terms of the bailout deal. This stipulates that some depositors have to bear part of the rescue's cost if their accounts hold more than 100,000 euros ($128,500).
"I am disappointed and angry," said Iacovos Louca, 53, who works at Popular Bank, which is being wound down under the 10 billion deal with the EU and International Monetary Fund. "The politicians are out of touch with our problems and the big guys, who had the information, managed to take their money abroad."
A copy of a bank statement, first published in the Cypriot communist newspaper Haravghi which maintains it is genuine, shows a company whose owners are related to the president by marriage moving money out of Popular in early March.
The company says there was nothing untoward or non-transparent in the transaction used to facilitate a real estate project abroad. It has also said many more millions of its funds remain locked in the Cypriot banking system.
One company in Nicosia which has several offices abroad has been caught in limbo as the central bank now has to approve transfers out of Cyprus over 25,000 euros. As part of the company's payroll is managed from the island, payments to employees abroad are being delayed because of the vetting process and currency controls to avoid a bank run.
"We have held clients' money for certain pre-paid jobs, and we have a cash flow issue now," the owner of the services company said, on condition of anonymity. "We have to make payments of more than 1 million euros on behalf of our clients, and now we can only use 100,000."
Lack of clear answers on where their money may end up is fuelling public frustration.
Andrew Georgiou, a 55-year-old British consultant who moved to Cyprus a year ago with the earnings from the sale of his home in London, says all four accounts he holds with Popular - even a sterling account containing just 22 pence - are blocked.
These totaled 97,000 euros and under the bailout deal, deposits under 100,000 are fully insured. Nevertheless, Georgiou is now unable to access any funds.
Georgiou, who is of Cypriot descent, said Popular Bank had justified its action on the grounds that he was also considered a beneficiary to an account held by his 78-year-old father. It also covered money held in a trust for medical expenses.
"I wrote to the central bank and they came back saying that it was not their competence, so whose competence is it?," said Georgiou. "Nobody is explaining where anyone should go with a problem."
As a result, Georgiou has been told he and his father could eventually be entitled only to a combined 40,000 euros despite the 100,000 euro guarantee, a fraction of their savings in Popular. "Absolutely nothing adds up," he said. "They told us it was 140,000 last week."
Georgiou and others like him are in for a long wait to figure out what went wrong. Three judges appointed to look into the island's financial collapse started work on Thursday.
With an extensive remit ranging from the business sense of Cypriot banks hoarding a mass of Greek government bonds while others were selling them and the prudence of government fiscal policies, the judges will need a small army of consultants.
Cypriots are, in the meantime, resigned to years of hardship. Iraklis Paraskeva, 53, has three children to support, now studying in Greece. "I am going to find myself in the street with no future, only debts. But we will fight to the end. We have nothing left to lose." ($1 = 0.7780 euros)
(editing by David Stamp)