This insight explores the background to the Cyprus financial crisis and the planned road to recovery for the banking industry operating on the island, including the two largest banks in Cyprus: Bank of Cyprus and Laiki Bank, from our experts including Jolanta Narmontaite base in our Cypriot Office and Mark Quirke, Managing Director of Animo Associates based in the Essex, UK office.
- Cyprus Financial Crisis escalated with the imposition from the Eurogroup of a haircut to the deposits (bailout) in the island’s 2 bigger banks Bank of Cyprus and Laiki Bank.
- Bank of Cyprus has reached the amount of €9.9 Billion for ELA (Emergency Liquidity Assistance) since the bailout.
- Before the bailout there were 41,7% non-performing loans.
- Imposition of Capital Controls to all the Banks in Cyprus.
The road to recovery for Cyprus:
- The 3-year macroeconomic adjustment program Cyprus entered was successfully enforced and the results are more than encouraging not just for now but for the future as well.
- Tourist Sector has grown remarkably in 2016 reaching at its highest point since 2002.
- 3% average growth rate for 2016.
- Stabilization of the residential property prices.
- Financial sector and especially financial and professional services sector not only was not affected, it continued performing even better than originally estimated. Cyprus hold its position as International Business Centre.
- Unemployment, especially youth unemployment appears to be on a downturn with low unit labour cost boosting competitiveness.
- The Council of Ministers have taken a decision that boosted and encouraged foreign investments by providing Cyprus citizenship to investors who wanted to invest their money in Cyprus.
- Capital Controls were removed faster than anticipated.
- Real GDP growth has shown a remarkable improvement reaching 2,7% in the second quarter of 2016.
- Credit rating Agencies Fitch and S&P Global upgraded Cyprus’ ratings with a positive outlook.
- Cyprus have successfully returned to international bond markets in 2015.
- Banking system was recapitalized and reformed.
- All systemic banks have successfully passed all the Stress tests.
For more information contact us:
Director of Animo Cyprus
Based in the Cypriot Office
Telephone: +357 22678369
Fax: +357 22678371