Foreigners cut deposits with Cyprus banks

Russian citizens and other CIS nationals reduced their deposits in Cyprus banks in November by EUR 400 mln, while compared to a year ago, the amount of money they have whisked out of Cyprus banks has totalled just under EUR 3 bln.
Total deposits placed with Cyprus banks in November reached EUR 56.69 bln, which while up 11% compared to EUR 51 bln in November 2007, were down 1.5% from EUR 57.34 in October 2008, according to the Monetary Survey of the Central Bank of Cyprus.
The monthly decline was due to foreign residents reducing their deposits with Cyprus banks from EUR 15.92 bln in October to EUR 15.53 bln in November. Compared to a year ago, deposits by non-euro area residents are down EUR 3 bln from EUR 18.28 bln in November 2007.
Cyprus residents maintained their deposits with local banks at EUR 39.97 bln in November, up 27% compared to EUR 31.37 bln a year earlier, but down moderately from EUR 40.2 bln reached in October as the aggressive deposit rates on offer convinced people to keep their money with the banks.
While the advertised deposit rates by banks for 3-month deposit averages 6.5%, a number of banks in Cyprus had been offering rates of up to 7.25% for 3-month money placed by high net-worth individuals and provident funds involving sums in excess of EUR 250,000.
A number of bankers told the Financial Mirror that they expect the pressure on deposit rates to ease from the New Year as the global interbank market starts functioning again, credit tightness eases and the effects of massive easing by central banks starts to trickle down to the rest of the economy.
Meanwhile, loan growth in November continued to hold well, increasing 38.75% year-on-year compared to November 2007, but the global credit crisis finally reached Cyprus, curtailing credit growth from the brisk pace reached in October 2008.
According to the Central Bank’s November Monetary Survey, total loans to non-MFIs reached EUR 54.16 bln expanding by 38.75% YoY (+0.4% MoM).
Consumer credit reached EUR 4.17 bln (+42.8% YoY; – 0.1% MoM), housing loans were at EUR 10.02 bln (+31.1% YoY; -0.1% MoM), while other lending to households was stable at EUR 6.69 bln. Corporate lending reached EUR 26.99 bln in November 2008 for a 46.8%YoY increase and up 0.9% MoM.
Total loans to domestic residents reached EUR 42.80 bln, up 29.8% YoY (-0.3% MoM), while loans to other euro-area residents reached EUR 1.88 bln, surging 118% YoY.