Cyprus bank deposits tumbled further in April

Cyprus business and household bank deposits fell 7.3% to 41.32 bln euros in April, following a fall of 4% in March from the previous month, while deposits in Greece dropped at a lower pace over the Cypriot banking crisis affecting Greek depositors as well.
Government officials have been trying to spur growth and revive confidence in the market that is reliant on the services and banking sector, but a 10 bln euro bailout from lenders ECB and the IMF.
Harsh conditions included a “bail in” that subjected all depositors of amounts of over 100,000 euros to a 37% haircut in order to finance the recpitalisation of local banks exposed to huge losses on Greek sovereign debt.
The economy came to a standstill in March after the Eurogroup of Eurozone ministers imposed the haircut and forced the island’s second largest lender, Popular Laiki Bank, into resolution, with the Bank of Cyprus inheriting a further debt burden of 10 bln euros as the banking sector looks to consolidate.
Most of the depositors withdrawing their money included foreign-owned entities and individuals, probably from Russia, who had been targeted by the Eurogroup as conducting money laundering through Cyprus banks. They have subsequently moved their deposits to banks in Baltic states, British colonial tax havens and other jurisdictions.
In Greece, where the island’s three main banks were forced to give up their vast branch network as part of the ‘Troika’ bailout plan, deposits were down 1.1% from 164.1 bln euros in March to 162.29 bln, according to European Central Bank data. Spain saw a similar development with a 1.5% fall, while deposits in Italian and Portuguese banks fell less than 1% each.