CYPRUS: Deposits in the banking system shrink by 745 mln in June

Deposits in the Cyprus banking system declined by €745.2 mln to €50.18 bln in June 2018 compared with a net increase of €201.2 mln the previous month, Central Bank of Cyprus (CBC) said on Thursday.

Although the Central Bank gave no reason for the drop in deposits the decline could have been affected by a mini-bank run on the Co-op over fears of bankruptcy before a deal with Hellenic Bank was sealed by parliament approving state guarantees on July 8.

During the panic surrounding the sale, Co-op customers withdrew hundreds of millions of euros from their savings accounts.

According to the monthly data issued by the CBC, the annual growth rate also slowed to 3.9%, compared with 4.6% in May 2018.

The amount of deposits in the banking system in June fell 1.43% to €50.18 bln down from €50.91 in May, the CBC said.

Compared to a year ago deposits were up 3.44% from €48.51 bln in June 2017 to €50.18 bln in June 2018.

Furthermore, total loans in June 2018 showed a net increase of €305.2 mln, compared with a net decrease of €66.8 million in May 2018.

Nevertheless, the CBC said, the outstanding amount of loans decreased by €2.1 billion in June 2018, declining to a total of €46.7 billion, due to reclassification, revaluation, exchange rate or other adjustments.

The annual growth rate stood at -1.1%, compared with -1.8% in May 2018, the CBC said.