CYPRUS: Russian deposits in Cypriot banks is shrinking

Third country nationals, especially Russians, are withdrawing tens of millions in deposits from the Cyprus banking system continuing a trend that was sparked during the banking crisis.

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The end of 2018 saw third-country national deposits shrink EUR 1.4 bln mainly due to Russian and Ukrainian citizens withdrawing their cash from Cyprus banks.

According to Cyprus Central Bank data, third-country national deposits, which played a significant role in strengthening bank liquidity, have significantly shrunk over the past 7 years, dropping by EUR 14.51 bln from 2012.

A large portion of the reduction concerns deposits that underwent the haircut in 2013 – a condition for Cyprus receiving a EUR 10 bln bailout from international lenders.

Deposits of European citizens declined by EUR 61 mln in 2018 compared to the previous year. The vast majority of EU depositors are Greek. Many had preferred the Cypriot banking system due to the debt crisis and speculation shadowing Greece’s future as a member of the Eurozone a few years back.

In 2011 EU national deposits amounted to EUR 5.35 bln, they have since decreased by EUR 2 bln at the end of 2018.

Meanwhile, local deposits also dropped by EUR 208 mln in 2018, however, but compared to 2016 there is an increase of EUR 1.5bln. Compared to Cypriot cash deposited in 2011, there is a decrease of EUR 6.14 bln.

The Cyprus banking system hosted deposits worth a total of EUR 47.86 bln at the end of 2018, dropping by 1.5 bln compared to the previous year. The total decrease from 2012 amounts to EUR 21.43 bln.

Loans declined by EUR 12.1 bln in 2018 after falling to EUR 39.2 bln from EUR 51.4 billion in December 2017.

Housing loan balances declined by EUR 2.75 bln in 2018 compared to the previous year. Compared to 2016, the reduction in housing loans is EUR 3.3 bln. Since 2011 the size of housing loans has dropped by EUR 5.47 bln.