Insider Economy Foreign deposits in Cyprus down in 2018 due to stricter AML rules

Foreign deposits in Cyprus down in 2018 due to stricter AML rules

Deposits of non-residents in the Cypriot banking system fell by nearly 13% in 2018 as a result of stricter policies against money laundering, the Central Bank of Cyprus has said.

Non-residents, including of special purpose entities, recorded in December 2018 a drop of 12.7% on an annual basis, compared to a drop of 2.1% in December 2017.

Central Bank data show that on the basis of net transactions deposits of non-residents presented a drop of €1.4 billion.

“This is partially due to stricter guidelines given to the banks in the framework of enhanced practices in combating the legalisation of income from illicit activities,” the Central Bank says in its annual report for 2018.

In contrast, the uncertainty caused by the transaction of the former Cyprus Cooperative Bank (CCB) resulted in a stabilisation of Cypriot residents’ deposits, which recorded in December of 2018 an increase of 2.1% on an annual basis, compared to an annual increase of 5.5% at the end of 2017.

At the same time the Central Bank notes that the sale of certain assets and obligations of the CCB to the Hellenic Bank and the conversion of the first into an credit purchase company since it has to manage non-performing exposures, which were not transferred to the Hellenic Bank of the order of €7 billion, were significant developments during the year.

The former CCB’s NPEs are now outside the banking sector, which has visibly reduced the amount of NPEs in the Cypriot banking system, the report reads, while the Bank of Cyprus has also sold NPEs of the order of €2.8 billion.

As a result, the Central Bank says, until September 2018 (latest available data), NPEs recorded a sharp drop. The sale of NPEs and the reclassification of loans as assets which are available for sale contributed to that.

“Despite the significant progress achieved, NPEs are still in higher than the rest euro area levels, burdening the local banking sector and limiting the offer of credit,” the Central Bank says.

The Central Bank also estimates that a further reduction of NPEs will take place as a result of a strengthened legal framework and the expected implementation of the “ESTIA” scheme.

The merger of USB with Astrobank is also referred to as a significant development.

The Central Bank of Cyprus notes however that at the end of 2018 the global economy had deceleration signs due to the global economic cycle maturing, a reduction of monetary support measures in developed economies and the impact of the imposition of duties between the United States and China.

It therefore, expects a deceleration of the GDP growth rate in 2019 and its stabilisation in the next two years.

For  2018 it expects a growth rate of 3.8% with a gradual deceleration to 3.2% until 2020. However, it projects that the growth rate will reach 3.3% in 2021, taking into account “a conservative estimate on the impact of the casino operation.”

(Cyprus News Agency)


Top Stories

France recalls ambassador to Ankara over Erdogan comments

  France condemned Turkish President Recep Tayyip Erdoğan’s remarks questioning the mental health of President Macron and recalled its ambassador to Ankara for consultations. The French...

130 cases today, most from private initiative-28 patients in hospital

  One hundred and thirty new Covid-19 cases were announced today, out of 4 thousand 285 tests, taking the total number of confirmed patients to...

Greece approaches four-digit covid cases, 935 today

  The second coronavirus wave is climaxing in Greece as it recorded 935 cases today, the highest number since the second wave begun gathering pace...

Erdogan says Macron needs ‘mental treatment’ over attitude to Muslims

  Turkish President Tayyip Erdogan launched yet another scathing tirade of insults on his French counterpart Emmanuel Macron, saying he needed mental treatment over his...

We are independent, Michaelides tells AG over golden passports

  We are not under anyone's custodianship, the Auditor General Odysseas Michaelides told Attorney General Yiorgos Savvides, who earlier called on his office to stay...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...