The Association of International Banks operating in Cyprus said on Friday that they will stay on the island because they believe in Cyprus’ potential, despite a decision for a €10 billion bailout that shattered the domestic banking system.
The Cyprus financial system came at the brink of collapse last March when the authorities agreed with its international lenders on a €10 billion bailout, which featured a haircut of deposits over €100,000 in a bid to cover the capital shortfall of the island’s two largest banks. The Bank of Cyprus, the island’s largest lender, absorbed the “good part” of the Cyprus Popular Bank, which will be liquidated. The bailout was coupled with restrictions in capital movement, which hampered domestic activity. Capital controls, although they are being gradually relaxed, affect foreign banks that provided services to domestic customers.
“The international financial sector is still strong and is staying in Cyprus and despite of all difficulties that we all face during this year, we are in Cyprus, we are staying here because we believe in the future of the country, we believe in the big potential of the country we are operating and I think that we are demonstrating the examples of this future which will give the incentives for the development for the rest of the country”, Kirill ZImarin, President of the Association and Russian RCB bank CEO said, after a meeting with ruling Democratic Rally President Averof Neofitou.
“We are here because we believe that Cyprus has a future,” he added, noting “what is important to mention now at the end of the year is that the international banking system has demonstrated its health and is strong and is financially viable.”
He said that the Association raised several concerns. “These problems will be understood, will be discussed and, I hope, will be solved,” he added.
On his part, Neofitou said the meeting gave “messages of optimism.”
“Despite the harsh measures that have been taken in the banking sector and the blows our country has taken, the international banks that operate in Cyprus have not only overcome the blows from last March Eurogroup decisions, they have also regained deposits lost and today are in a stronger position than before,” Neofitou said.
He added the banks have posted profits despite the very difficult year.
Neofitou expressed his party gratitude that none of the 26 foreign banks operating in Cyprus opted to leave the island, following the Eurogroup decision on the Cypriot bailout.
“They haven’t done so, they showed confidence in Cyprus in the economy and its people and we are confident that with the efforts made by the government, Cyprus will emerge stronger. It will take patience and resolve to transform the crisis into an opportunity for our children and the future generations,” he concluded
