- POSTED: 12 Oct 2013 02:55
This graph is an experimental feature that tracks number of views over time.
Bank of Cyprus, the recession-hit Mediterranean island's largest lender, on Friday announced a record loss of 2.21 billion euros (US$3 billion) in 2012, up more than 60 per cent on its 2011 losses.
NICOSIA: Bank of Cyprus (BoC), the recession-hit Mediterranean island's largest lender, on Friday announced a record loss of 2.21 billion euros (US$3 billion) in 2012, up more than 60 per cent on its 2011 losses.
Cyprus agreed in March to a 10-billion-euro rescue package negotiated with the European Commission, European Central Bank and International Monetary Fund (IMF) to bail out its troubled economy and oversized banking system.
The deal included the closure of the island's second-largest bank Laiki and a 47.5 per cent "haircut" on deposits above 100,000 euros at the Bank of Cyprus.
"Events following Eurogroup's decision on Cyprus have significantly impacted the Bank of Cyprus Group," the BoC said in a statement.
It said profit before penalties and restructuring costs was 620 million euros in 2012, down 22 per cent from 797 million euros the year before.
There was also a significant 441 per cent spike in provisions for bad debt to 2.30 billion euros from 426 million euros in 2011, driven by the deterioration of the bank's loan portfolio.
The unprecedented "haircut" on deposits forced the government to close all the island's banks for nearly two weeks in March and impose draconian controls when they reopened.
To prevent a rush on deposits, there is still a 300-euro daily cash withdrawal limit, while cheques cannot be cashed and central bank approval is needed for large business transactions.
The BoC has only now been able to announce its results after a restructuring and the appointment of a new board.
The bank said it has suffered financially from disposing its Greek operations, absorbing Laiki's operations in Cyprus and Britain, and discarding its retail business in Romania.
But it said it has been "recapitalised to a level which can sustain possible future losses on its loan portfolio," with share capital of 4.7 billion euros.
Its non-performing loans ratio at the end of last year reached 23.7 per cent, compared to just 10.2 per cent in 2011.
However, the bank pointed out that "despite the prevailing adverse economic conditions which affected the trust and confidence of depositors," its total deposits had declined by just four per cent by December 31, 2012, to 28.4 billion euros.
Total income for 2012 reached 1.357 billion euros, 12 per cent less than in the previous year.
"The recapitalisation of the bank, and the restructuring currently in progress, aim to create a healthy financial institution, able to best serve client needs and contribute to the recovery of the Cyprus economy," the BoC said.