Recently, Cyprus Finance Minister Haris Georgiades stated that the country's largest bank—the Bank of Cyprus—and the entire banking sector have entered a phase of normalized operations. While the management and restructuring of the banks have achieved satisfactory results, the banking sector must continue to work on improving performance.
During the height of the financial crisis in 2013, the Cypriot banking sector was on the verge of collapse. The Cypriot government was forced to sign a 10 billion euro bailout agreement with the "Troika," and the Bank of Cyprus implemented a haircut on some depositors' savings. The banking sector announced a state of emergency capital controls, which did not end until July of that year.
Currently, the Bank of Cyprus remains heavily reliant on emergency liquidity assistance from the European Central Bank. As of September 2013, the ratio of non-performing loans (NPLs) held by the Bank of Cyprus exceeded 40%, representing the greatest challenge and threat facing the bank. An assessment team dispatched by the European Commission is scheduled to arrive in Cyprus next week to conduct the third review of the progress and results achieved by the Cypriot government and relevant sectors in fulfilling the bailout agreement.
Source: Economic and Commercial Counselor's Office in Cyprus
