BUSINESS

Cyprus bank deposits rise 1.2 pct y/y on non-EU inflows

Deposits in Cyprus's banking system rose 1.2 percent year on year in 2012, Central Bank data showed, driven by inflows from outside the European Union amid financial strain on the island which is seeking an international bailout.

Combined deposits in Cyprus-based banks stood at 70.15 billion euros at the end of December. The bulk, 43.3 billion euros' worth, were held by Cyprus residents.

Depositors from other EU member states held 5.3 billion euros in the system, 1.2 percent down from a year earlier.

Depositors from the rest of the world, generally believed to be mostly Russians though the Central Bank does not offer a breakdown of data, held 21.5 billion euros on the island. That was a 7 percent increase over 2011.

Cyprus's close business ties with Russia have come under scrutiny from its euro zone peers while it negotiates desperately-needed financial aid. The island, which offers the lowest nominal corporate tax rate in the euro zone, has been accused by some politicians, particularly in Germany, of being a hub for money laundering.

Cyprus denies the charge, saying its financial regulations are continuously being reviewed and tightened to ward off illicit activities.

The island, one of the smallest in the 17 member euro zone, sought financial aid in June 2012 after its banks reported significant losses to an EU-sanctioned debt writedown for Greece. Its total bailout bill could reach 17-17.5 billion euros, roughly equalling its annual output.

[Reuters]

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