ECONOMY

Bank of Cyprus sees deposits drop by over a third

Bank of Cyprus said that deposits shrank by over a third in the first half of 2013, a period in which it was a central player in the country’s messy financial crisis.

Cyprus’s largest lender said that deposits fell 40 percent to 17 billion euros by the end of June from 28.4 billion euros six months earlier.

During that period, Cyprus negotiated a financial rescue with its euro partners and the International Monetary Fund that forced uninsured depositors to take big losses on savings in the country’s top two lenders.

The seized money was used to boost Bank of Cyprus’s depleted capital buffers. The bank also absorbed parts of the now-defunct Laiki Bank.

A more detailed look at the statement shows that savers withdrew 4.1 billion euros from the bank during the half-year, even though Cypriot authorities imposed capital controls to prevent a run.

The bank said it lost another 7.7 billion euros in deposits when the rescue agreement forced it to sell its extensive operations in Greece.

Also under the deal’s terms, some 3.8 billion euros in savings were converted into bank shares. [AP]