Forex deposits at Cyprus banks decline on Russian outflow

Deposits placed with Cyprus banks continued to decline by December 2008 for a second consecutive month, probably as a result of Russians taking their money out of Cyprus banks to meet other contingency needs.

Total deposit growth placed at Cyprus banks was at its slowest pace seen, climbing by 6.6% year-on-year to EUR 56.01 bln by December 2008 compared to EUR 52.5 bln in December 2007, according to the Monetary Survey of the Central Bank of Cyprus.

Total deposits in November 2008 amounted to EUR 56.68 bln, while according to data collected by the Financial Mirror, the highest amount of deposits ever recorded with Cyprus banks was in October 2008, when it reached EUR 57.4 bln.

Domestic resident deposits increased by 22% YoY to EUR 39.46 bln, but were down 1.3% MoM. The highest level ever reached was in October, when domestic deposits amounted to EUR 40.2 bln. Other euro area deposits fell 21.5% YoY to EUR 1.09 bln.

Russians flee
The most worrying concern for Cyprus based banks – which also include the International Banking Units, formerly known as Offshore banks – was the steep 18% YoY decline in deposits by non-euro area residents, the majority of whom are Russians, followed by those from Ukraine and then by other rest of the world nationals.

Such deposits amounted to only EUR 15.46 bln by December 2008, down from EUR 18.82 bln in December 2007 and EUR 15.54 bln end of November 2008.

Financial Mirror data show that the top month was in April 2008, when deposits from rest of the world countries reached EUR 20.23 bln.

Financial Mirror, February 02, 2009

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