Who is cyprus bank

Progress in addressing NPLs has been slow, but new legislation on foreclosures and insolvency passed in July is helping banks address this problem more effectively. To support these efforts, the European Investment Bank and European Bank of Reconstruction and Development, have made lending and guarantee programs available in Cyprus. Bank financial statements are in compliance with international standards and audited by internationally recognized auditors.

Since , a deposit insurance scheme has been in operation, under the Banking Law of Regulations passed in the summer of raised the guaranteed amount under this scheme from EUR 20, to EUR , per depositor.

Banking supervision has improved in the past few years. Visit the following links for more information about banks website available only in the Turkish language and the banking system in the area administrated by Turkish Cypriots.

Create a Board. There's Something Rotten in Cypriot Banks. There are four things you need to know about Cypriot banks. First , they have assets equal to roughly eight times the country's GDP. Second , they get a huge percentage of their deposits from tax-dodging Russians. Third , they invested a ton of money in Greece. And fourth , they are highly dependent on central bank financing to stay afloat.

In other words, Cypriot banks are too big for Cyprus to save. But somebody needs to save them. How did all this money get into Cyprus banks?

Like many other small islands , Cyprus has found that turning itself into a tax haven and money-laundering center is a pretty lucrative business. Money has poured in from Russian oligarchs and mobsters looking to avoid taxes back home, and that Russian money has bloated Cypriot banks to a size far beyond the government's ability to bail out. In other words, almost all of the foreign money is in uninsured accounts, and 68 percent of all uninsured accounts come from abroad.

So, what did Cyprus banks do with all of this money? Well, they invested it where they thought they had a competitive advantage: Greece. After all, southern Cyprus is ethnically Greek the northern half is occupied by Turkey , and the Greek economy, which is 12 times larger than the Cypriot one, looked like an ideal place to expand.

It wasn't. Cypriot loans to the Greek government and businesses have opened black holes on bank balance sheets. Here's how it works. Suppose you run a euro bank desperately short on cash, collateral, and confidence. In other words, you need more money, but you so obviously need more money that nobody will lend it to you except on a secured basis -- and only then against top-notch collateral, which you don't have.

Well, this is what lenders-of-last-resort are for, assuming your bank is illiquid and not insolvent. You can take your slightly crappy collateral to the ECB, and get a loan subject to a haircut. Technically-speaking, the worse your collateral, the higher the interest rate the ECB charges you. But suppose your collateral isn't just slightly crummy; say it's really crummy.

Well, don't worry, you're still in luck! Welcome to the wonderful world of " emergency liquidity assistance " ELA. Now, this sounds confusing and that's probably the intent behind it , but it's really not. It's the same idea as before, only with crappier collateral and higher interest rates. Remember, the ECB sets monetary policy for every euro member, but those members retain their own central banks, which carry out the ECB's policy decisions.

These national central banks can basically accept any collateral -- really, anything -- as long as they apply more severe haircuts and get the okay from the ECB. The only other big difference here is the national central banks, not the ECB, are on the hook in case of default.

Cypriot banks have stayed alive by gorging on this ELA funding. Notice it gets a third of its capital from the central bank. That's, um, a lot. This dependence on central bank financing leaves Cyprus quite open to, shall we say, ECB persuasion. This, ladies and gentlemen, is what we call "foreshadowing".

Merkel doesn't want to bail out Russian gangsters in an election year. There are two ways a broke government could still come up with this money. First, it could force its own creditors or the banks' creditors to take losses.

But, as Joseph Cotterill points out, the Cypriot government can't logistically force losses on its foreign lenders, and its domestic lenders are mostly its banks. In other words, the only losses the government can force on its bonds would make the banks' problems all the worse. That leaves the banks' creditors. Most banks fund themselves with three classes of lenders: junior bondholders, unsecured senior bondholders, and secured senior bondholders, including insured depositors.

If the bank goes bust, the secured senior bondholders are at the front of the line for whatever's left, and so on. But Cypriot banks are almost entirely funded with deposits and ELA money. So Germany is making Cypriot depositors pay. The questions are which depositors, and how much of their deposits. When Anastasiades tried to walk out in protest, ECB officials promptly informed him they would cut ELA funding for the second-biggest Cypriot bank, Laiki, if he didn't agree.

It's quite something when the ECB lets Germany use it as its debt collector. Of course, Anastasiades eventually acquiesced -- though he insisted the top tax rate not exceed 10 percent, likely to preserve Cyprus' future viability as a tax haven. That meant insured depositors had to be charged 6. These tax rates still has to be approved by the Cypriot parliament, and, well, that's not happening. The vote has already been postponed twice , and the Cypriots are back negotiating what they hope will be more politically acceptable tax rates.