Deposits in the banking system shrink by 745 mln in June

Deposits in the Cyprus banking system declined by EUR 745.2 mln to EUR 50.18 bln in June 2018 compared with a net increase of EUR 201.2 mln the previous month, the Central Bank of Cyprus (CBC) said on Thursday.

Although the Central Bank gave no reason for the drop in deposits, the decline could have been affected by a mini-bank run on the Co-op over fears of bankruptcy before a deal with Hellenic Bank was sealed by parliament approving state guarantees on July 8.

During the panic surrounding the sale, Co-op customers withdrew hundreds of millions of euros from their savings accounts, with some estimates putting the total at closer to 1 bln.

According to the monthly data issued by the CBC, the annual growth rate also slowed to 3.9%, compared with 4.6% in May 2018.

The amount of deposits in the banking system in June fell 1.43% to EUR 50.18 bln, down from EUR 50.91 in May, the CBC said.

Compared to a year ago, deposits were up 3.44% from EUR 48.51 bln in June 2017 to EUR 50.18 bln in June 2018.

Furthermore, total loans in June 2018 showed a net increase of EUR 305.2 mln, compared with a net decrease of EUR 66.8 mln in May 2018.

Nevertheless, the CBC said, the outstanding amount of loans decreased by EUR 2.1 bln in June 2018, declining to a total of EUR 46.7 bln, due to reclassification, revaluation, exchange rate or other adjustments.

The annual growth rate stood at -1.1%, compared with -1.8% in May 2018, the CBC said.