In statements he made to the press at the Presidential Palace, on Tuesday, Stylianides said that there are many hopes that the economy will restart and growth will follow. He highlighted the significance of reforms taking place in all levelsof the economy, starting from the banking sector. Asked whether there are any developments as regards loan rates, he said that everyone wishes that rates are reduced because such a move would create the basis for growth and new investments.
Stylianides continued to say that clearly the govenrment’s goal is to attract investments locally or from abroad which would boost growth. It goes without saying, he said, that the economy is in such a great crisis that achieving this is not going to happen from one day to the next. However, he added, since we the bankin system has entered a period of normalization and stability, we look forward to the Bank of Cyprus exiting its restructuring process as soon as possible. The goal is for this to happen by the end of July, he said. All the above will create the right conditions for rates to be reduced and for investments to take place which will lead to growth, he pointed out.
Referring to the processes underway in the Bank of Cyprus Stylianides said that they seem to be bearing fruit. Today, he added, the first big restructuring step is expected from the new Board of Directors in cooperation with the Banking Employees Union (ETYK). He expressed the hope that things will go smoothly from now on. Concluding Stylianides expressed his faith in the Cypriot people’s capacity to face adversity and survive. As long as we don’t repeat the same mistakes, as long as all great reforms take place in all levels of the economy, he said, we have many hopes.
Excluded from international markets since April 2011, Cyprus applied for financial assistance from the EU bailout mechanism in June 2012, after its two largest banks sought state aid following massive write downs of Greek bond holdings amounting to €4.5 billion. In March Cyprus and the Eurogroup agreed on a €10 billion bailout, on condition that Cyprus would secure 10.6 billion required for the recapitalization of its banking sector from own resources. Under the agreement, Cyprus Popular Bank, Cyprus` second largest lender, would be wound down and its good part will be absorbed by Bank of Cyprus, the island`s largest lender, whose unsecured deposits (above €100,000) may take losses up to 60%.
Furthermore, Cyprus has undertaken to implement fiscal consolidation measures amounting to 7.1% of GDP, by 2016. Amid the adverse financial conditions both in Greece and Cyprus, Cyprus` two largest banks resorted to ECB emergency liquidity amounting to €11.2 billion (€9.2 billion for CPB and €2 billion for Bank of Cyprus). This debt has been transferred to the consolidated Bank of Cyprus.
Source: Financial Mirror
