Bank of Cyprus suspends activity in Romania for a week, clients can withdraw money from ATMs
Cypriot lender Bank of Cyprus temporarily suspended activity in Romania starting yesterday (April 1), for a week, while trying to find a solution and sell the Romanian subsidiary, the bank recently announced. Meanwhile, clients can withdraw money from ATMs, and for special request they can use the call center of the Bank of Cyprus subsidiary. The bank will be under reorganization during this period, as decided by its parent bank.
Bank of Cyprus only holds 0.7 percent of the banking assets in Romania. As it is a subsidiary of a European Union bank, deposits are guaranteed via the guarantee scheme in its home country, Cyprus. Romania's Central Bank Governor Mugur Isarescu last week said the two Cypriot banks in Romania only have 1.3 percent of the banking assets in the country.
Cyprus has been going through troubles recently. It managed to reach an agreement with the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) on the terms of a bailout for the country.
Under the terms agreed, holders of uninsured deposits over EUR 100,000 in the two “problem” banks stand to suffer considerable losses. One of the banks, the Laiki Bank, will be closed down. In return, Cyprus will get a EUR 10 billion bailout, which will stop the banks collapsing and keep the tiny island state in the eurozone. The agreement came right before the ECB deadline, which threatened to stop funding the Cypriot banks if a deal had not been made.
The agreement will keep Cyprus in the eurozone, but at considerable cost. Analysts predict years of recession as the country is essentially forced to scrap its primary industry – offshore banking. “It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone,” said Cypriot Finance Minister Michalis Sarris at a press conference after the deal was struck.
The new agreement came after the Cypriot Government tried to pass a law enforcing a tax on all bank deposits, but the new law was not approved by the Parliament. More about it here.
editor@romania-insider.com
