Banking in Cyprus
Since the years of 2009 – 2013 economic crisis and subsequent EU bail out Cyprus’ Banking and Finance sector has been transformed
A big factor contributing to the financial crisis was excessive exposure to the Greek economy and public debt and the severe overleverage in the housing sector.
As a result of all these factors plus a high proportion of non-performing loans (NPL) some in excess of 50%. it caused chaos in the economy since the safes of Cypriot banks were literally emptied
The EU Bail Out
In 2013 the Cyprus Government turned to Europe for EU bail out assistance signed by “The Economic Adjustment Programme Memorandum of Understanding (MoU).
One of the key parts of the MoU process included the assessment of the banking system’s needs and weaknesses.
The banking system then set several targets in place to achieve them.
Several Targets Put in Place for Recovery
This included the recapitalization and restructuring of credit institutions as well as the strengthening of the regulatory and supervisory framework of the banking and finance systems.
In real terms this path the banks chose to take proved to be brutal, this action helped to produce local banks and other finance institutions which not only rationalized, stable and better capitalized but also very importantly invested in corporate governance.
With all these changes it was understood that there was a lack of diversity within the finance sector. For many years bank lending and tax-focused corporate structuring had dominated the landscape.
Banking in Cyprus Today
Soon after the EU bail out a conscious effort has been made to add sectors such as Investment funds, cryptoassets and crowdfunding into the mix. The investment fund sector, in particular, showed rapid growth following an overhaul of the regulatory framework.
Assets under management increased and Cyprus today in 2023 is home to a unique blend of banking and finance organisations.
