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Termination of Lebanese banks' branches in Cyprus takes place without problems

29/11/2022 12:16

The termination of the operations of Lebanese banks' branches in Cyprus took place in the last months without particular problems, CNA has learned.

Through the close monitoring and enforcement of specific measures by the Central Bank of Cyprus (CBC) - within the framework of the prudential supervision it exercises on the branches -  it was ensured that there was the necessary liquidity to repay the customers' deposits.

The implementation of a deposit repayment process through withdrawals from the liquidity held at CBC, has ensured the repayment of almost all deposits of customers of the specific branches.

According to sources, out of a balance of hundreds of millions, a few thousand are currently pending to be settled, which is expected to be done in the next period.

Developments in Cyprus unfolded amid an explosive situation in Lebanon which was the outcome of the economic crisis of recent years, culminating in the events of recent weeks during which desperate depositors literally attempted, in some cases, to rob banks to get their deposits back.

Following the imposition of the obligation to terminate the operations of branches in Cyprus by the Lebanese Supervisory Authority at the beginning of 2022, the CBC imposed the obligation to maintain liquidity equal to 100% of customer deposits in the CBC to ensure full repayment of deposits.

Developments in Lebanon have confirmed the correctness of the CBC's decisions, since depositors of the branches in Cyprus were fully protected, while at the same time possible side effects on the rest of the Cypriot banking system, public finances and the economy in general were avoided, said CNA sources.

According to the same sources, although the importance of the Lebanese branches in the Cypriot economy was considered negligible (loans were corresponding to less than 1% in the Cypriot banking system based on the latest available data),  failure to take preventive measures in time could have affected the banking system.