Cyprus bank suffered record loss in 2012

People queue up outside a Bank of Cyprus branch in Nicosia on April 2, 2013.

The Bank of Cyprus has announced a record net loss of 2.2 billion euros ($3 billion) in 2012 as a crippling recession hit the people’s ability to repay their debts.

The Cypriot bank said in a statement issued on Friday that the figure is more than 60 percent higher than the bank’s losses in 2011.

The bank added that its Tier 1 capital ratio, which is a measure of a bank’s financial strength from a regulator’s point of view, sank to minus 1.9 percent by the end of last year, much lower than the EU-mandated nine percent.

The troika of international lenders — the International Monetary Fund, the European Commission and the European Central Bank — agreed in March to give a 10-billion-euro ($13.1 billion) rescue loan package to Cyprus to recapitalize its shaky banking system and help the cash-strapped nation avoid bankruptcy.

The deal included the closure of the country™s second-largest bank, Laiki Bank, and a 47.5 percent cut on deposits over 100,000 euros at the Bank of Cyprus to recapitalize it.

œEvents following Eurogroup™s decision on Cyprus have significantly impacted the Bank of Cyprus Group,” the statement said.

It added that profit before penalties and restructuring costs, which Cyprus agreed to impose on the bank under the terms of the bailout package, was 620 million euros last year.

The bank stated that œdespite the prevailing adverse economic conditions which affected the trust and confidence of depositors,” its total deposits had fallen by only four percent by December 31, 2012.

The long-drawn-out eurozone debt crisis, which began in Greece in late 2009 and later on reached Italy, Spain, France , Portugal, Britain, Ireland, and Cyprus is viewed as a threat not only to Europe but also to many of the world™s other developed economies.

The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered massive demonstrations in many European countries.

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Copyright: Press TV