11.8 C
Saturday, December 2, 2023

Fluid € 17 billion “sits” in the banks

Must read

Fluid € 17 billion

The Cypriot banks entered 2021 with the greatest liquidity they ever had, amid a prolonged pandemic crisis and the new lockdown, which puts a “lock” on a significant part of business activity.

READ ALSO: The revised Budget increased by € 339.91 million.

According to the latest data from the Central Bank, in November 2020 the deposits of the system exceeded the loans by € 16.65 billion, remaining at the highest levels, at least since 2008 when available data are available.

The picture in the banking system is very different from the one that existed in 2013, when loans exceeded deposits by € 17 billion, an amount that corresponds to the Cypriot GDP. The liquidity coverage ratio of the Cypriot banking system amounts to 331%, exceeding 145%, which is the average of the euro area and more than double the 100% threshold set by the Basel III Directive.

Banks are trying to find new customers to channel some of their liquidity, while considering the possibility of some investments. The environment of high non-performing loans and high private debt makes it difficult to find creditworthy borrowers, while investing in stocks and bonds carries increased risk compared to the expensive but secure “parking” of deposits in Frankfurt.

The fear that red loans will increase due to the effects of the coronavirus on business and households makes banks even more demanding for new lending. Already, the end of the installment suspension at the end of December 2020 and the controversial revised moratorium raise the degree of difficulty for large lending exposures. Banks fear that a large increase in their non-performing loans will affect their forecasts with an impact on capital.

The central bank announced last week that it was easing the criteria for granting new short-term credit facilities by March 31, 2021, to help affected businesses and households immediately gain the liquidity they need to meet their current liabilities.

The Ministry of Finance, at a time when the banking system has excess liquidity, announced that from January 1, 2021, the interest rate subsidy plan for new business and mortgage loans will be extended for a period of six months, until 30/6/2021.

Source: www.philenews.com

- Advertisement -AliExpress WW

More articles

- Advertisement -AliExpress WW

Latest article