Judging from the above graphs (click to enlarge), there seems to have been some improvement in May with the outflow slowing to €1.4bn. This remains a sizeable amount given the continuation of the capital controls.
Of the outflows taking place it seems fairly evenly split between domestic depositors and those from the rest of the world. The outflows also seem to be split fairly evenly across sectors. It’s hard to draw any stark conclusions from this set of data. It seems that both households and firms are continuing to draw down their deposits at a rapid pace and those foreign firms which can withdraw money are still doing so, albeit in small amounts.
The question remains, with Cypriot growth prospects looking so bleak, when and where will this outflow stop?
It will not stop. The more deposits are withdrawn the worse the condition of the banks will be. And already a borderline case (seen the letter of the President) a next bail out (or worse) is just around the corner.
ReplyDeleteAnd furthermore banks are notoriously slow in getting their own affairs in order. So we will hardly see restructuring in the costbase or we see it much too late.
You simply donot want money in Cypriotic banks. A bank-walk iso a bankrun, because of the capital controls and the fact that there is no real panic (only Panicos).