2dimes wrote:Ok Fruit, what's happened? Besides me not getting my heated shop... Has Cyprus gained any economic ground?
It's been some time, but seeing as we have the Greek crisis occurring, I thought an update on Cyprus might be a good idea after the torture those people went through a couple of years back.
Laiki Bank collapsed (of course) but the Bank of Cyprus has been steadily getting it together. However, about half the loan book transferred went into default. Offshore and regional financial services are starting to thrive again and new business registrations are well up.
However, the pure banking sector is thought already to have shrunk by half. Most think that's a good thing, though for all of that, the business model of the country has not significantly changed.
Looking at the 'offshore and regional financial services', it is interesting that Vlad the impaler has recently sanctioned a €2.5 billion loan to Cyprus (he doesn't give up...or was this payback for something else one wonders....answers best kept to yourselves).
Russian money buying assets on the island has been steadily increasing for the last 15 months, so it would seem all is forgiven from that sector.
I am something of a philosopher when my money isn't involved (as it no longer is as my broker has orders to clear my positions tomorrow - Monday) so here's my take on the Cyprus crisis compared , albeit briefly, to the Greek.
There was €6.3 billion withdrawn from the Cypriot banks April 2013. But deposits soon started to return. Foreign investors started to come back in (of course, who wouldn't with asset prices being what they then were.) Bank of Cyprus raised €1 billion from them in July 2014, and Hellenic Bank sold over half of its shares to Belarussian and American firms the same year.The real economy suffered much less than expected but continued to contract until the end of last year. Tourism took a dive but that has recovered to pre crisis levels this year.
Although a record €6.3 billion was withdrawn from banks, on net, in April 2013, deposits soon started to return. Foreign investors came back. Bank of Cyprus raised €1 billion from them in July 2014, and Hellenic Bank sold over half of its shares to Belarussian and American firms the same year. The real economy also suffered much less damage than expected (though it did continue to contract through the end of 2014). Tourism suffered a little during the crisis but has more than caught up since, with tourist arrivals in the first five months of this year increasing almost 10% year-on-year. Although the financial sector has taken a big hit, the growth of the island's business-services industry has begun to make up for the loss.
Is all this applicable to the present Greek crisis? Well, Cypriots only suffered six days of uncertainty between rejecting and agreeing to a bail-out. Greeks, on the other hand face a very different dynamic. They have been in the shitter for 5 years or more already. They are much further down the road than Cyprus ever was. However, one parallel that should be noted is that Vlad has been sending senior bods down to Athens for some time now. The Russian ambassador to Athens was one of the first visitors received by Alexis Tsipras upon his election victory.
My take? I think Grexit is now a near certainty and that Vlad will increase his influence further around the Med. Merkel et al can try all they like, they should never have sold Greece short.
by rishaed on Wed Apr 03, 2013 6:39 pm 
rishaed
