Cyprus Banks: Withdrawals Double Amid Crisis

Withdrawals in March from Cypriot banks were almost double February's total - even though its financial institutions were shut for half of the month due to a banking crisis.

Both consumers and companies pulled deposits in Cyprus, where big account holders in the two largest lenders were forced to take a hit as part of an international bailout.

Private-sector deposits fell by 3.9% to 44.6bn euros (£37.6bn), according to European Central Bank (ECB) data.

Withdrawals from accounts in February were 2% up on those of January.

Banks on the southern part of the divided island were shut for nearly two weeks in March after Cyprus agreed the 10bn euro (£8.5bn) bailout, which forced major depositors to pay part of the cost of the rescue.

Scuffles occurred after banks reopened after the unprecedented closure

In addition to Cypriot nationals, expatriate residents and Russian investors were caught up in the imposed levy.

After days of negotiations, which originally included a plan to impose a levy on all account holders, those with deposits above 100,000 euros were hit with the tax.

Capital controls are still in place on the island, with limits on how much people can transfer from their accounts.

Cyprus reiterated a promise to gradually ease the financial controls.

Meanwhile, in the wider eurozone, ECB executive board member Benoit Coeure said there was no undue stress on bank deposits since the Cypriot bailout.

Many Cypriot residents opposed the strict imposition of a levy on savings

The data backed this up - Greece recorded a 1% increase in private sector deposits to 172bn euros (£145bn), and deposits in Italian banks also rose, by 3.1% to 1.5trn euros (£1.3trn).

Deposits in Ireland recorded a 6.5% jump to 210bn euros (£177bn), reaching the highest level since October 2010.

Monthly fluctuations in the figures are common, though sharp consecutive drops in countries with stable banking systems are unusual.

The data, which are for all currencies combined, are not seasonally adjusted and differ slightly from national central bank figures.

They exclude deposits from central government and banks.

But negativity remains in certain areas, with the ECB admitting that lending to companies is still weak.

Russia and Cyprus share orthodox roots but expats were also hit by the levy

Further uncertainty comes as the Bundesbank confirmed as genuine a leaked report prepared for Germany's constitutional court that criticises the ECB's plan to buy the debt of highly indebted states.

The 29-page report, dated December 21, was published by German newspaper Handelsblatt.

In it, the German central bank warned that the purchase of stressed countries' sovereign debt could "compromise the independence of the central bank" and could be difficult to stop.

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