Gold Magazine June - July 2013, Issue 27 | Page 42

BANKING
BANKING

T

he decision to
substantially restructure Cyprus’
banking sector
came as no surprise, given that it
was deemed by the
other countries of
the eurozone and the IMF to be a major
cause – if not the main one – of the island’s
financial difficulties. The detailed reform

plan prepared by the Troika, which is part
of the Memorandum of Understanding
agreed with Cyprus, essentially turns the
sector upside down. It involves considerable downsizing and restructuring in order
to restore the banks’ solvency and viability,
reinforce the sector’s resilience and regain
public confidence. The domestic banking
sector (including the cooperative credit institutions), which until recently represented
550% of GDP, has been already downsized

significantly to 350% of GDP. Further
downsizing will be achieved through the
restructuring of the cooperative credit
institutions. Gold presents a detailed
roadmap of what has to be done over the
next 30 months to the end of 2015 in
order to put the banking sector in order.
The Troika has placed great emphasis
on the second half of this year, when the
most important aspects of the restructuring plan must be implemented.

Steps to be followed by Cyprus under the
guidance of the Troika for the restructuring of
the banking sector By Kyproula Papachristodoulou

40 Gold the international investment, finance & professional services magazine of cyprus