Confidence knock for Cypriot banking sector

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The stark warning from Cyprus' outgoing finance minister that the island will run out of money come May has panicked depositors into withdrawing funds and causing the new finance minister to issue his own warning that the Cypriot banks will be at risk from such negative statements.

The incumbent Finance Minister, Michalis Sarris, confirmed there have been substantial outflows of deposits since the alarm was first broadcast which are damaging the island’s banking system. He insisted such outflows went against the government’s endeavour to stabilise the system. Of the €17bn that Cyprus is seeking as bailout funds, some €10bn is estimated to be required to shore up the banking sector which suffered a significant blow when forced to write down their holdings of Greek government debt at the time of Greece’s second bailout. The finance industry has been criticised recen...

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