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Bank of Cyprus announces €2.2bn loss

Nicosia - The Bank of Cyprus, the crisis-hit Mediterranean island's largest lender, on Friday announced losses of €2.21bn ($3bn) in 2012, exceeding its 2011 losses by more than 60%.

Cyprus agreed in March to a €10bn rescue package negotiated with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.

The deal also involved the closure of the island's second-largest bank Laiki and a large 47.5% "haircut" on deposits above €100 000 at the Bank of Cyprus.

"Events following Eurogroup's decision on Cyprus have significantly impacted the Bank of Cyprus Group," the BoC said in a statement.

It said profit before penalties and restructuring costs was €620m in 2012, down 22% from €797m the year before.

There was also a significant 441% spike in provisions for bad debt to €2.30bn from €426m in 2011, driven by the deterioration of the bank's loan portfolio.

The unprecedented "haircut" on deposits forced the government to close all the island's banks for nearly two weeks in March and impose draconian controls when they reopened.

To prevent a rush on deposits, there is still a €300 daily cash withdrawal limit, while cheques cannot be cashed and central bank approval is needed for large business transactions.

The BoC has only now been able to announce its results after exiting resolution and appointing a new board.


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