Bank of Cyprus unfreezes EUR 950m in CDs

(NICOSIA) - Bank of Cyprus, the island's largest lender, released 950 million euros ($1.29 billion) in six-month certificates of deposit it had locked in following a haircut on savings during a March bailout of the economy.

The CDs, due to mature on Friday, had been blocked as part of the bank's recapitalisation process under the deal.

"The bank's improved liquidity position and stabilising sign of its deposit base witnessed in the last few months are the decisive reasons for the release of deposits," BoC said, noting that it could have renewed the CDs automatically if it had chosen to do so.

"Through its decision the bank's management recognises the improving trust and confidence toward the bank by its customers and meets the expectations of the general public to enhance liquidity in the economy."

BoC said it acted after consulting the central bank and finance ministry, who issued a joint statement welcoming the decision as a sign of stability and a move to strengthen trust in the troubled banking sector.

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

The deal included the closure of the island's second-largest bank, Laiki, and a 47.5 percent "haircut" on deposits above 100,000 euros at BoC.

BoC posted a 1.94 billion euro net loss in the first nine months of 2013, the most recent period for which data are available.