Creditors begin Cyprus third bailout review

Written by Associated Press | Nicosia, Cyprus | Updated: Jan 30 2014, 08:02am hrs
International creditors were back in Cyprus on Wednesday to gauge whether the country is living up to the terms of its financial rescue programme. Cyprus' third bailout review comes after earlier assessments concluded that the country was on track, but warned that there was no room to slacken efforts.

EU and IMF officials will focus on Cyprus' banking sector, which was hit hard under the terms of the country's 10 billion-euro ($13.6 billion) rescue agreed in March. The deal saw authorities seize large portions of uninsured savings in the two largest banks and impose capital controls. The second-largest lender was shut down.

Banks are struggling to cope with bad loans. Some 46% of all loans, or 19 billion euros ($26 billion), are considered soured. That's the equivalent of 120% of GDP. Capital controls, such as daily cash withdrawal limits of 300 euros, have been significantly eased since March, but many remain in place.