Central Bank Governor of Cyprus Panicos Demetriades said on Thursday that a haircut on major deposits in Cypriot banks has mostly affected foreign deposits.
"At the Bank of Cyprus, where 37.5 percent of uninsured deposits has been converted into shares, 70 percent of the value of deposits affected concerned overseas people, leaving Cypriot households and businesses unaffected to a greater extend than was possibly expected," Demetriades said in presenting his annual report.
He also said that what happened was very painful for many depositors, mainly those who had no bank loans to be offset by their deposits.
"However, 96 percent of depositors has not been affected," he added.
The Eurogroup on March 25 imposed an unprecedented loss on deposits of over 100,000 euros at the Bank of Cyprus and a merger of the bank with the island's second largest lender, Cyprus Popular Bank, which is in the process of being wound down.
It was the first time the Eurogroup, acting in unison with the International Monetary Fund, used depositors' money to rescue banks in distress. In return a 10 billion euro bailout was approved for Cyprus, which is expected to receive the first tranche of the loan this month.
Demetriades said the Cypriot economy contracted by 2.4 percent in 2012, mainly as a result of the drop of the private consumption and investments.
Eurogroup estimates a further drop of at least 8 percent this year.
Demetriades said unemployment has reached an all time high of 12.7 percent at the end of the first quarter.