Cyprus banks seeing signs of stabilisation, says IMF

Cyprus's economy is adjusting following the 2013 recession, which was "not as severe as anticipated", the International Monetary Fund (IMF) has said.

"Signs of stabilisation are emerging in the banking sector," said the IMF in a report.

Cyprus agreed to a 10bn-euro ($13.8bn; £8.3bn) bailout with the European Union and the IMF last year.

Cyprus's second-largest lender - Laiki Bank - was closed down.

Although the recession was not as severe as expected, there may be more pain to come, warned the IMF.

"The outlook remains challenging, with rising unemployment, falling credit, and increasing non-performing loans," it said.

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