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Greece takeover of Cyprus bank branches underway

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Greece takeover of Cyprus bank branches underway

Postby Lit » Fri Mar 22, 2013 3:21 pm

Greece takeover of Cyprus bank branches underway
22 March, 2013
Greece has already started the ring-fencing of Cyprus-owned bank branches with their takeover “by a Greek banking group” in agreement with the Central Bank of Cyprus.

“This will shield Greece and safeguard all deposits held in Cypriot-owned banks,” Finance Minister Yiannis Stournaras said in Athens on Friday.

Bank of Cyprus and Popular Bank Laiki share about 15 bln euros in deposits and some 24 bln euros of loans in Greece. Together with the smaller Hellenic Bank, they command a 10% market share of loans and 8% of deposits.

However, any takeover would not result in funds reaching Cyprus, but would reduce the need to raise 5.8 bln euros from taxing savings accounts, in order to secure a 10 bln bailout loan from the Eurozone and the IMF.

Earlier, the Cyprus government confirmed that President Nicos Anastasiades and Greek Prime Minister Antonis Samaras discussed “the regulation of the matter of alienating Greek branches of Cyprus banks was confirmed, with the most beneficial terms under the circumstances and with an important benefit for the Cypriot side.”

Reports suggested that Alpha Bank and Piraeus Bank, as well as the state-controlled Hellenic Postbank, were front runners in the takeover of the Cyprus bank’s Greek operations that include a network of 300 branches and 5,000 employees. The biggest lender, National Bank of Greece, has also shown interest. ... ?nid=29226
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Re: Greece takeover of Cyprus bank branches underway

Postby Lit » Fri Mar 22, 2013 4:28 pm

Fund assessing offers for Greek units of Cyprus lenders

Greece has agreed on a deal for the takeover of local units of stricken Cypriot banks, the two nations said on Friday, helping shield Greek banks from the fallout of the island's crisis and allowing Cyprus to shrink its bloated banking sector.

At least three Greek banks including Alpha Bank and Piraeus are ready to buy the units of the three Cypriot lenders in Greece, and the country's bank support fund was meeting on Friday to pick a buyer, officials told Reuters.

"The Cypriot branches in Greece will be sold to one Greek bank,» a senior official at the Hellenic Financial Stability Fund told Reuters, declining to be named. «The fund will assess the offers submitted by Greek banks."

European shares pared losses after news of the Greek-Cypriot agreement, which fulfills one of the terms of a euro zone bailout deal voted down by the Cypriot parliament earlier this week because of an unpopular levy on banking deposits.

Cyprus said the deal included the «most favourable terms under the present circumstances» for the island nation.

Russia rebuffed Cypriot entreaties for aid on Friday, leaving the island's increasingly isolated leaders scrambling to strike a bailout deal with the European Union by next week or face the collapse of its financial system.

Cyprus's top three banks - Bank of Cyprus, Cyprus Popular Bank (CPB), formerly called Laiki, and Hellenic Bank - have small but sizeable operations in Greece, which have been shut all week in line with a bank holiday in the island nation.

They together hold 8 percent of Greek banking deposits, 10 percent of loans and about 300 branches in the country.

Euro zone finance ministers excluded the Greek branches of Cypriot banks from the deposit levy on condition that those units would be transferred to Greek banks, which themselves are being recapitalized by bailout funds from the European Union and International Monetary Fund.

Shares of Greece's No.2 lender Alpha Bank rose 2 percent while shares of No.3 bank Piraeus surged 5 percent on news of the deal. Hellenic Postbank, a small lender controlled by Greece's bank bailout fund, could also buy the Cypriot units if interest by other lenders is deemed unsatisfactory, bankers have told Reuters.

Greece had been rushing to wrap up a deal since Monday in a bid to reassure local depositors that their savings were safe, but had to put it on hold after Cyprus rejected the bank levy.

Athens - whose own tottering banks are only slowly seeing deposits trickle back as fears of a Greek euro zone exit fade - was determined to have Cypriot branches reopen after Monday's public holiday to avoid panic among savers, bankers said.

"The target for the Greek government and the domestic banking system is to fully operate the branches of the Cypriot banks in Greece on Tuesday without restrictions on deposits,» a senior Greek banker said on condition of anonymity.

Investment manager PIMCO, which carried out a review of Cypriot bank capital needs that has yet to be published, had estimated Cypriot banks in Greece needed to be recapitalised with about 1.5 billion euros in funds, the banker said.

Half of that amount is expected to be covered by the Greek bank support fund HFSF and the other half from a Cypriot bailout deal, if one is eventually agreed with the EU and IMF, the banker said.

A sale will also help Cyprus deleverage its vast banking sector, a key demand from the euro zone and the IMF.

The combined assets of Bank of Cyprus and CPB in Greece alone amount to about 22 bln euros or 1.2 times Cyprus's nearly 18 billion euro economy.

If they are sold, the leverage ratio of Cyprus's banking system (assets/GDP) will go down to 6.8 from about 8 times, bankers and analysts said, a step in the right direction in the eyes of international lenders. ... 013_489421
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