Ten years after the dramatic, for the domestic economy, days of 2013, the situation of the Cypriot banking system no longer resembles the picture it presented then: the sector is now more compact, after the closure of Laiki Bank, the absorption of the Cooperative from Hellenic Bank and the evolution of RCB Bank into a supervised asset management company. At the same time, NPLs (non-performing loans) continue to decline, banks have significant capital adequacy, while the stricter regulatory framework is an important safeguard to avoid bad practices in the future.
Recording the positive footprint of these developments, the international rating agencies have upgraded the credit rating of the economy, bringing Cyprus back to investment grade, with the banking system increasingly attracting the interest of international investors in recent years, which is also favored by the policy of the European Central Bank . As he characteristically mentioned in recent statements of Elizabeth McCaul, a member of the ECB's Supervisory Board, Cypriot banks have made “enormous progress” and the situation has improved dramatically since “the dark days of 2013”, with the future looking even more promising.
Developed investment mobility
The intense investment interest in the sector has been evident in recent yearsthrough the movements recorded in the banking institutions operating on the island. An illustrative example is the National Bank of Greece, which while following a strategy of disinvestment from foreign countries, ending among other things its operations in Malta, has recently reactivated its presence in Cyprus, where it presented new deposit products for its clients on the island. Similarly, Alpha Bank of Greece, after making significant changes at the administrative level centrally and announcing its strategic partnership with Unicredit, is simultaneously launching its redevelopment in Cyprus, where it operates through Alpha Bank Cyprus.
In the same context, Astrobank moved last autumn to acquire CDB. Although the specific proposal ultimately did not have a positive outcome, the bank announced in November that as part of its strategy it will continue to examine non-organic growth opportunities, indicative of the mobility that exists in the Cypriot banking system.
In 2023 , after all,the Eurobank group practically expressed its intention to acquire HellenicBank, signing binding agreements, in order to increase its total percentage in the bank to 55.3%. Cyprus is a gateway to the EU for businesses from important Middle Eastern markets such as Israel, Saudi Arabia and the United Arab Emirates and especially from the particularly emerging economy of India, which, if achieved, will be an important, positive development for the Cypriot economy.
The favorable climate for the more active involvement of investors from abroad had already been described, in time, in his statements in December 2021 to the Parliament, by the Governor of the Central Bank, when he had mentioned that the challenges favor mergers in the banking sector and its possible further consolidation is not excluded. After all, the perspective of cross-border mergers is also favored by ECB policies, as in this way the stability of local systems is strengthened.
Given the above moves and the practical activity of investors in Cypriot banks, the 2024 is awaited with particular interest for our financial system, which seems to have left behind for good the upheavals of the previous decade.