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Vote of confidence in the Cypriot systemic banks

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Vote of confidence in the Cypriot systemic banks

The American company Moody's rates the Cypriot banking system with a positive sign and upgrades its rating for Bank of Cyprus and Hellenic Bank, while confirming its rating for RCB Bank. At the same time, it maintains a positive outlook for all three systemic banks in the country. This is a positive development amid the uncertainty caused by the pending divestitures, which reflects the improvement of the position of the three banks, but also the positive effect of the creation of new funds in the coming years in the context of the implementation of the minimum regulatory requirement of equity and eligible liabilities (MREL).

Bank of Cyprus

Moody's upgraded the Bank of Cyprus's long-term deposits rating by two notches from B3 to B1 with a positive outlook and the long-term risk rating, from B1 (cr) to Ba3 (cr).

According to Moody's, the upgrades reflect the significant improvement in the quality of the loan portfolio after the sales of NPLs of 1.4 billion euros, which led to a substantial reduction of the NPL percentage of loans from 30% in 2019 to 16%.

Risk for the bank continues to be the possibility of creating new NIS due to the deteriorating epidemiological picture of Cyprus, as well as the difficulties faced by the tourism sector, which represents 12% of the bank's loans.

However, it is considered positive that 95% of the loans that have been suspended have started to repay their installments normally.

Hellenic Bank

The deposit base of Hellenic Bank was upgraded to B1 from B3, with a positive outlook. The upgrade reflects the enhanced credit profile of the bank and in particular its improved reliability and increased collateral that allow it to navigate the extremely difficult economic environment created by the effects of the Covid-19 pandemic.

The positive outlook reflects Moody's expectations that Hellenic Bank will continue to improve its solvency profile, despite the possible increase in NPLs due to the effects of the pandemic on the economic environment. As reported, 8% of the bank's loans relate to the tourism industry, which has been hit hard by the effects of the pandemic, but it is encouraging that the percentage of the bank's loans, which are repaid normally, has risen since the moratorium was lifted. at 95%.

RCB Bank

Moody's rating of RCB Bank remained unchanged at B1 and its outlook was upgraded from stable to positive. The rating agency emphasizes the strong capital adequacy of RCB Bank, with the overall ratio reaching 21.1% on December 31, 2020. The rating confirmation also reflects the evolving structure of the bank's liabilities leading to increased protection for of.

The CEO of RCB Bank, Dr. Kirill Zimarin, commented that “this repeated confirmation, combined with the change of our outlook to positive, enables us to continue to support our customers and of course through them the Cypriot economy in general and it allows us to look to the future with confidence. “

Source: politis.com.cy

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