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Next What reasons changed the bank map of Cyprus HOME • INSIDER • CYPRUS • What reasons changed the bank map of Cyprus
& nbsp & nbspΘεανώ Θειοπούλου & nbsp; & nbsp;
The banking map in Cyprus changed three times in nine years, with the closure of two systemic banks, Laiki in 2013 and RCB Bank in 2022, while in 2018 the Cooperative was consolidated, resulting in the departure of another large credit institution from the competition. The reasons for the reclassification of the banking system in each period of time were completely different.
For the first time in 2013, the reasons for the shrinking financial system were the uncontrolled expansion of the banking sector, which reached almost 900% of GDP and domestic banks to 600% of GDP. Also, political reasons, mainly due to the well-known Greek bond cut (PSI) and the poor quality loan portfolio of credit institutions, due to the absence of supervisory mechanisms. As a result, Laiki Bank, the second largest systemic bank in Cyprus, due to political decisions at Eurogroup level in 2013, enters a consolidation regime, depositors are cut with the well-known bail-in procedure and its operations are absorbed by the Bank Of Cyprus. With this move, a significant part of the competition left the banking market, as Laiki had a share of about 18% in deposits and 20% in loans.
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Biggest shrinkage in 2018
Five years later, the bank map is being restructured. In 2018, the Cooperative's deposits and its good loan portfolio pass to Hellenic Bank and the cooperative share essentially leaves the market, approximately 20% in deposits and loans respectively. The reasons are known and the process was done in the form of bail-out, the taxpayers paid. The Supervisory Board of the Unified Supervisory Mechanism decided in January 2018 to conduct an on-site audit of SKT, due to the inefficient management of NIS and the absence of corporate governance. Most importantly, however, European supervisors wanted additional provisions, with the aim of covering 65% of non-performing loans. This would require around € 800 million in additional provisions, resulting in a significant capital deficit.
RCB Decisions
And here we come to March 2022. RCB Bank is the victim of sanctions against the Russian banking system. The domestic banking system is shrinking even further as the third systemic credit institution, RCB Bank, leaves the market, which maintained sufficient regulatory capital and high liquidity. The bank's market share is not negligible. It had about 5.5% in deposits and 10% in loans.
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