Bank of Cyprus CEO Sees Consolidation in Island’s Banks

(Bloomberg) -- Cyprus’s banking industry could be set for a round of consolidation and Bank of Cyprus would likely have a role in any activity, Chief Executive Officer Panicos Nicolaou said in an interview.

While the Nicosia-based bank is not currently evaluating specific targets, “as the largest lender on the island, we will proceed if there’s an opportunity,” Nicolaou said.

This summer has already seen a wave of moves in Cyprus’s banking sector. 

National Bank of Greece SA last month classified its Cypriot subsidiary as “held for sale and discontinued operations” after deciding against proceeding with a deal to sell the unit to Cyprus-based Astrobank. 

Greece’s Eurobank Ergasias Services And Holdings SA in July acquired Third Point’s 9.9% share in Hellenic Bank, the second-largest Cypriot lender. 

Trimming NPLs

Bank of Cyprus’s first-half results, released on Wednesday, “prove we’re on the right track to deliver on what we’ve promised: de-risking the bank and reducing the non-performing loan ratio to a single digit by the end of 2022,” the CEO said. 

Since its peak in 2014, Bank of Cyprus has reduced its non-performing exposure by 89% to 1.6 billion euros ($1.9 billion) and cut its NPE ratio by 48 percentage points. 

The lender wants to continue to explore strategies to accelerate de-risking, including further portfolio sales, Nicolaou said. Bank of Cyprus in the first half completed its Helix 2 project to sell 1.3 billion euros of bad loans, and the next phase, Helix 3 is due to be finished by the end of the year, the CEO said.

‘Own Tools’

The lender has cut non-performing loans using “our own initiatives and tools,” Nicolaou said, rather than resorting to government-backed plans like Greece’s Hercules asset protection program in Greece. 

With the Cypriot lending market capped by its size, Bank of Cyprus aims to achieve its new lending targets by pursuing further international opportunities, focusing on the shipping sector, especially via the maritime cluster in the port city of Limassol, Nicolaou said. In the first half of 2021, Bank of Cyprus announced 63 million euros in fresh lending in this category, up 14.5% year on year. Cyprus is Europe’s largest ship management center.

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