Bank of Cyprus: return from the dead
Bank of Cyprus has been surprisingly fast to recover from the crisis in 2013. The whole ordeal will be remembered as a successful bank rescue deal completed within the shortest possible period.
As the 2013 crisis came about in Cyprus, an unprecedented decision on deposit clipping was taken with the principle ‘God helps those who help themselves’ as a reference point. Having cut capitals, the European Central Bank demonstrated to other banks what would happen to them if they appear in a similar situation.
The Bank of Cyprus shows a positive trend of increasing the number of deposits and thus the recovery of depositors’ trust. The Bank has scaled back its international activity by selling its Russian branch, and ultimately earned €1Bn in 2015. Its plans go as far as to be listed on the London Stock Exchange in 2017.
After the financial downturn, the Bank of Cyprus changed the whole management board and major Shareholders to sign John Hourican (a former Senior Executive at RBS) as Chief Executive, along with the deputy Josef Ackermann, who used to run Deutsche Bank. The major Shareholder is currently a US Private Investor Wilbur Ross, who is likely to become a member of Donald Trump’s administration too.
Nevertheless, Bank of Cyprus still has room for improvement. About 58% of loans are not maintained and risk being acknowledged as defaulted. Besides, only €800m has been repaid from €11.4Bn emergency funding, provided by ECB, currently being used to keep the bank afloat.
All in all, recovering from the financial meltdown, the Bank of Cyprus demonstrates substantial progress.