Presentation on theme: "1. 2 Miltos Michaelas, Director - International Business Banking The Cyprus Banking System."— Presentation transcript:
2 Miltos Michaelas, Director - International Business Banking The Cyprus Banking System
3 Cyprus ratings The most recent 10-year CY bond which was Issued in February 2010 is now trading at 121 bps spread.
4 Cyprus EU member & Euro zone member Proven versatility in crisis Milder effects from the economic crisis Inflation within control Stable, conservative Central Banking System and effective regulatory framework The financial sector withstood the global crisis and no public recapitalization or government support was necessary Cyprus is in the OECD white list
5 Extracts from Deutsche Bank report on the Banking Industry in Greece and Cyprus (21/01/09) Cyprus From a macroeconomic perspective, we agree with most economists that Cyprus is, relative to other world economies and Greece in particular, in a healthier position to sail through the current storm. Our view is supported by the island`s positive budget balance and relatively low public indebtedness. It is important to point out that, as opposed to Greece, the Cyprus Government has the economic resources to boost the real economy if needed.
6 CBC Governor comments That said, I should point out that the budget deficit estimate for 2009 puts Cyprus in the middle of the range for the euro area as a whole. The situation is clearly not as dire as in some other euro area countries. To some degree this is because the recession we experienced in 2009 was not as deep as in other regions of the euro area. A comparison with the Greek economy is not warranted. Our budget finances are in better shape and our debt to GDP ratio is considerably smaller. Athanasios Orphanides, Governor of the Central Bank of Cyprus, Interview with Bloomberg, 11 February 2010
7 Total deposits ιn Cyprus increased by 4,1 billion during the first 4 months of 2010 (7,0% to 62,2 billion) - reflecting the "safe-heaven" qualities of the market. Property sales rising Qatar agreement: a $500M joint project in hospitality/property sectors confirming Cyprus economic potential "Our decision to proceed with such a large investment in Cyprus is due to the fact that the Cypriot economy has not been affected to a great extent by the (world) financial crisis. The Cypriot economy has opportunities for growth." Qatar's Emir, Sheikh Hamad bin Khalifa al-Thani Nicosia Cyprus going strong in 2010
8 Cyprus Banking
9 A market driven system based on English law, a legacy of the British colonial rule Marfin Laiki Bank, BOC – more than 100 years old Legal and Banking structures (still) reflect British equivalents Corporations Act Marfin Laiki is number 1 on Register of Companies Open, competitive, multivariate, multidimensional, even multicultural Banking Industry Well capitalised and profitable banks
10 A Multitude of Banks of past and present LISTED BANKS 1.Marfin Popular Bank Public Co LtdMarfin Popular Bank Public Co Ltd 2.Bank of Cyprus Public Company LtdBank of Cyprus Public Company Ltd 3.Hellenic Bank Public Company LtdHellenic Bank Public Company Ltd 4.USB Bank PlcUSB Bank Plc SUBSIDIARIES OF FOREIGN BANKS Αlpha Bank Cyprus Ltd BNP Paribas Cyprus Ltd Emporiki Bank – Cyprus Limited Kommunalkredit International Bank LtdKommunalkredit International Bank Ltd National Bank of Greece (Cyprus) Ltd Russian Commercial Bank (Cyprus) LtdRussian Commercial Bank (Cyprus) Ltd Societe Generale Cyprus Ltd Piraeus Bank (Cyprus) Ltd Eurobank EFG Cyprus Ltd OTHER BANKS 1.Co-operative Central Bank LtdCo-operative Central Bank Ltd 2.The Cyprus Development Bank Public Company LtdThe Cyprus Development Bank Public Company Ltd 3.Housing Finance CorporationHousing Finance Corporation 4.Mortgage Bank of Cyprus LtdMortgage Bank of Cyprus Ltd BRANCHES OF BANKS OF EU COUNTRIES 1.Barclays Bank PLCBarclays Bank PLC 2.Banque SBA SABanque SBA SA 3.First Investment Bank Ltd First Investment Bank Ltd 4.Joint Stock Company Trasta KomercbankaJoint Stock Company Trasta Komercbanka 5.National Bank of Greece S.A.National Bank of Greece S.A. 6.Central Cooperative Bank PLCCentral Cooperative Bank PLC 7.Banca Transilvania S.A.Banca Transilvania S.A. 8.Joint Stock Company Akciju Komercbanka "Baltikums"Joint Stock Company Akciju Komercbanka "Baltikums" BRANCHES OF BANKS OF COUNTRIES OTHER THAN EU 1.BankMed s.a.l. BankMed s.a.l. 2.Arab Jordan Investment Bank SAArab Jordan Investment Bank SA 3.BANQUE BEMO SAL BANQUE BEMO SAL 4.Bank of Beirut SALBank of Beirut SAL 5.BBAC SAL BBAC SAL 6.BLOM Bank SAL BLOM Bank SAL 7.Byblos Bank SAL Byblos Bank SAL 8.Credit Libanais SAL Credit Libanais SAL 9.FBME Bank LtdFBME Bank Ltd 10.Open joint-stock company AvtoVAZbank Open joint-stock company AvtoVAZbank 11.OJSC PromsvyazbankOJSC Promsvyazbank 12.Jordan Kuwait Bank PLC Jordan Kuwait Bank PLC 13.Jordan Ahli Bank plcJordan Ahli Bank plc 14.Lebanon and Gulf Bank SAL Lebanon and Gulf Bank SAL 15.Lloyds TSB Offshore Limited 16.Privatbank Commercial BankPrivatbank Commercial Bank 17.IBL Bank sal IBL Bank sal REPRESENTATIVE OFFICES 1.UBS AGUBS AG 2.Atlasmont Banka A.D. Atlasmont Banka A.D.
11 Central Bank of Cyprus (CBC) Cyprus joined euro area on 1 January 2008 Interest rate management is now the responsibility of the European Central Bank (ECB) Governor is a member of the Board of ECB The primary objective of the ECB is to ensure price stability, which means keeping inflation rates below, but close to, 2% The CBC has supervision over the commercial banks
12 An Effective Supervisory Mechanism Proven track record in setting Monetary Policy and safeguarding the Banking system IMFs Assessment of Financial Sector Supervision Report: Supervision is strong, effective and in compliance with International Standards Full adoption of European Regulation Use of non-interest rate tools proactively: Tight(er) liquidity requirements – only 30% of FX deposits can be lend out by Banks Managed cooling off of the propertymarket: tightened LVRs since mid 2007, to 70%.
13 More deposits than loans Euro deposits growing faster than FX since mid 2006 Time deposits grew faster than demand after Sep 2008 Cyprus is self sufficient in liquidity, post (liquidity) crisis No deposit withdrawals by international customers Loan growth under control April 2010 Loans/deposits 95% 4,1bn increase in deposits in first 4 months of 2010 (7% increase) bn
14 A Competitive Banking Market Commercial Banking 8 local Banks and other credit Institutions 9 subsidiaries of Foreign Banks 27 International Banks operate branches Very open & automatic for EU Banks 462 branches plus 33 IBUs Supervised by the Central Bank of Cyprus Large Cooperative sector 111 co-ops Supervised by the Cooperative Central Bank
Experiences from Abroad Targeting Greek & Cypriot populations in developed countries Banking experiences in UK, Australia, USA, South Africa, Canada Entry of main Cypriot banks in Greek Market solidified international strengths and experiences Entry to CEE was a calculated move to extend products and services to existing (international) client base
16 Commercial Banking Highly educated human resources Strong Banking Fundamentals Adoption of Basel II Conservative Lending Practices Good breakdown of operations between markets Very good profitability record No exposure to Toxic Assets Limited exposure to CEE Healthy Capital and Liquidity positions
17 Solid Financial Package attracts International businesses Benign low tax environment Extensive Array of Double Taxation treaties Mature Legal and Accounting practices Strong Banking Sector Euro shields against currency crisis provides access to ECB arsenal of support expands the attractiveness of the Banking system for foreign deposits and transactions Attraction of International Businesses expands banking client base
18 Government Crisis Support Was not needed for Cyprus Banks given their strengths and reasonable risk exposures In fact, the Cyprus Government did not have to bail out or provide direct support to any private organisation. Government has the means for direct support but their use has been unnecessary in the global crisis of 2008/09 Fiscal stimulus package being implemented The Central Bank of Cyprus offers and operates a Deposit Protection Scheme up to per person or legal entity per Bank.
19 Update on Cyprus Banking System Despite negative developments in the real economy, our banking system remains in very good condition. Our banks are healthy, robust and have a strong capital base with a capital adequacy ratio of 11.9% at December 21, 2009, well above the minimum requirement of 8%. The ratio of non-performing loans, which was declining steadily over time, may have increased in 2009 but is still within acceptable levels. Please note that satisfactory provision for bad debts has been set aside for these loans. Regarding the profitability of banks, this has been satisfactory in During the year under review, which was a difficult year, banks have remained profitable, but with a smaller profit than that of 2008 Athanasios Orphanides, Governor of Central Bank of Cyprus, Press Conference, Nicosia 3 May 2010
20 Marfin Laiki Bank A good Example
21 Group Profile – 109 Years Old Marfin Laiki Bank (MLB) is strategically positioned as an emerging regional player with two home markets, Greece & Cyprus, and operations spanning in 11 countries in Emerging Europe, UK, Australia, Malta, Russia & Ukraine Regional bank with focus on corporate banking, wealth management and international business banking Ten years of robust growth both organically and through a series of mergers & acquisitions and strategic alliances Successful management track record and entrepreneurial culture Head-Office in Cyprus 507 branches, over staff
22 Credit Ratings Their Comments The rating derives from the banks very strong position in its domicile market, its expanding franchise in Greece due to the consolidation of the groups three banking subsidiaries and its improving financial fundamentals The ratings of (MLB) reflect its sound franchise in Cyprus and to a lesser extent Greece, its adequate funding profile supported by a large deposit base, good cost management and improved capitalisation… Following a period of rapid loan growth and international expansion, including the integration of Athens-based subsidiary Marfin Egnatia Bank (MEB; rated BBB+ Outlook Negative), the bank is now focusing on containing asset-quality deterioration, maintaining sound liquidity and improving cost efficiency. The latter should be helped by the planned merger of MEB into MLB, likely in Q210. Credit Ratings Long term Bank depositsA3 Senior unsecured debtA3 Subordinate DebtBaa1 Bank financial strengthC- Short termP-1 Long term Issuer Default rating BBB+ Short Term Issuer Default rating F2 Individual Rating C Support Rating 2
23 Strong Shareholders-Allies MLB shares are listed on the Athens and the Cyprus Stock Exchanges Biggest shareholder is Dubai Investment Fund with 18,81% No exposure to Dubai fund or Dubai economy – confirmed by press release and Rating Agencies comments Other key shareholders proposed purchase of stake 2nd biggest is Marfin Investment Group (MIG) with 9,55% Listed in Athens Stock Exchange 5,19bn capital raising through private placement completed in July 2007 Most recent investment: Olympic Airlines
24 Financial Information Key balance sheet items (m) FY08FY091Q10 Loans to customers (net) Total assets Customer deposits Total equity Tangible equity Key ratiosFY08FY091Q10 Tier 18,6%9,7%10,1% Capital adequacy ratio10,6%11,8%12,1% Cost/income54,5%58,1%56,8% NIM2,4%1,72%1,81% Loans/Deposits94,4%104,0%105,0% NPLs4,3%6,1%6,33% Provisioning61 bps105 bps108 bps
25 Comments on 2009 Results Marfin delivered better than expected earnings of 30m: Marfins fourth quarter earnings beat our estimates by 32%, coming in at 30m versus our expectation for 23m. The beat came from lower impairments, while fees also surprised positively. Earnings for the full year amounted to 174m, down 56% y/y (187m, down 44% adj). Overall a good set of results, with positive trends in asset quality and equity levels, though deposits were down q/q. UBS Unexpectedly good results Q4 bottom line significantly beats our estimates Surprise came from stronger NII (particularly in Greek operations) improving fee generation and higher trading. The solid top line performance more than offset the higher than expected costs in Q4. Cheuvreux
26 Recent issue of capital securities (April 2010) Hybrid Tier I Notes Size of issue: Through a private placement up to 200 m with an option to extent Application process closed on Friday, 7th May 2010 Oversubscribed to 250 m The proceeds to be used to further strengthen the Banks Tier I capital June 2010-Public offer for 50m under way
27 Marfin Laiki Bank Achievements Best Investment Services Provided, Cyprus 2008 Awarded by World Finance of Reuters – (first time awarded to a Cypriot Bank) Best Bank in Cyprus in 2009 Awarded by World Finance Best Internet Bank, Consumer Bank in Cyprus, 2009 and Best Sub Custodian Bank in Cyprus, 2009 Awarded by Global Finance Innovation Award- Cyprus Awarded by Money Markets 2008 International Custody Awards Straight- through Processing (STP) Excellence Award Awarded by Deutsche Bank Quality Recognition for Outstanding Achievement Award, (Best in Class STP Rates) Awarded by JP Morgan Special 10 Year Recognition Award for the period For the quality of US payments Awarded by JP Morgan – (first time awarded to a Cypriot Bank)
28 ROSPROMBANK, Russia
29 Branches: 8 Sub-branches: 12 Employees: 570 As of 31/05/2010 Credit Portfolio: 117 m Total Assets: 458 m Equity: 59 m Presence Throughout Russia
30 Commercial Bank ROSPROMBANK (LLC) was founded in In February 2008 it became part of the MARFIN POPULAR BANK PUBLIC CO LTD. ROSPROMBANK (RPB) provides the full range of banking operations (all regular banking operations, ForEx, cash collection, etc.). Clients count on RPB for fast delivery of a wide spectrum of personalized commercial banking products and services. RPB offers: - Treasury Services - Short and Long Term Financing including: Project Financing, Working Capital Financing, revolving/non-revolving Credit Lines and Overdrafts - Trade Financing, Letters of Guarantee and Letters of Credit - Leasing - Factoring - Corporate and personal Credit Cards RPB also provides a wide array of Deposit products, as well as Payroll distribution products, for corporate, commercial and retail customers companies Today RPB renders services to over companies. HIGHLIGHTS
31 Contact Us
32 Contact Us International Business Banking Tel: , Fax: Mailing Address: PO Box 22032, CY-1598 Nicosia, Cyprus Nicosia International Business Centre 1 (178) Tel: , Fax: Nicosia International Business Centre 2 (168) Tel: , Fax: Limassol International Business Centre 1 (179) Tel: , Fax: Limassol International Business Centre 2 (158) Tel: , Fax:
33 Contact Us cont… Larnaca International Business Centre Tel: , Fax: Paphos International Business Centre Tel: , Fax: International Lending Tel: , Fax: International Corporate Banking Unit Tel: , Fax: Moscow Representative Office Tel: , Fax: , 35/2 Miasnitskaya Street Moscow, Russia (495)
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