articles | 20 June 2016

BoC unfazed by Brexit

The bid by Bank of Cyprus (BoC) for a listing on the London Stock Exchange will not be affected by an exit of the UK from the EU according to senior bank officials.

“Bank of Cyprus is going to be listed on the London Stock Exchange in 2016 no matter what the outcome of the June 23 referendum,” a BoC top officer told the press.

Separately, on Thursday, BoC’s Chief Executive Officer John Hourican told Bloomberg News: “While the City of London may suffer something over time following a Brexit, the Londoninfrastructure on global financial markets sits slightly separate to the UK’s destiny.”

Britain’s ‘Leave’ campaign opened up a 7-point lead over ‘Remain’ this week ahead of the referendum on membership of the European Union, an opinion poll showed earlier this week.

BoC announced in March that it would pursue a premium listing on the London Stock Exchange in the second half of 2016, while it would shed its listing in Athens.

“The access to a greater pool of international capital, together with greater profile and visibility in the European financial markets, will help position the Group to play a key role in supporting the growth of the Cypriot economy,” the bank said at the time.

Credit positive

Moody’s rating agency this week changed the outlook to positive from stable on both BoC’s Caa3 long-term deposit ratings and on the Hellenic Bank’s Caa2 deposit ratings.

It upgraded the BoC’s long-term Counterparty Risk Assessment (CRA) to Caa1(cr) from Caa2(cr) on the back of rising deposits and a fall in Emergency Liquidity Assistance (ELA).

“The outlook change reflects Moody’s expectations of further improvements in the banks’ weak asset quality, a return to profitability and improving funding conditions. This is driven by accelerating economic domestic recovery and the banks’ increased restructuring efforts,” Moody’s said. Meanwhile, Finance Minister Harris Georgiades is keeping his powder dry on the referendum debate in advance of a possible new pro-Brexit government. It is widely expected that UK Prime Minister David Cameron will resign if Britons vote to leave the EU next week.

“It would not be wise to refer to possible dangers an eventual Brexit may entail for the local economy or for any EU economy,” Georgiades said, replying to questions from Members of Parliament (MPs) earlier this week. Georgiades noted that if Britain decides to leave the EU, the negotiation process could last up to two years.

Nevertheless, the Cyprus government is being asked by business people to seek a trade deal with the UK in the event of a Brexit, as the slide in the pound is raising fears about the impact on Cyprus’ largest market for tourism and other services.

Source: InCyprus

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