Local
articles | 26 November 2013

EU officials expect Cypriot banks to pass tests

European officials did not appear concerned over the performance of Cypriot banks in an upcoming stress test on eurozone lenders.

Before the European Central Bank takes up its new role supervising eurozone banks from late next year, it plans to run a series of rigorous tests to uncover any possible shortfalls on the lenders’ balance sheets to avoid any surprises once it has taken charge. Members of the delegation of international lenders, or troika, handling Cyprus, said they did not expect any problems. “I wouldn’t be too worried about it,” said the European Central Bank’s Isabel von Koppen Mertes, responding to a question at the Economist conference in Nicosia. Cyprus is in a good position, particularly the Bank of Cyprus, she added.

The stress tests will include Bank of Cyprus, Hellenic, cooperatives, and the Russian Commercial Bank. The European Commission’s deputy director-general for economic and financial affairs said he did not expect Cypriot banks to need additional capital. “I would not anticipate that more money would be required,” Maarten Verwey said.

But there were buffers in the bailout programme to tackle such an eventuality, he said, reiterating that he did not expect additional capital requirements to arise. Bank of Cyprus was recently recapitalised by using depositor cash, a process known as bail-in, or haircut. Co-operatives will receive around €1.5 billion from the island’s €10 billion bailout, while Hellenic managed to raise the necessary funds through private investors. Around €1 billion set aside for banks — co-ops and Hellenic — remained unused.

Source: Cyprus Mail

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