Economy category powered by

Outgoing CBC Governor: It was an honour to serve Cyprus

"It was my honour to serve our country as the Governor of the Central Bank of Cyprus (CBC)," its outgoing Governor Constantinos Herodotou said in a statement that looked back on his five year term as the island's central banker.

He said the last five years have been full of challenges for the banking sector and for the Cypriot economy in general, and that despite this "with coordinated and timely actions, we managed for the economy and the banks to demonstrate remarkable resilience and now they can look to the future with optimism".

The CBC implemented measures and actions that shielded banks - and subsequently citizens as well as their money - from any temporary but also long-term crises, he added. And it was widely acknowledged that an economy as small as the Cypriot one cannot develop sustainably without a healthy banking sector.

"We have acted at all levels so that today we have a banking system that withstands shocks, supports the economy, businesses and households and can be trusted by citizens, without this meaning that we have not already started initiatives and projects for further improvement," he said, adding: "CBC initiatives such as the creation of an electronic platform for online customer identification and data updating and the finding of a systemic solution that will lead to an even more drastic reduction of νon-performing loans in all banks are at an advanced stage along with a proposal for social support for the first residence."

Something that, as he points out, would not have been possible without the constructive attitude of all involved bodies, governments, House of Representatives, private sector bodies, the members of the Board of Directors and the staff of the CBC as well as the media.

Herodotou finally thanked everyone for the cooperation and also the constructive criticism that they may have expressed from time to time.

Important achievements and actions of the past five years

Accompanying Herodotou's statement was a report by the CBC listing all the major achievements and actions that took place during his five-year term (2019-2024).

These include the successful management of the RCB crisis, the COVID-19 pandemic challenges as well as the management of the Lebanese financial crisis and its effect on Lebanese bank branches in Cyprus.

It said the CBC successfully managed consecutive crises without any cost to depositors or to the state, while acting under tight timelines, ensuring the avoidance of deposit haircuts and safeguarding the stability of the Cyprus economy. "The crisis at a systemic bank like RCB, could have easily spread to the rest of the banking system, posing a risk to the country's economy," the CBC pointed out. "We implemented unprecedented and innovative measures that protected households and businesses alike."

Among others, it notes the introduction of a loans moratorium scheme used by almost 50% of borrowers, with the total amount protected by the scheme amounting to €11b loans. Reference is also made to the temporary relaxation in bank capital requirements and loan origination criteria to expedite the granting of short-term loans to businesses and households addressing urgent financial needs in a prompt manner.

The Central Bank also says that it acted promptly and effectively when the crisis in neighbouring Lebanon began to unfold, with nine branches of Lebanese banks operating in Cyprus

"Our actions had a pivotal role in enhancing the reputation of our country," said the CBC with regards to anti money laundering threats, making particular note of 42,728 terminations of business relationships with shell companies and 125,872 bank accounts that were closed.

The CBC also said that it enhanced its "participation and influence in the ECB's discussions and decisions", with the outcome being internationally acknowledged, "evidenced by esteemed high-ranking officials honouring us with their presence in Cyprus over the past five years".

"Despite the crises we encountered, we successfully transformed the banking system into a more robust, a more solvent, and a more resilient one," it said, adding that the solvency ratio increased by 5.4% from 2018, which is "among the highest ratios in the European Union".

The CBC also reiterated how Non-Performing Loans have decreased to their lowest level since 2014, and referred to when it mandated banks to allocate part of their profits towards covering the shortfall in their MREL capital requirement, resulting in their MREL shortfall being reduced to the lowest level ever recorded since it was initially imposed.

"We are delivering a restructured, more efficient and modern Central Bank" addressing long-standing structural issues and executing plans and actions that have remained pending for years," the CBC said.

It also noted the "strengthened" financial independence of the Central Bank, while increasing its balance sheet risk coverage from 44% in 2020 to 96% in 2023.

"For the first time in our Central Bank's history, we successfully hosted the President of the ECB twice, the second time together with the entire Governing Council of the ECB, confirming the strengthened position we achieved for the CBC within the ECB," it added, before concluding: "A strong and reliable Central Bank, and a resilient banking sector capable of fostering economic growth. This is the Central Bank we deliver today."

Read More

Meeting between Cypriot and Greek professionals to promote business
One in two Cypriots finds it easy to start a business, survey finds
Dep. Minister to the President: Cyprus needs to double green investments
No official announcements after Christodoulides-Chinese Ambassador Vasiliko terminal meeting
Government to further support beekeeping, Agriculture Minister says
Construction Materials Price Index down by 1.57% in April
Tourist arrivals in April down 2.7%, up by 1.7% in first quarter
Supporting rural areas is a primary goal for the government, President says
Government pledges continuation of policies for strong and resilient economy
House President and Cyprus Union of Ship Owners discuss shipping challenges