A YEAR has passed since the Eurogroup decision on a bailout plan brought the island to its knees and the banks into a freefall, and a pair of encouraging announcements yesterday suggest that the economy might be on a path to recovery.
This was also a sign of confidence by the bank's management who have been struggling with liquidity issues and the recovery of non-performing loans that account for nearly 50 per cent of their loanbook, a risky position made tougher with the new stress-tests for European banks announced earlier this week.
At the same time, the ministry of finance made a surprise announcement yesterday that it had raised €100m in a six-year bond via a private placement with an overseas investor, in the first international debt issue since the bailout rescued it from bankruptcy a year ago.
News about BoC's release of the 9-month deposits that matured yesterday came as a relief to cash-strapped depositors who can once again access their large-sum savings that were blocked and split into three schemes last year to help the bank stand on its feet again.
The bank said in a statement that the reason behind the decision was "the improving liquidity position and the specific and deliberate actions to enhance liquidity through deleveraging," the process adopted by the management to offload non-core assets, such as overseas operations and properties that have been vacated after the forced merger with
"The release of the deposits reflects the bank's prudent liquidity management and takes into account the improvement in the economic environment. The (bank's) management recognises the improving trust and confidence shown by customers and, in tandem, meets the expectations of the general public in
This was in a similar mood to the announcements made in January when the bank took the risk of releasing some €900m in 6-month fixed deposits, not knowing if thes funds would ever return to its branches.
This was confirmed by the
As per the release of the 6-month deposits, BoC said that it will proceed with the release of the 9-month time deposits as follows: a third of the amount is immediately made available in clients' current accounts; a third is converted into a 3-month deposit maturing and automatically released on
Hassapis said that the release of deposits marks yet another positive development for the bank following the sale of its
Following a decision by EU finance ministers in
In July, the CBC said in a joint statement issued with the finance ministry that 12 per cent of the outstanding balance in depositor funds which were frozen under the bail-in arrangement would be unblocked.
The remaining frozen funds were equally divided and placed in six, nine, and 12-month timed deposits.
Following the bail-in from the uninsured deposits, BoC achieved a core capital adequacy ratio of 10.2 per cent, according to figures for
Meanwhile, the finance ministry said yesterday that the €100m bond issue carried a yield of 6.5 per cent and was launched under
The bonds will be listed on the
Proceeds from the transaction will be used for public debt management, including government financing, it added.
Access to the eurobond market was taking place via its updated EMTN programme.
The facility has not been used since before
Last week, credit ratings agency Standard and Poor’s raised its long-term rating on
The EMTN programme has a €9bn ceiling. Debt worth about €2.5bn has been launched under the programme to date, a finance ministry official said.
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