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Andreas Stavrou, Manager International Business Centre - Nicosia
The Cyprus Banking System
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Cyprus
EU member since May 2004 &
Euro zone member since January 2008
Proven versatility in crisis
Milder effects from the economic crisis
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
Ranked by Forbes as No.22 of “Best Countries for Business”
Economy dominated by the Services Sector – 78% of GDP
http://www.centralbank.gov.cy/
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Cyprus ratings
The most recent 10-year CY bond which
was Issued in February 2010 is now
trading at 150 bps spread.
On 24 June 2010 Fitch affirmed Cyprus ratings
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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
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Cyprus going strong in 2010
Total deposits ιn Cyprus increased by €8,8 billion during the first
6 months of 2010 (15,0% to €66,9 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 21.4.2010
7 Cyprus Banking
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Cyprus Banking
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 1925 - Marfin Laiki is number 1 on Register
of Companies
Open, competitive, multivariate, multidimensional, even
multicultural Banking Industry
Well capitalised and profitable banks
www.acb.com.cy
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A Multitude of Banks of past and present
LISTED BANKS
1.Marfin Popular Bank Public Co Ltd
2.Bank of Cyprus Public Company Ltd
3.Hellenic Bank Public Company Ltd
4.USB Bank Plc
SUBSIDIARIES OF FOREIGN BANKS
Αlpha Bank Cyprus Ltd BNP Paribas Cyprus Ltd Emporiki Bank – Cyprus Limited Kommunalkredit International Bank
Ltd National Bank of Greece (Cyprus) Ltd Russian Commercial Bank (Cyprus)
Ltd Societe Generale Cyprus Ltd Piraeus Bank (Cyprus) Ltd Eurobank EFG Cyprus Ltd
OTHER BANKS
1. Co-operative Central Bank Ltd
2. The Cyprus Development Bank Public Company Ltd
3. Housing Finance Corporation
4. Mortgage Bank of Cyprus Ltd
BRANCHES OF BANKS OF EU COUNTRIES
1. Barclays Bank PLC
2. Banque SBA SA
3. First Investment Bank Ltd
4. Joint Stock Company “Trasta Komercbanka”
5. National Bank of Greece S.A.
6. Central Cooperative Bank PLC
7. Banca Transilvania S.A.
8. Joint Stock Company Akciju Komercbanka "Baltikums"
BRANCHES OF BANKS OF
COUNTRIES OTHER THAN EU
1. BankMed s.a.l.
2. Arab Jordan Investment Bank SA
3. BANQUE BEMO SAL
4. Bank of Beirut SAL
5. BBAC SAL
6. BLOM Bank SAL
7. Byblos Bank SAL
8. Credit Libanais SAL
9. FBME Bank Ltd
10.Open joint-stock company AvtoVAZbank
11.OJSC Promsvyazbank
12.Jordan Kuwait Bank PLC
13.Jordan Ahli Bank plc
14.Lebanon and Gulf Bank SAL
15.Lloyds TSB Offshore Limited
16.Privatbank Commercial Bank
17.IBL Bank sal
REPRESENTATIVE OFFICES 1. UBS AG 2. Atlasmont Banka A.D.
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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
http://www.centralbank.gov.cy
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An Effective Supervisory Mechanism
Proven track record in setting Monetary Policy and safeguarding the Banking system
IMF’s 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 – increases funding cost
Managed “cooling off” of the property market: tightened LVRs since mid 2007, to 70%.
Large credit exposures are discouraged to avoid concentration risk.
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More deposits than loans
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15
20
25
30
35
40
45
50
DEC 05 DEC 06 DEC 07 DEC 08 DEC 09 FEB 10 APR10
FCY EUR
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)
25,00
30,00
35,00
40,00
45,00
50,00
55,00
60,00
65,00
DEC
05
JUNE 0
6
DEC
06
JUNE 0
7
DEC
07
JUNE 0
8
DEC
08
JUNE 0
9
DEC
09
FEB 10
MAR 1
0
APR 1
0
Loans Deposits
€bn
€bn
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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
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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
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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”
Healthy Capital and Liquidity positions
EU-wide stress testing results indicate ability
of domestic banking sector to withstand shocks
Limited exposure to CEE
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Deutsche Bank ranks MLB as the least exposed in CEE
amongst peers
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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
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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 €100.000 per person or legal entity per Bank.
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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 2009. 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
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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 9.500 staff
http://www.marfinlaiki.com.cy/
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507 branches Internationally
GREECE
CYPRUS MALTA
GUERNSEY
SERBIA
ROMANIA
UKRAINE
RUSSIA
ESTONIA
UNITED
KINGDOM
AUSTRALIA 10
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115
185
1
4
4
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63
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Credit Ratings
Capital Raising 7.7.2010
“…Marfin Popular Bank Public Co Ltd (“Bank”)
announces that it has successfully
completed on June 25, 2010, the issue of
the second Tranche of Capital Securities
2010 through a public offer, …
Overall, through the two Tranches the
amount of €295.524.000 was raised by the
issue of 295.524 Capital Securities of
nominal value €1.000 each. The Capital
Securities will be included to the Hybrid Tier
I Capital of the Bank, following the already
obtained relevant approval by the Central
Bank of Cyprus, further enhancing the
strong capital base of the Marfin Popular
Bank Group.
Credit Ratings
Baa2
BBB+
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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 http://www.dubaigroup.com/
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 April 2010 sold Chipita for €730m and is accumulating cash for new
investment opportunities http://www.marfininvestmentgroup.com/
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Financial Information
Key balance sheet items (€m) FY08 FY09 1H10
Loans to customers (net) 23.427 25.082 27.513
Total assets 38.367 41.828 43.287
Customer deposits 24.828 23.886 25.344
Total equity 3.430 3.636 3.563
Tangible equity 2.165 2.358 2.270
Key ratios FY08 FY09 1H10
Tier 1 8,6% 9,7% 9,8%
Capital adequacy ratio 10,6% 11,8% 11,5%
Cost/income 54,5% 58,1% 60,4%
NIM 2,4% 1,72% 1,80%
Loans/Deposits 94,4% 104,0% 104,9%
NPLs 4,3% 6,1% 6,6%
Provisioning 61 bps 105 bps 105 bps
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CEO comments on 1H10 Results
31.08.10 Mr. Efthimios Bouloutas, CEO of Marfin Popular Bank Group, made the following statement:
“The Group’s strong operating performance during 1H 2010 reflects the success of our strategy
established on both prudent balance sheet management and rigorous risk management culture, in
conjunction with strong focus on client service. In this exceptionally challenging business environment,
the Group succeeded to further increase its operating profitability, while maintaining its solid capital
and comfortable liquidity position. The quality of the Group’s revenues combined with pre-provision
organic profitability demonstrated significant improvement compared with 1H 2009, while NPL
formation marked a meaningful decline. The combination of the above together with additional
provisions led to the further improvement of the provision coverage ratio and the strengthening of the
Group’s balance sheet against future developments.
Our Group, appreciating the social role it has to play in these adverse conditions globally, and especially
in Greece, has continued the uninterrupted supply of credit to its clients. In 1H 2010, the Group’s
market shares in new loan disbursements exceeded 25% in Cyprus (highest rank) and 21% in Greece
(second highest rank).
With these actions we consider that we contribute practically and materially to the efforts of our clients
and the communities we operate as they undergoing the adjustment process and reposition for growth.”
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2010 EU Wide Stress Test Exercise
□ The exercise was conducted using the scenarios,
methodology and key assumptions provided by CEBS.
□ As a result of the assumed shock under the adverse
scenario, the estimated consolidated Tier 1 capital ratio
would change to 8,5% in 2011 compared to 9,4% as of end
of 2009.
□ An additional sovereign risk scenario would have a further
impact of 1,4 percentage point on the estimated Tier 1
capital ratio, bringing it to 7,1% at the end of 2011,
compared with the CRD regulatory minimum of 4%.
□ Additional buffer of €302m exists!
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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”
“Special 10 Year
Recognition
Award for the
period 2000-
2009” For the quality of US
payments Awarded by
“JP Morgan” –
(first time awarded to
a Cypriot Bank)
Top 1000 World Banks
2009 2010
Rank 240 209
FT Banker magazine
29 Contact Us
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Contact Us
International Business Banking Tel: +357 22 363923, Fax: +357 22 363900 e-mail: [email protected]
Mailing Address: PO Box 22032, CY-1598 Nicosia, Cyprus
Nicosia International Business Centre 1 (178) Tel: +357 22 363737, Fax: +357 22 363750 e-mail: [email protected]
Nicosia International Business Centre 2 (168) Tel: +357 22 363737, Fax: +357 22 363700 e-mail: [email protected]
Limassol International Business Centre 1 (179) Tel: +357 25 815959, Fax: +357 25 815972 e-mail: [email protected]
Limassol International Business Centre 2 (158) Tel: +357 25 815959, Fax: +357 25 815637 e-mail: [email protected]
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Contact Us cont…
Larnaca International Business Centre
Tel: +357 24 814291, Fax: +357 24 814290
e-mail: [email protected]
Paphos International Business Centre
Tel: +357 26 816522, Fax: +357 26 911334
e-mail: [email protected]
International Lending
Tel: +357 22 363718, Fax: +357 22 312878
e-mail: [email protected]
International Corporate Banking Unit
Tel: +357 22 363903, Fax: +357 22 363900
e-mail: [email protected]
Moscow Representative Office
Tel: +74959670185, Fax: +74959670186,
e-mail:[email protected]
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However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. We caution that these statements represent the Group‟s judgments and future expectations and that we have based these forward-looking statements on our current expectations and projections about future events. The risk exists that these statements may differ materially from actual future results or events and may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future Group results to differ materially from these targets.
Forward-looking statements may be influenced in particular by factors such as movements in local and international securities markets, fluctuations in interest rates and exchange rates, the effects of competition in the areas in which we operate, general market, macroeconomic, governmental and regulatory trends and changes in economic, regulatory and technological conditions. We caution that the foregoing list is not exhaustive.
When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and events. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. All forward - looking statements are based on information available to Marfin Popular Bank Public Co Ltd. on the date of this presentation and Marfin Popular Bank Public Co Ltd. assumes no obligation to update such statements, unless otherwise required by applicable law.
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