Cyprus Property News magazine for overseas buyers & real estate investors

Thursday 1st October 2020
Home Investor Centre Moody's downgrades Marfin and Bank of Cyprus

Moody’s downgrades Marfin and Bank of Cyprus

EARLIER today, Moody’s ratings agency downgraded the deposit and debt ratings of Marfin Popular Bank Public Co Ltd (MPB) to Ba2/Not Prime, from Baa3/Prime-3, and Bank of Cyprus Public Co Ltd (BoC) to Ba1/Not Prime from Baa2/Prime-2.

At the same time, Moody’s confirmed the deposit and debt ratings of Hellenic Bank Public Co Ltd (Hellenic) at Ba1.

The outlook on the ratings of all three banks is negative.

According to Moody’s press release, the main factors driving the rating actions are:

  1. High exposures to Greek government bonds (GGBs), amounting to approximately 95% of Tier 1 capital for the Marfin Popular Bank and 55% for the Bank of Cyprus.
  2. Significant lending exposure to the Greek private sector, which will also likely cause a further rise in the banks’ non-performing assets and, as a result, weaken profitability.
  3. Challenges to sustain their current funding and liquidity profiles in the context of high levels of uncertainty in the region.

The negative outlook on the banks’ ratings reflects the high level of uncertainty surrounding credit developments in Greece and the impact this could have on the banks’ overall credit risk and the negative outlook also reflects the weak operating conditions in Cyprus.

Government bonds downgraded

Today’s downgrade follows yesterdays announcement by Moody’s that it had downgraded Cyprus’ government bond ratings to Baa1 from A2 over “ongoing concerns about Cyprus’ fiscal position, which are amplified by the fiscal and economic consequences of the destruction of the Vasilikos power plant on 11 July 2011”.

Yesterday’s announcement also referred to “the increasingly fractious political climate in Cyprus in the wake of the plant’s destruction”.

Adding that “This adverse development increases implementation risk to the government’s plans, many of which will require not just cross-party support, but also acceptance by the trade unions.

Moody’s also said that the “government may need to extend capital support to at least some of its banks over the next few years given the substantial exposure of Cypriot banks to a sovereign default and macroeconomic stress in Greece”.

The outlook is now negative, Moody’s said.

8 COMMENTS

  1. @Mick, if this shower decide to sell any assets such as property & state land. Will they come with full, immediate & genuine Title Deeds at point of sale?

  2. I don’t live in Cyprus . Courtesy of a fraudulent lawyer and a well known developer. But the good news is I don’t have any money there either.

  3. I am surprised that the list did not contain :

    4. Significant lending exposure to unscrupulous, dodgy Cypriot Developers.

    But then again most title deeds on new property have yet to be issued and the Banks will try to use home owners as underwriters.

    As for Moodys outlook being negative. Dire is more appropriate

  4. Personally, I have started reducing savings deposit set aside for the IPT with Marfin rather than draw off my UK savings at a terrible exchange rate and I started this a few days before the power station was wrecked.

    Now, based on Moody’s, I’ll be withdrawing the lot – I’m not going to be caught out, certainly not here in Cyprus where we are being consistently fleeced or defrauded by the Cypriot system.

    I think it safe to say, you can guarantee expats will be the last in the queue when it comes to a refund and I for one, will not be in that queue.

  5. Well, plenty of us could see things Cyprus-wise were heading sharply in the wrong direction- and that was BEFORE the lunatic storage and subsequent explosion of the confiscated munitions. The Cyprus government were already well in Denial mode regarding the downwards trajectory of the countries economy.

    Now the President blames ‘everyone else’ and seems to see himself as some kind of SuperHero who single-handedly can somehow turn things around, because the people of Cyprus voted for him. HA, his track record goes before him, many would say this rates, at best, Poor, some would extend this to include the word Incompetent.

    Where to now? Well with this man at the helm, prepare for a VERY rough ride, the Cyprus banks must be seeing serious money ‘walk out the door’ and the ignominy of asking for a Eurozone bailout, tethered to some serious Austerity measures, including a radical shakeout of the overblown Public Sectors and remedial measures to first stabilise and then turnaround the seriously sick Tourism, Property and Construction sectors, would surely ensue, yes little Ol Cyprus in there in the PIGSty as the global recession goes into a worrying and possibly prolonged 2nd Phase.

  6. Greece & South Cyprus should cut it’s vast bureaucracy & sell their assets like other debt ridden countries – the sale of the various islands to interested buyers would be a good idea.

  7. Here we go!

    Hold on for the bumpy ride to come!

    Three wheels on my wagon and all that!!!

Comments are closed.

CYPRUS WEATHER FORECAST

EURO EXCHANGE RATES

EUR - Euro Member Countries
GBP
1.1016
RUB
0.0109
CNY
0.1254
CHF
0.9255

TOP STORIES

EU vows to take aim at ‘golden visa’ programmes

For years, wealthy Chinese have made investments in Cyprus and Malta in exchange for European Union passports – so-called golden visa transactions. Now, Brussels...

Wealthy Britons turn to Cypriot citizenship

The number of British entrepreneurs looking to "buy" citizenship from countries offering visa-free access to the European Union has risen sharply, investment migration firms...

Mixed outlook for real estate

BNP Paribas has released its second 2020 report regarding the property market outlook post-pandemic, presenting forecasts about real estate in uncertain times. The obvious differentiation...

you're currently offline