Cyprus' main commercial banks have announced a 0.5% reduction on all loans connected to the European Central Bank's base rate.

The decision by Bank of Cyprus, Marfin Laiki Banka and Hellenic Bank came a day before a scheduled meeting between Finance Minister Charilaos Stavrakis with the heads of the local commercial banks and follows increasing calls for a reduction of the banks’ lending margins with a view to ease pressure on businesses and households in the wake of the global financial crisis.

In its press release, the Bank of Cyprus said it postpones the planned increase of its lending margins on housing loans connected to the ECB base rate until January 1 2009.

''The bank management in the meantime will monitor developments closely and will contribute accordingly with solutions aiming to support the economy,'' the BOC press release said.

Marfin Laiki noted it postpones its planned revision of its lending margins on housing loans tied to ECB base rate until December 31 2008.

''Marfin Laiki, as an indispensable part of the Cypriot financial system, will follow closely developments and will contribute with suggestions to the competent authorities for the sake of the economy of our country,'' the press release adds.

Hellenic Bank announced a 0.5% reduction to its base rate to all loans granted prior January 1 2008 and tied to the ECB base rate.