Bank of Cyprus expressed its disagreement over proposals tabled by the Troika of the European Commission, the European Central Bank and the International Monetary Fund concerning the consolidation of the Cypriot banking sector.
Andreas Artemis, Chairman of the Bank of Cyprus, Cyprus’ largest bank said the bank disagrees with the proposal by Troika that the Central Bank of Cyprus should direct all banking groups in the island to increase the minimum Core Tier 1 capital ration from the present 8% to 10% and to maintain this level for the duration of the adjustment programme to be agreed between the Troika and Cyprus.
He also expressed the bank’s disagreement on the Troika proposal that the administrative hurdles and legislative framework that currently constraints the seizure and sale of loan collateral should be amended so that the property pledged as collateral can be seized and offered for sale within a maximum time-span of 1.5 years. Troika believes that this proposal, if implemented, would minimize the incentives for strategic default by borrowers.
This is the second disagreement by a Cypriot bank over the Troika proposals for financial sector regulation and supervision, following the official discourse expressed by Makis Keravnos, CEO of the Hellenic Bank.
On Bank of Cyprus’ capital shortfall of €730 million, as showed by the European Banking Authority’s final assessment, Artemis pointed out that the overall capital needs of the bank will be determined by the due diligence audit to be carried out by Pimco, after a Troika directive, as part of Cyprus’ application for financial support by the EU bailout mechanism.
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