Banks in Greece seem prepared to take over the Greek branches of Cypriot lenders, Finance Minister Yannis Stournaras said on Wednesday, confirming earlier reports that Alpha Bank and Piraeus Bank were close to a deal that would ringfence the Greek operations and lower the Cyprus bank’s recapitalisation needs.
Stournaras also said Greece was "shielded" from any fallout from the crisis in Cyprus, which is tottering close to bankruptcy after rejecting a proposed levy on bank deposits in return for a 10 bln bailout from the EU, the ECB and the IMF.
Euro zone finance ministers excluded the Greek branches of Cypriot banks from the controversial tax included in the island's international bailout on condition that those units would be transferred to Greek banks that would seek assistance from the country's bank bailout fund Hellenic Financial Stability Fund.
The three Cypriot banks with operations in Greece - Bank of Cyprus, Cyprus Popular Bank (CPB) and Hellenic Bank - have about a 10% share of the banking market based on loans and about 8% of deposits.
They operate as branches of their Cypriot parents and not as subsidiaries, meaning they are regulated by the Central Bank of Cyprus, which also provides them with funding through its emergency liquidity assistance (ELA) facility.
Their ELA exposure stems primarily from their Greek operations and covers their funding gap - the difference between assets and liabilities. The Greek units have higher loan-to-deposit ratios compared to their Cypriot parents.
Together they run a network of just over 300 branches in Greece and employ about 5,000 people. Their combined loan portfolio tops 20 bln euros, according to analysts.
The biggest of the three is Bank of Cyprus, which has a network of 181 branches.
Shares of Bank of Cyprus and CPB, which are also listed in Athens, did not trade on Tuesday and Wednesday.
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