Piraeus Bank is offering competitive loans totaling EUR 150 mln for small and medium sized enterprises (SMEs) to coincide with its first anniversary of full banking operations in Cyprus.
Piraeus Chairman Michalis Salas, who was in Cyprus to mark the occasion, said that having met its objectives, the bank plans to use Cyprus as a base for its international activities, a decision which was warmly welcomed by Finance Minister Charilaos Stavrakis who also attended the press conference.
Constantinos Loizides, Chairman and CEO of Piraeus’ Cyprus operations, said that the loan scheme was finalised after consultations with the Finance Ministry.
Rapid expansion
Piraeus Bank has achieved a lot in its first year of operations in Cyprus, according to Loizides. Customer deposits reached EUR 924 mln at the end of January, while customer loans were EUR 340 mln, a four-fold increase from a year ago.
“We are servicing more than 11,000 customers through our network of 15 branches which will soon be expanded,” said Loizides, adding that Piraeus Bank now commands a 1.5% market share in Cyprus.
Salas said that while the deposit and loan amounts are relatively small compared to the overall size of the Cyprus deposit and loan market, what is of greater importance is the rapid growth in business.
He also said that Piraeus Bank will soon be profitable, a major achievement considering that it usually takes several years for a new bank to turn a profit.
No acquisitions
Piraeus Bank gained a rapid entry into Cyprus following its acquisition of Arab Bank in Cyprus a year ago. It has also taken a 20% stake in Atlantic Insurance and absorbed the operations of Euroinvestment & Finance. The total injection of money into Cyprus is estimated at EUR 120 mln.
Salas said no new takeovers are planned in the foreseeable future.
Loizides, meanwhile, hotly defended the acquisition of a minority 20% stake in Atlantic at three-times book value, saying it would give it access to the 30,000-strong customer base.
Loan scheme
The loan scheme is mostly directed at providing working capital and improving the liquidity of SMEs with annual turnover of EUR 50,000 to 3 mln, with at least three years of operations, of which two should be profitable.
The interest rate for the loans range from 6.75% to 7.75%, based on the Piraeus Bank base lending rate plus a spread of 1.5% for loans with guarantees and a 2.5% spread for loans without cover.
In a surprising development whereby the Finance Minister attended a commercial presentation of a bank for the first time, Stavrakis welcomed the “low interest rate loans offered by Piraeus,” expressing the hope that it would be followed by other banks.
Loizides explained that their offer in loans goes a long way to dispel the widely held view that Piraeus is whisking money out of Cyprus.
“The EUR 150 mln loans earmarked to the SMEs, the backbone of our economy, is just the beginning,” said Loizides, adding that soon the bank will announce a new lending programme for municipalities that need financing for projects.
