Cyprus banks continue to cut rates, ease terms

Bank of Cyprus announced it was cutting deposit and lending rates from May 1, while it also said that it would extend the grace period for bank charges to 75 days to June 30. Greek-owned Alpha Bank Cyprus also announced it was extending the period for rate-free charges and possessions by 60 days to June 29.
Bank of Cyprus said that the Basic Interest Rates are reduced by 0,5% to 5.25, effective from 1/5/2013. The rates for mortgage loans is reduced to 3,50% and for business loans to 4,25%
The reductions affect all loans and current accounts linked to the basic interest rates of the Bank of Cyprus and the former Popular Bank.
The bank also said it had initiated a temporary suspension of charges for 75 days, from April 16 to June 30 for loan arrears, current account unauthorised excesses, returned cheques and authorised temporary current account limit.
The announcement followed an agreement reached last week between the Central Bank of Cyprus and all commercial banks on the gradual reduction of interest rates on deposits from May 1. The move is also expected to lead to a gradual reduction of lending rates.
The proposal provides that if the deposit rate offered by financial institutions exceeds euribor plus 300 basis points, then the financial institution must maintain additional specific equity.
Last week, Hellenic Bank said it was cutting the basic interest rate from 5,75% to 5,50%, business loans and business overdraft from 4,75% to 4,50%, housing loans from 4,40% to 4,15% and from 5,25% to 5,00% in the case of previous fixed loan rates.
The Cooperative banks also said they will reduce basic deposit and lending rates, while Eurobank Cyprus said it was reducing its basic rates from 4,90% to 4,65%.