CYPRUS: Stress tests confirm economy’s positive outlook

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The results of the Comprehensive Assessment for Cypriot Banks by ECB and EBA, published on Sunday confirm the final stabilization and restoration of confidence in the financial system of Cyprus and the positive outlook that is formed for the Cypriot economy, the Ministry of Finance says.

According to an official announcement, issued by the Ministry, based on the results of the Comprehensive Assessment, the Cypriot Banks will not need state support.

The Ministry of Finance notes that it recognizes the importance of the results and their meaning in the evaluation of the Banks.

“We believe that the unprecedented scale of the Assessment, as regards the level of tests and the number of credit institutions participated, will strengthen the trust of the markets on the durability and soundness of the European banking systems in general and the Cypriot credit institutions in particular”, it added.

The Ministry points out that the four Cypriot banks which participated in the Assessment, namely the Bank of Cyprus, the Cooperative Central Bank, the Hellenic Bank and the Russian Commercial Bank, “during the past year have taken significant preventive measures for further strengthening of their capital adequacy, while additional measures for that reason are underway”.

The Cooperative sector was nationalised this year as the government injected €1.5 billion from the bailout funds to cover its capital needs.

On the Hellenic Bank, the Ministry notes that it appears a capital deficit which seems perfectly manageable.

ACB satisfied with stress tests results

The Association of Cyprus Banks (ACB) has expressed satisfaction with the positive results of the Comprehensive Assessment of four Cypriot banks by the European Central Bank and the European Banking Authority.

ACB notes in a press release that the completion of the exercise strengthens the efforts made both at home and European level to achieve transparency, consolidating stability and building confidence in the financial system and the banking sector across Europe.

According to the Association, the results of the Comprehensive Assessment, especially for Cyprus,
show that "our banks have responded positively to the strict quality control requirements of the assets and exercise stress test and that is in a position to cope with future risks that might arise from a possible rapid deterioration of economic data."

It also indicates that "actions taken by our banks over the past months led to a significant increase in capital, thus enhancing the resilience of the banking sector, as it is also confirmed by the analysis of the results."

The Association believes that these positive developments enhance the international credibility and the public`s confidence in the Cypriot banking system, which are essential to the overall effort for recovery and growth of our economy.