Central Bank governor Constantinos Herodotou argues that Cyprus needs to develop a culture of prevention rather than reaction to external uncertainties and risks that could derail the economy.
Speaking at the AGM of the Association of Cyprus Banks (ACB), he said the culture in Cyprus should changed from reaction to prevention.
He was referring to the current international risks and uncertainties for the economy, such as Brexit and trade protectionist issues.
Herodotou said that projections for the uncertainties and risks should be taken into account, so that proper planning could be made before conditions outside Cyprus affect the markets.
He noted that the fight against money laundering “is a one-way street for Cyprus, not only because it is imposed by regulations, but also because there are wider economic benefits to both the consumers and the banking system”.
If the country’s risk for investors was reduced, cheaper financing and banking products would be available at lower cost.
But he said that legal transactions should not be delayed due to the fight against money laundering, and that banks should invest in staff training and technology for that purpose. He added that neither the challenge of profitability should justify the delays.
With regard to Non-performing Loans (NPLs) in the Cyprus banking system, he said that huge progress has been made, but recalled that NPLs that have been removed from the banking system after sale deals, still remain in the economy.
For that reason, he called for proper use of the restructuring tool by borrowers and he also urged the platforms that have bought loans from the banks to take into account the possibilities for restructuring.
Minister of Finance Harris Georgiades said the Cypriot banking system operates now in a differentiated European supervisory environment within the framework of the European banking union, which was the joint response of the Member States to the mistakes and omissions that had led to the unprecedented crisis of the past.
Cyprus supports the attempt to complete the European Banking Union that would help in the definitive and complete consolidation of the Cypriot banking system, despite the fact that shaping a common framework was difficult.
The minister also referred to ESTIA scheme for NPLs reduction, saying that the scheme, as was approved by the European Commission, would be submitted to the Cabinet in about two weeks and should be available to vulnerable borrowers by July.
Cyprus Banks Association elected Hellenic Bank’s CEO Ioannis Matsis as its new President, succeeding Bank of Cyprus Christakis Patsalides.
In his speech marking also the 50th anniversary of CBA, Matsis said challenges for the Cypriot banking system was the reduction of NPLs, low profitability, the need for digital adoption in the banking sector and the introduction of new, more flexible working methods.
