The Central Bank of Cyprus (CBC) said it expects banks to show flexibility to support businesses and households adversely affected by the spread of COVID- 19.
The European Central Bank Governing Council with the participation of Cypriot Governor Constantinos Herodotou, agreed to additional liquidity in the eurozone’s financial system, expand its QE programme that contributes to the maintenance of favourable liquidity conditions and the temporary release of capital and liquidity buffers.
The ECB’s Single Supervisory Mechanism (SSM) created a capital buffer for Cypriot systemic banking institutions amounting to €1.3 bln.
“The CBC expects banks to use them, demonstrating the flexibility needed to support both businesses and households that are expected to be adversely affected by the spread of COVID-19,” the CBC said:
“Bank support is expected include short-term restructuring of existing credit facilities as well as new short-term credit facilities for working capital purposes.”
It is emphasized that the implementation of prudent banking practices should continue so that the resilience of Cypriot banks will continue in the future.
In addition to the above moves, the CBC said it is working on additional measures within the framework of its powers and responsibilities, which will be announced in the coming days.
EIB mobilises €40 bln
The European Investment Bank (EIB) announced it will rapidly mobilise a funding facility that may reach up to €40 bln for Cypriot and European businesses under strain from the COVID-19 pandemic.
EIB called on member-states to set up a further guarantee for SME and Midcap support from EIB Group and national promotional banks.
Funding of up to €40 billion can be mobilised on short notice, backed by guarantees from the European Investment Bank Group and the European Union budget, while extra funding available for healthcare sector emergency infrastructure and development of cures and vaccines, the bank said.
EIB President Werner Hoyer called for significant, scalable additional guarantees from the Member States to ensure access to finance for SMEs and midcaps.
“Covid-19 is exacting a tragic toll in human suffering across Europe and the world. The Bank, and I personally, are close to the people hit by the contagion. The pandemic is also having a devastating economic impact which is already showing,” Hoyer said.