Businesses in Cyprus, including small and medium-sized enterprises (SMEs), may benefit from export and import opportunities available through the European Bank for Reconstruction and Development (EBRD) doubling its trade finance limit to the Bank of Cyprus from €50 mln to €100 mln.
The facility comes under the EBRD Trade Facilitation Programme (TFP) worth €21 bln in response to the coronavirus pandemic.
The European bank said the increase in trade finance, which was suspended due to the crisis, “will help mitigate the disruptions that severe market conditions have caused in trade and supply chains.
It will accommodate the growing demand from Bank of Cyprus’s customers for trade finance instruments by providing guarantees for import, export and local distribution of imported goods.”
Bank of Cyprus, in which EBRD has a 5% stake, is one of the most active TFP partner banks in Cyprus with 319 transactions worth over €200 mln to date.
In 2014, EBRD injected €107.5 mln to rescue the bank, as part of the depositors’ bail-in of €1 bln, giving it a 5% stake, which is currently categorised as ‘disbursing’.
In 2015, EBRD also pumped €20 mln into Hellenic Bank, as part of the second-biggest lender’s capital raised from private investors, taking a 5.4% stake, which is also categorised as ‘disbursing’.
“This is a crucial step to help local importers and exporters respond to the impact of the pandemic. Trade finance is a vital part of the EBRD’s coronavirus response,” said Andreea Moraru, EBRD Director, Regional Head of Greece and Cyprus.
With the help of the TFP, Bank of Cyprus hopes to re-establish its correspondent banking relationships and thereby facilitate international trade transactions for its clients, the vast majority of them SMEs who have suffered from lack of liquidity and limited facilities from commercial banks.
The TFP promotes international trade to, from and within the economies in which the EBRD invests, including Cyprus.
Since its inception, the TFP has supported 648 import-export transactions for a total of €327 mln in Cyprus.
The EBRD started investing in Cyprus on a temporary basis to support the country’s economic recovery following the collapse of the banking sector in 2013.
To date, it has invested €464 mln in six projects, all in the private sector.