Moody’s may upgrade BOC higher

Moody’s, the credit rating agency in its recent report on Bank of Cyprus Pcl identifies the risks involved with the deficit in the Group’s staff pension plan amounting to CYP 104 mln, but notes the improvement and at the same time says it may move to upgrade the Bank’s rating.

Moody’s recognize the deficit as a burden on BOC’s capital and future profitability. Specifically, the deficit is associated with the performance of BOC stock on the CSE as approximately 35% of the pension plan’s assets are invested in BOC shares and 10% in BOC debentures.

On the other hand, the performance of BOC stock during 2005 will help increase the assets of the pension fund, thus bringing the deficit to lower levels.

Moody’s stipulate that the value of the pension plan’s assets for the

first ten months of the year increased by CYP 33 mln on the back of the 70% increase in the share price of BOC stock.

This will result in a reduction in the deficit below 10% of the share capital of the Group thus improving BOC’s financial position and consequently it may result in an upgrading of the bank (from D+).

Finally, in their report Moody’s welcomed the actions taken so far by the new management of the Group for local restructuring and the successful expansion in Greece.