The largest bank in Cyprus has fully repaid the €11.4 billion it received from the European Union in the midst of a banking crisis in 2013. Bank of Cyprus chief executive John Patrick Hourican said the bank proved its resolve to restrategise and correct its funding structure. He said the development also shows that the bank has transitioned into a “stronger, safer and more focused institution capable of delivering appropriate shareholder returns over the medium term.” The bank revealed it was able to accomplish this by getting rid of unwanted assets and operations, increasing its cash reserves and gaining the trust of depositors. The Emergency Liquidity Assistance (ELA) provided by the central bank was equal to 60 percent of the country’s GDP in 2013. The bank also rebuilt its reserves by seizing savings accounts of over €100,000.
Now that the repayments are done a year ahead of schedule, the bank can resume dividend payment. “ELA [Emergency Liquidity Assistance] meant there was no chance a dividend could be paid,” said John Hourican. “This allows us to begin discussions of normal capital distributions over the coming years.” The bank was forced to let go of international assets, while also being able to sell €1 billion worth of shares. “A whole pile of little things have added up to what is a really important and big milestone for the bank,” Mr Hourican said. “To talk about the bank being normal and to talk about it being on the road to being repaired and still having emergency funding on the balance sheet doesn’t sound right,” he added. “It’s really important psychologically and from the investor and customer perspective.” Investor’s in the bank include Donald Trump’s pick for commerce secretary, Wilbur Ross. The bank still has to tackle its non-performing loans (60 percent of the bank’s loan book) before it can begin paying dividends.