You are here

Bank leaders expand their turf

07/12/2015 06:57
The current year proves to be yet another period of significant changes in relation to the banks' domestic deposits with market leaders strengthening their position.

After the substantial changes occurred during 2014 when the country's two largest banks suffered serious declines in their domestic deposit base, BOCY and COOP are coming back during 2015.

The gradual return of customers' confidence in Cyprus' economy in general and banking system in specific, seems to be favouring the sector's biggest players at the expense of smaller competitors.

The developments in Greece primarily during the summer, took their toll on the Greek banks' domestic subsidiaries as they experienced considerable withdrawals resulting in the shrinkage of their deposit base.

System deposits showed encouraging signs especially during the third quarter of the year even though domestic deposit rates are at a historic minimum and all controls on capital movement have been uplifted in April.

Although some funds were shifted to Cyprus due to the situation in Greece were although a stabilization is taking place, the capital controls still in effect act as a deterrent for capital to stay in Greece, Central bank data show that the main contribution for the increase in local deposits comes from Cyprus residents.

The most notable change during the first three quarters of the year occurred in BOCY as especially during the third quarter it managed to attract increasing funds resulting in its deposits in the local system increasing by 7,5% in comparison with the beginning of the year, as opposed to a 10,9% decline in 2014.

As a result, BOCY's market share in deposits increased by almost 2% from 2014 to 26,4%.

The results are in line with StockWatch's recent survey which showed a distinct improvement in BOCY's credibility as perceived by both individuals and businesses.

COOP being the leading bank regarding deposits, managed a 2,8% enlargement since 2014 after a 8% decrease in the previous year with its market share advancing to 27,6% from 26,9%.

It remains to be seen whether the recently announced recapitalization of the bank will have any adverse effects on customers' confidence and thus on its credibility.

Hellenic bank, the island's third systemic banking organization, after being the main beneficiary of last year's transformations, seems to be in a consolidation phase as its deposits in 2015 show a small reduction of 0,8% resulting in a market share of 13,6% from 13,8% at the end of 2014.

The two Greek subsidiaries included in this report lost a considerable part of their deposits and thus their respective market shares fell.

The banks examined, control roughly 78% of deposits in the system.