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CY banks after the referenda

26/04/2004 08:50
The main characteristic in the aftermath of the referenda carried out in Cyprus will be the extension of uncertainty that surrounds the island’s economy, while “stagnation” in economic activity will continue in anticipation of the international reactions to the G/C no vote, high ranking bank officials told StockWatch on Monday. Messrs. Yiannis Kypri, Christos Stylianides and Yiannis Telonis reviewed the prospects of economy for 2004 and commented on the impacts of the referendum on the financial results of the Cyprus banks.

Recovery in 2005?

Invited to comment on the forecasts for the recovery of the Cyprus economy in 2004 in relation to the outcome of the referendum, Bank of Cyprus Economic Manager, Yiannis Kypri said that it is a matter of psychology and, therefore, depends on the reaction of the public opinion, the consumers and the businessmen. “If there are hopes that the Annan Plan will be back (either in its current form or in other), many will depend on the psychology and the reaction of the public opinion. Every time that there was a ‘no’ vote indications, investors showed their disappointment”, he noted.

Similarly, Hellenic Bank Strategic Development Manager, Yiannis Telonis said that any forecasts are quite risky and left the possibility open for the extension of uncertainty in economic activity. “Are we going towards a second referendum? If yes, uncertainty will continue until the outcome of the second referendum”, Mr. Telonis said.

Mr. Telonis anticipates that the prospects for recovery in 2004 will be lost in 2004, while many will depend on tourism. “Many will depend on the foreigners’ reaction, if they interpret negatively the difference between ‘yes’ and ‘no’. We should not exclude the possibility of stagnation in the market”, he concluded.

International reactions

Newly appointed Laiki Group General Manager, Christos Stylianides stressed that the stance of the Cyprus government will play an important role, since the international community will offset this stance in relation to the measures it will take. “This week we will have the reactions of the international community and the Cyprus business world. If there are concerns on the possible impacts, then recovery in 2004 will become difficult”, Mr. Stylianides said.

Responding to the relevant question, Mr. Stylianides said that the difference between ‘yes’ and ‘no’ is not as important as the reaction of the international community and the Cypriot businessmen, stressing that in case the reactions are mild, the impacts on economy for 2004 will not be significant. Otherwise, any predictions are fairly risky.

Will the bank results be affected?

As regards to the financial statements, bank officials attempted to dissociate the referendum with their balance sheets. “The results do not depend on the referendum. They are not only based on the citizen’s psychology and the possible solution or non solution”, Mr. Kypri said.

On the other hand, Mr. Telonis said that the impacts will be definitely evident within the period of six months. Similarly, Mr. Stylianides said that positive or negative impacts will become evident in the second quarter.

Bad debts: "We have taken the proper measures…"

With regard to the bad and doubtful debts, the banks stressed that they have already taken the proper measures to deal with the impacts of the political uncertainty, which has stagnated the Cyprus market.