Nothing is comparable with Cyprus’ 2013 financial crisis, Hellenic Bank’s Chief Executive Officer Oliver Gatzke has said, adding the bank’s management team is monitoring the situation on a daily basis.
Speaking to the press over the bank’s annual results, Gatzke said the bank has received questions by its regulator, the EU Single Supervisory Mechanism, stating there is no reason to worry.
His comments came in the mid of the financial turmoil sparked by the collapse of two regional banks in the US and the turbulence in Credit Suisse.
“Look at the banks today and ten years ago, there is a lot of capital, there is a lot of liquidity and when you look at Hellenic Bank you will see there is even more capital and even more liquidity,” he said.
Responding to a question, the German banker said supervision and regulation was beneficial.
“The banking system in Cyprus has improved significantly and this was because of better regulation. At the end of the day banks are safer,” he said.
Gatzke highlighted the very different business model observed by Hellenic Bank compared with the US Silicon Valley Bank which collapsed from a run from its uninsured depositors (over $250,000) namely start-ups and venture capitalists.
Hellenic Bank has mainly local retail deposits with the majority being insured deposits (up to €100,000) considered as more stable.
The situation, he added, is not comparable with 2013 when a large part of deposits in the Cyprus banking system came from abroad.
Gatzke also pointed out that the bank has excess liquidity of €6 billion held in Central Banks, which is are highly liquid.
Moreover, he noted that the bank’s Liquidity Coverage Ratio (LCR) stood at 440% compared with the supervisory requirement of 100%.
We have the highest or the second highest LCR in the universe of the banks supervised by the ECB, he said.
Gatzke also said that the bank’s bond portfolio, totalling €4.2 billion in end-2022, is invested in highly rated bonds, in Cyprus Government Bonds, as well as high-quality covered bonds with an average maturity of three years.
Amid the rising interest rates, Gatzke said that is important to maintain high credit standards, noting new lending is expected to slow down. He noted that, as part of its loan origination criteria, the bank accepts higher loan instalments without increased own contributions by borrowers, households and businesses alike.
Gatzke said that the majority of the bank’s loans are associated with the local base rate rather than Euribor which is more linked with the ECB’s rate hikes.
Referring to deposit rate, the German banker said that the bank will “slowly- slowly” start raising rates starting with fixed term deposits.
Furthermore, Gatzke said that the bank is in discussions with the regulator, over dividend distribution in 2024 for the year of 2023.
Noting that a decision by the regulator (SSM) is expected by the end of the year or early next year, Gatzke noted that “seeing our Key Performance Indicators, we believe we can pay dividend and it is time to start paying dividend at some point in time.”