06/04/2015 06:09
A new era starts today for the banking sector as all capital controls imposed after the 2013 bail-in are abolished.
Without any restrictions in capital movement for the first time in two years, banks are called to defend their deposit base from fleeing Cyprus.
Judging from the depositors' behavior so far, there will be a non-significant negative impact as during 2014 they could take their deposits out of Cyprus already, given the gradual lifting of capital controls.
Some concerns exist due to the situation in Greece but as the president of the banks association George Georgiou stated to Stockwatch "at this stage deposit outflows are not a concern".
Banks rely on their successful recapitalizations in order to convince depositors to either maintain their deposits with them or return previously removed deposits.
The eventual implementation of the foreclosures law that seems to be a matter of time now, is expected to further reinforce their position of financial soundness as it will help them tackle the non-performing loans issue more effectively.
Meanwhile banking sector players intensify their efforts to attract depositors by offering new products that come with various flexible features.
Although interest rates on deposits have recently declined after a concerted effort by the central bank and a general call from other market players, they remain the highest in the Eurozone.
Based on the banks' recently announced audited 2014 accounts and CB's published system deposits, some significant changes occurred during 2014 although related rankings remained unchanged.
COOP held to the number one spot despite a decrease in their market share from 28,7% to 26,9% due to a decline of 8% in their deposit base against a drop of 1,8% in the system total deposits.
The drop in system deposits is 4% if currency and various other adjustments are taken into account.
The decline of their deposits from €13,5 bn to €12,4 bn would be much higher if not for a massive return of deposits since October 2014 after the successful outcome of the European stress test.
Since then and until the end of March 2015, COOP managed a net deposit inflow of €500 mn.
Maintaining the second place, Bank of Cyprus suffered a decrease in its market share from 27% to 24,5%.
Its Cyprus deposits declined by 10,9% during 2014 from €12, 7 bn to €11,3 bn.
An increase in its deposit base in Cyprus occurred in December 2014 for the first time after the bail-in of March 2013 giving a glimmer of hope that the declining trend in deposits came to an end.
According to the company the increase continued until at least the end of February 2015.
Hellenic bank was the main beneficiary of the deposit losses by the two largest banks as it experienced a substantial increase of 15,1% from €5,5 bn to €6,3 bn.
This resulted in an improvement of its related market share by 2,1 percentage points from 11,7% to 13,8%.
As the only domestic bank that was neither bailed-in or bailed-out, HB looks forward to continuing this trend and improve its market share even more.
Eurobank Cyprus also managed a considerable increase in its market share in terms of deposits as it witnessed an increase from 5,3% to 7,2% further reinforcing its domestic position.
Alpha bank Cyprus enjoyed a small increase as well from 4,3% to 4,5%.
These five banks command about 77% of domestic deposits.
Without any restrictions in capital movement for the first time in two years, banks are called to defend their deposit base from fleeing Cyprus.
Judging from the depositors' behavior so far, there will be a non-significant negative impact as during 2014 they could take their deposits out of Cyprus already, given the gradual lifting of capital controls.
Some concerns exist due to the situation in Greece but as the president of the banks association George Georgiou stated to Stockwatch "at this stage deposit outflows are not a concern".
Banks rely on their successful recapitalizations in order to convince depositors to either maintain their deposits with them or return previously removed deposits.
The eventual implementation of the foreclosures law that seems to be a matter of time now, is expected to further reinforce their position of financial soundness as it will help them tackle the non-performing loans issue more effectively.
Meanwhile banking sector players intensify their efforts to attract depositors by offering new products that come with various flexible features.
Although interest rates on deposits have recently declined after a concerted effort by the central bank and a general call from other market players, they remain the highest in the Eurozone.
Based on the banks' recently announced audited 2014 accounts and CB's published system deposits, some significant changes occurred during 2014 although related rankings remained unchanged.
COOP held to the number one spot despite a decrease in their market share from 28,7% to 26,9% due to a decline of 8% in their deposit base against a drop of 1,8% in the system total deposits.
The drop in system deposits is 4% if currency and various other adjustments are taken into account.
The decline of their deposits from €13,5 bn to €12,4 bn would be much higher if not for a massive return of deposits since October 2014 after the successful outcome of the European stress test.
Since then and until the end of March 2015, COOP managed a net deposit inflow of €500 mn.
Maintaining the second place, Bank of Cyprus suffered a decrease in its market share from 27% to 24,5%.Its Cyprus deposits declined by 10,9% during 2014 from €12, 7 bn to €11,3 bn.
An increase in its deposit base in Cyprus occurred in December 2014 for the first time after the bail-in of March 2013 giving a glimmer of hope that the declining trend in deposits came to an end.
According to the company the increase continued until at least the end of February 2015.
Hellenic bank was the main beneficiary of the deposit losses by the two largest banks as it experienced a substantial increase of 15,1% from €5,5 bn to €6,3 bn.
This resulted in an improvement of its related market share by 2,1 percentage points from 11,7% to 13,8%.
As the only domestic bank that was neither bailed-in or bailed-out, HB looks forward to continuing this trend and improve its market share even more.
Eurobank Cyprus also managed a considerable increase in its market share in terms of deposits as it witnessed an increase from 5,3% to 7,2% further reinforcing its domestic position.
Alpha bank Cyprus enjoyed a small increase as well from 4,3% to 4,5%.
These five banks command about 77% of domestic deposits.
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