Downgrade of Cypriot Banks by Moody's
Downgrade of Cypriot Banks by Moody's
10/8/2001 8:46
Moody's Investors Service announced that it has concluded the review of the Cypriot banks and downgraded the financial strength rating (FSR) of Bank of Cyprus and Cyprus Popular Bank to C- from C and confirmed the FSR of Hellenic Bank at D+.

With regard to Bank of Cyprus and Cyprus Popular Bank, Moody's stated that rapid loan growth and a deteriorating operating environment have compounded already weak asset quality within the banks. Moody's noted that positive benefits from overseas diversification were not sufficient to offset concerns stemming from their local operations. In addition, Moody's cited enhanced market risks from local equity asset volatility as a factor that has diminished both banks' intrinsic financial strength.

On Hellenic Bank, Moody's noted that although the bank recently experienced rapid loan growth, Hellenic also significantly strengthened capital resources during the same time-period. Moody's cited considerably less aggressive growth plans in Greece relative to the other Cypriot banks combined with the capital increase as reasons for maintaining the current FSR.

Moody's currently rates the following banks in Cyprus (Long/short-term deposit rating, financial strength ratings):

Bank of Cyprus Ltd.A2 negative outlook /Prime-2, "C-"
Cyprus Popular Bank A2 negative outlook /Prime-2, "C-"
Hellenic Bank LimitedA2 negative outlook /Prime-2, "D+"

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