By George Psyllides
SPLITTING the Bank of Cyprus (BoC) into two separate entities appears to have significant advantages, the Central Bank governor said yesterday, although such a move must be looked into carefully.
“At first glance such an action appears to have significant advantages,” Panicos Demetriades said in an interview with the Cyprus News Agency (CNA).
The aim is to regain customer and investor confidence for the bank through a restructuring plan that will ensure the lender’s long-term viability, Demetriades said.
“The suggestion to separate the bank’s operation into commercial and real estate must be looked into carefully,” the governor said. “If the study shows that something like this would be beneficial for the bank, then careful steps must be undertaken to put the scheme in place.”
The suggestion to split the BoC into two – core banking and asset management – drew reaction back in July, mainly from DISY leader Averof Neophytou and the head of the Church of Cyprus, Archbishop Chrysostomos.
Both argued that the scheme would put the homes of the common folk at risk of being seized by the bank.
The archbishop repeated the claim a couple of days ago, seemingly ignoring what the former interim chairman of BoC had said at the time: that the asset management company would deal with the non-performing loans of big developers.
A senior banker told the Cyprus Mail recently that splitting the bank was the way to go.
“Asset recovery has not been part of the culture and the DNA of banks in Cyprus,” he said, speaking on condition of anonymity. “You need a different setup with a clear focus and necessary know-how.”
Governor Demetriades said all practical, technical and legal issues must be studied before any decisions were made.
The CBC “will discuss the matter with the new management and the bank’s advisers so that the best decisions are made, under the circumstances,” Demetriades said.