Hellenic Bank has little direct exposure to Russia

Hellenic Bank on Tuesday announced that it has negligible direct exposure to Russia, while its indirect exposure through any adverse effects on the Cypriot economy hinges on a number of factors, which are currently hard to assess.

“The bank expects limited impact from its direct exposure, while any indirect impact will depend on the longevity and severity of the crisis and its impact on the Cypriot economy, which remains uncertain at this stage,” the bank said in a statement.

Aside from two representative offices in Russia and one in Ukraine, Hellenic Bank does not have any commercial operations in the two countries. The representative offices were tasked with providing administrative support and have no licences for banking services of any kind.

Furthermore, the bank has no exposure to either the Russian sovereign fund or to any Russian banks that are currently being sanctioned.

Regarding the bank’s balances with subsidiaries of European banks in Russia, these amount to approximately €20 million, while they all have maturities of less than one week.

In terms of its lending exposure to Ukrainian and Russian-owned companies or individuals through the bank’s international business centres in Cyprus, this amounts to a net book value of approximately €35 million.

“The vast majority of this lending exposure is collateralised with assets in Cyprus, with the source of repayment coming from Cyprus,” the bank explained.

“Customer deposits related to Russian and Ukrainian customers account for circa 8 per cent of total customer deposits, whose exposure is not material compared to the bank’s overall strong liquidity position, with a Liquidity Coverage Ratio of 499 per cent (compared to a minimum requirement of 100 per cent) as of December 2021,” it added.

Regarding the bank’s indirect exposure, the bank said that it expects the Cypriot economy to be impacted due to a number of factors.

These include the Cypriot economy’s links to the international business services sector, the connection between the local tourism industry and the real estate market with Russia and Ukraine, as well as the possible inflationary pressures due to higher prices in energy, raw materials and agricultural and food products.

The bank explained that the negative impact on the economy may affect its financial performance through decreased revenue, reflecting suppressed economy activity, as well as possible higher impairment charges stemming from domestic borrowers encountering difficulties in servicing their obligations.

“The bank is taking all necessary and appropriate measures to manage all related risks and to comply with the applicable sanctions imposed on Russia,” the bank said, adding that client monitoring processes have been intensified, while transactions are strictly monitored and vetted accordingly.

Finally, the bank stated that it is taking all necessary measures to mitigate the impact on its operations and financial performance, while additional updates will be provided when there is more clarity on the impact on financial performance.