EFG International private bank, expanding in Cyprus, gets thumbs-up from Moody’s  

Swiss bank EFG got a solid thumbs-up from credit rating agency Moody’s on Friday, in a review.

Moody’s noted the the Zurich-headquartered banking group’s absolute and relative financial strength, its strong solvency rating, and high level of liquidity.

“EFG Bank’s A1 deposit ratings reflect its baa1 Baseline Credit Assessment,” the agency noted. An A1 deposit rating signifies that the issuer or carrier has stable financial backing and ample cash reserves. The risk of default for investors or policyholders is very low, according to the Moody’s website.

EFG Bank’s baa1- rated Baseline Credit Assessment incorporates the bank’s sound capitalisation, offsetting tail risks from investments in life insurance policies and ongoing – and potential future — litigation cases. The baa1-rating means that credit risk is moderate, the organization is considered medium grade and as such may possess certain speculative characteristics.

“The rating, however, reflects EFG Bank’s strong liquidity and limited dependence on market funding sources, as displayed by customer deposits funding a very high proportion of the bank’s balance sheet. The rating is constrained by the bank’s weak profitability as well as its exposure to market, operational and reputational risks inherent in its business model, the review said.

“In a period of negative interest rates, private banking is inevitably less profitable,” commented EFG Cyprus CEO Costas Stylianos.

EFG International opened two new branches in Cyprus this year. The bank has had a presence on the Mediterranean island for the past six years. Now a representative office of EFG Private Bank has opened in Limassol; while EFG Cyprus, a subsidiary investment firm of EFG Private Bank (UK), has set up shop in the capital city of Nicosia.

“We continue to grow our activities in Cyprus and in the region – our presence is certainly credit-positive for Cyprus,” he added.

A select number of UK client relationship officers have been certified in Cyprus to provide investment services to ensure that the bank’s London-based Cypriot market expertise continues to drive growth in the region.

Moody’s affirmed EFG International’s A1 long-term deposit ratings with a stable outlook, along with affirmation of the bank’s baa1 BCA and Adjusted BCA ratings in January 2021.

“Moody’s assessment incorporates private banking business model-inherent low to moderate credit risks for EFG Bank as well as for EFGI, its listed holding company, and reflects that both entities are exposed to market and operational risks, including remaining legal risks. However, Moody’s does not have any particular governance concerns for EFG Bank and EFGI, and does not apply any corporate behavior adjustment,” the credit rating agency said in January.

EFG Private Bank provides relationship-based international private banking and wealth management. The bank says that “relationships mean understanding, teamwork, trust, good communication, support and a shared vision. In a market that is ‘over-banked but under-served’ these core values are increasingly hard to find.”