Talks between the European Central Bank (ECB), Central Bank of Cyprus (CBC) and local commercial banks are currently on going as efforts continue to finalise the results of the tests. According to the latest feedback from Frankfurt – where Cypriot banking chiefs recently flew out to – Bank of Cyprus (BoC) and theCo-ops will need to bolster their capital whileHellenic Bank may need to make a small increase in its capital.

The ECB is looking to release the results of the tests before the implementation of the Single Supervisory Mechanism, which would transfer supervision authority for the Eurozone’s 6.400 banking institutions from national central banks to the ECB – on November 4.

Earlier this month, International rating agency, Capital Intelligence (CI), announced that it had raised the BoC Financial Strength Rating (FSR) to ‘B-‘ (from ‘C+’), reflecting the greatly improved capital position.

CI noted in that FSR is revised upwards, although as is the case with other European banks, capital adequacy is still subject to some uncertainty until the results of the ECB stress tests are released later this month.

Furthermore, the revised FSR “also captures the rebound in operating and net profit, as well as good progress in the implementation of the Bank`s restructuring programme,” adding that the FSR remains “constrained by very weak asset quality and very tight liquidity.”

Source: InCyprus