It upgraded Bank of Cyprus’ long-term bank deposits to Ba3 from B1, its senior unsecured and subordinated ratings to B3 from Caa1, its long-term Counterparty Risk Ratings (CRRs) to Ba2 from Ba3, its long-term Counterparty Risk Assessment (CRAs) to Ba2(cr) from Ba3(cr) and its Baseline Credit Assessment (BCA) and Adjusted BCA to b2 from b3.

The outlook on the bank’s long-term deposit and senior unsecured ratings is positive.

“The upgrade of Bank of Cyprus’ ratings and assessments reflects significant ongoing improvement in the bank`s asset quality following its agreement to sell a portfolio of non-performing loans (in a transaction termed Helix 3) with a gross book value of €568 milllion, as well as real estate properties with a book value of around €120 million,” the agency said.

“The NPE sale significantly reduces solvency risks for Bank of Cyprus, with the bank`s Pro-forma NPEs net of total loan loss provisions dropping to 3.6% of gross loans as of September 2021.”

According to Moody’s, the positive outlook on BoC’s long-term deposit ratings and senior unsecured ratings “reflects expectations the bank will continue to improve its solvency profile, by further reducing NPEs and its foreclosed real estate assets, while gradually strengthening its profitability”.

It also argues the impact of the coronavirus pandemic on the Cypriot economy is unlikely to leave any lasting damage.

Bank of Cyprus’ Ba3 deposit ratings continues to be placed two notches above its BCA, driven by the protection Moody’s expects will be afforded to depositors from its upcoming MREL (minimum requirement for own funds and eligible liabilities) eligible debt issuances in the coming years.

Source: Financial Mirror