george appios managing director and ceo 20 th march 2015 developments in the banking sector

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George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

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Page 1: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

George AppiosManaging Director and CEO

20th March 2015

Developments in the Banking Sector

Page 2: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

20/3/2015 2

The Day of Reckoning for Cyprus Banking System • Government Over-Spending• Public Over-Borrowing• Banks Over-Lending• Under-Regulated

15th March 2013

• Bail-in of Biggest Bank • Resolution of 2nd Biggest Bank• State Aid of 3rd Biggest Bank/Coop• System in Shambles & Capital Controls

BEFORE

AFTER

Page 3: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

Banking System effects – Loans and Deposits

20/3/2015 3

€72.5 bln

€61.6 bln

€70.2 bln

€46.1 bln

Dec 2012L/D 103%

Dec 2014L/D 134%

Deposits Loans

Page 4: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

20/3/2015 4

• We Had to Rebuild. • We Had the Technology. • We Had the Capability.• We Had to Make the Banking System:

Better Stronger More Reliable

After the Initial Shock

Page 5: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

Banking System – Regulatory Changes

• New Definition of NPLs and Provisioning Procedures

20/3/2015 5

Major New Central Bank Directives

• Stricter Anti-Money Laundering Directive

• Arrears Management (Code of Conduct with Clients)

• Restructuring and Loan Origination Rules

• Corporate Governance and Board Members Qualifications

• More Demanding Capital Requirements (CRD4 and CRR)

• ECB Single Supervisory Mechanism

Page 6: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

Banking System – Regulatory Changes

• Transparency – Credit Bureaus (Artemis & Aeantas)

20/3/2015 6

Major New Legislative Changes

• Bankruptcy and Guarantor Protection

• Liquidations, Insolvency, Examinership, Administration

• Personal Payment Schemes, Debt Relief Orders

• Establishment of Banking Ombudsman

• Control of Loan Interest Rates and Bank Abusive Actions

• Directives gradually lifting all Capital Controls

Page 7: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

Banking System – Issues to be managed

20/3/2015 7

• High Non-Performing Loan Ratios

• Relatively Low Provision Coverage Ratio

• Relatively High Security Coverage Ratios

• Declining Property Values Lead to More Bad Debt Provisioning

• Higher Provisions Lead to More Capital Requirements

Page 8: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

20/3/2015 8

Property Drop in Value Historic Index Movement

Jun 15

?

Page 9: George Appios Managing Director and CEO 20 th March 2015 Developments in the Banking Sector

20/3/2015 9

Thank you

спасибо