Nicosia, Cyprus. Cyprus’ banking sector recovery after the 2013 crisis reflects banks’ commitment to act alongside firm supervisory oversight, according to George Ioannou of the European Central Bank and the Central Bank of Cyprus.
Interview outlines path to recovery
In an interview published by the European Central Bank (ECB), Ioannou, a member of the ECB supervisory board and director of supervision of credit institutions at the Central Bank of Cyprus (CBC), said “the road to recovery was anything but smooth”.
He said that towards the end of 2013, while mitigating the effects of the crisis, the largest European banks were engaged in the comprehensive Asset Quality Review conducted at the onset of the Single Supervisory Mechanism. From that point onwards, he said, the focus sharpened on addressing legacy issues and strengthening institutions’ balance sheets.
Measures by Cypriot significant institutions
Ioannou said Cypriot significant institutions “responded decisively to the push of the supervisors”.
He said they undertook large-scale disposals of non-performing loan portfolios, implemented viable restructurings, enhanced internal governance arrangements and refined business models. He described these steps as instrumental in stabilising the system, restoring confidence, and repositioning the Cypriot banking sector on firmer ground.
Ioannou said progress would not have been achieved without the consistency and discipline of banks, paired with what he described as rigorous and effective supervision by the Central Bank of Cyprus and ECB Banking Supervision.
Underwriting standards and supervisory directives
Ioannou said discipline embedded in banks’ underwriting standards since the 2013 crisis is evident.
He said the CBC introduced directives that became the foundation of a more prudent underwriting framework, adding that the framework has become part of the DNA of local banks and that it has worked.
What do you think were the most important steps in Cyprus’ banking sector recovery since 2013?