Transcript Cyprus Banking

1
Miltos Michaelas, Director - International Business Banking
The Cyprus Banking System
2
Cyprus ratings
The most recent 10-year CY bond which
was Issued in February 2010 is now
trading at 121 bps spread.
3
Cyprus





EU member & Euro zone member
Proven versatility in crisis
Milder effects from the economic crisis
Inflation within control
Stable, conservative Central Banking
System and effective regulatory framework
 The financial sector withstood the global crisis and no public
recapitalization or government support was necessary
 Cyprus is in the OECD white list
 http://www.centralbank.gov.cy/
4
Extracts from Deutsche Bank report on the Banking Industry
in Greece and Cyprus (21/01/09)
“Cyprus
From a macroeconomic perspective, we agree with most
economists that Cyprus is, relative to other world economies
and Greece in particular, in a healthier position to sail
through the current storm. Our view is supported by the
island`s positive budget balance and relatively low public
indebtedness.
It is important to point out that, as opposed to Greece, the
Cyprus Government has the economic resources to boost
the real economy if needed.”
5
CBC Governor comments
“That said, I should point out that the budget deficit estimate
for 2009 puts Cyprus in the middle of the range for the euro area as
a whole. The situation is clearly not as dire as in some other
euro area countries. To some degree this is because the recession
we experienced in 2009 was not as deep as in other regions of the
euro area.
A comparison with the Greek economy is not warranted. Our
budget finances are in better shape and our debt to GDP ratio is
considerably smaller.”
Athanasios Orphanides,
Governor of the Central Bank of Cyprus,
Interview with Bloomberg, 11 February 2010
6
Cyprus going strong in 2010
 Total deposits ιn Cyprus increased by €4,1 billion during the
first 4 months of 2010 (7,0% to €62,2 billion) - reflecting the
"safe-heaven" qualities of the market.
 Property sales rising
 Qatar agreement: a $500M joint project in hospitality/property
sectors confirming Cyprus economic potential
"Our decision to proceed with such a large investment in Cyprus is due to the fact
that the Cypriot economy has not been affected to a great extent by the (world)
financial crisis. The Cypriot economy has opportunities for growth."
Qatar's Emir, Sheikh Hamad bin Khalifa al-Thani
Nicosia 21.4.2010
7
Cyprus Banking
8
Cyprus Banking
 A market driven system based on English law, a legacy of the
British colonial rule
 Marfin Laiki Bank, BOC – more than 100 years old
 Legal and Banking structures (still) reflect British equivalents
 Corporations Act 1925 - Marfin Laiki is number 1 on Register
of Companies
 Open, competitive, multivariate, multidimensional, even
multicultural Banking Industry
 Well capitalised and profitable banks
 www.acb.com.cy
9
A Multitude of Banks
LISTED BANKS
1.Marfin Popular Bank Public Co Ltd
2.Bank of Cyprus Public Company Ltd
3.Hellenic Bank Public Company Ltd
4.USB Bank Plc
SUBSIDIARIES OF FOREIGN
BANKS
 Αlpha Bank Cyprus Ltd
 BNP Paribas Cyprus Ltd
 Emporiki Bank – Cyprus Limited
 Kommunalkredit International Bank
Ltd
 National Bank of Greece (Cyprus) Ltd
 Russian Commercial Bank (Cyprus)
Ltd
 Societe Generale Cyprus Ltd
 Piraeus Bank (Cyprus) Ltd
 Eurobank EFG Cyprus Ltd
1.
2.
3.
4.
1.
2.
3.
4.
5.
6.
7.
8.
1.
2.
of past and present
OTHER BANKS
Co-operative Central Bank Ltd
The Cyprus Development Bank
Public Company Ltd
Housing Finance Corporation
Mortgage Bank of Cyprus Ltd
BRANCHES OF BANKS OF
EU COUNTRIES
Barclays Bank PLC
Banque SBA SA
First Investment Bank Ltd
Joint Stock Company “Trasta
Komercbanka”
National Bank of Greece S.A.
Central Cooperative Bank PLC
Banca Transilvania S.A.
Joint Stock Company Akciju
Komercbanka "Baltikums"
REPRESENTATIVE OFFICES
UBS AG
Atlasmont Banka A.D.
BRANCHES OF BANKS OF
COUNTRIES OTHER THAN EU
1. BankMed s.a.l.
2. Arab Jordan Investment Bank SA
3. BANQUE BEMO SAL
4. Bank of Beirut SAL
5. BBAC SAL
6. BLOM Bank SAL
7. Byblos Bank SAL
8. Credit Libanais SAL
9. FBME Bank Ltd
10.Open joint-stock
company AvtoVAZbank
11.OJSC Promsvyazbank
12.Jordan Kuwait Bank PLC
13.Jordan Ahli Bank plc
14.Lebanon and Gulf Bank SAL
15.Lloyds TSB Offshore Limited
16.Privatbank Commercial Bank
17.IBL Bank sal
10
Central Bank of Cyprus (CBC)
 Cyprus joined euro area on 1 January 2008
 Interest rate management is now the responsibility
of the European Central Bank (ECB)
 Governor is a member of the Board of ECB
 The primary objective of the ECB is to ensure price
stability, which means keeping inflation rates below,
but close to, 2%
 The CBC has supervision over the commercial banks
 http://www.centralbank.gov.cy
11
An Effective Supervisory Mechanism
 Proven track record in setting Monetary Policy and
safeguarding the Banking system
 IMF’s Assessment of Financial Sector Supervision
Report: “Supervision is strong, effective and in
compliance with International Standards”
 Full adoption of European Regulation
 Use of non-interest rate tools proactively:
 Tight(er) liquidity requirements – only 30% of FX deposits
can be lend out by Banks
 Managed “cooling off” of the propertymarket: tightened
LVRs since mid 2007, to 70%.
12
More deposits than loans
Loans
R
10
10
AP
R
10
M
A
FE
B
EC
09
09
D
E
JU
N
EC
08
08
D
E
JU
N
EC
07
07
D
E
06
JU
N
EC
D
E
05
JU
N
EC
D
€bn
06
65,00
60,00
55,00
50,00
45,00
40,00
35,00
30,00
25,00
Deposits
 Cyprus is self sufficient in liquidity, post
(liquidity) crisis
 No deposit withdrawals by international
customers
 Loan growth under control
 April 2010 Loans/deposits 95%
 €4,1bn increase in deposits in first 4
months of 2010 (7% increase)
50
 Euro deposits growing faster than FX
since mid 2006
 Time deposits grew faster than demand
after Sep 2008
45
40
35
30
25
20
15
10
€bn
DEC 05
DEC 06
DEC 07
FCY
DEC 08
DEC 09 FEB 10 APR10
EUR
13
A Competitive Banking Market
 Commercial Banking
8 local Banks and other credit Institutions
9 subsidiaries of Foreign Banks
27 International Banks operate branches
Very open & automatic for EU Banks
462 branches plus 33 IBUs
Supervised by the Central Bank of Cyprus
 Large Cooperative sector
111 co-ops
Supervised by the Cooperative Central Bank
14
Experiences from Abroad
Targeting
Greek &
Cypriot
populations in
developed
countries
Banking
experiences in
UK, Australia,
USA, South
Africa, Canada
Entry of main
Cypriot banks
in Greek
Market
solidified
international
strengths and
experiences
Entry to CEE
was a calculated
move to extend
products and
services to
existing
(international)
client base
15
Commercial Banking
 Highly educated human resources
 Strong Banking Fundamentals
 Adoption of Basel II
 Conservative Lending Practices
 Good breakdown of operations
between markets
 Very good profitability record
 No exposure to “Toxic Assets”
 Limited exposure to CEE
 Healthy Capital and Liquidity positions
16
Solid Financial Package attracts International businesses
 Benign low tax environment
 Extensive Array of Double Taxation treaties
 Mature Legal and Accounting practices
 Strong Banking Sector
 Euro
 shields against currency crisis
 provides access to ECB arsenal of support
 expands the attractiveness of the Banking system for foreign
deposits and transactions
Attraction of International Businesses expands banking client base
17
Government Crisis Support
 Was not needed for Cyprus Banks given their strengths and reasonable
risk exposures
 In fact, the Cyprus Government did not have to “bail out” or provide
direct support to any private organisation.
 Government has the means for direct support but their use has been
unnecessary in the global crisis of 2008/09
 Fiscal stimulus package being implemented
 The Central Bank of Cyprus offers and operates a Deposit Protection
Scheme up to €100.000 per person or legal entity per Bank.
18
Update on Cyprus Banking System
“Despite negative developments in the real economy, our banking
system remains in very good condition. Our banks are healthy,
robust and have a strong capital base with a capital adequacy ratio
of 11.9% at December 21, 2009, well above the minimum requirement
of 8%.
The ratio of non-performing loans, which was declining steadily over
time, may have increased in 2009 but is still within acceptable levels.
Please note that satisfactory provision for bad debts has been set aside
for these loans. Regarding the profitability of banks, this has been
satisfactory in 2009. During the year under review, which was a difficult
year, banks have remained profitable, but with a smaller profit than that
of 2008”
Athanasios Orphanides,
Governor of Central Bank of Cyprus,
Press Conference, Nicosia 3 May 2010
19
A good Example
Marfin Laiki Bank
20
Group Profile – 109 Years Old
 Marfin Laiki Bank (MLB) is strategically positioned as an
emerging regional player with two home markets, Greece &
Cyprus, and operations spanning in 11 countries in Emerging
Europe, UK, Australia, Malta, Russia & Ukraine
 Regional bank with focus on corporate banking, wealth
management and international business banking
 Ten years of robust growth both organically and through a
series of mergers & acquisitions and strategic alliances
 Successful management track record and entrepreneurial
culture
 Head-Office in Cyprus
 507 branches, over 9.500 staff
 http://www.marfinlaiki.com.cy/
21
Credit Ratings
Their Comments
Credit Ratings
Long term Bank deposits
Senior unsecured debt
Subordinate Debt
Bank financial strength
Short term
Long term Issuer Default rating
Short Term Issuer Default rating
Individual Rating
Support Rating
A3
A3
Baa1
CP-1
BBB+
F2
C
2
“The rating derives from the bank’s very strong
position in its domicile market, its expanding
franchise in Greece due to the consolidation of
the group’s three banking subsidiaries and its
improving financial fundamentals”
“The ratings of (MLB) reflect its sound franchise in
Cyprus and to a lesser extent Greece, its
adequate funding profile supported by a large
deposit base, good cost management and
improved capitalisation…
Following a period of rapid loan growth and
international expansion, including the integration
of Athens-based subsidiary Marfin Egnatia Bank
(MEB; rated ‘BBB+’ Outlook Negative), the bank
is now focusing on containing asset-quality
deterioration, maintaining sound liquidity and
improving cost efficiency. The latter should be
helped by the planned merger of MEB into MLB,
likely in Q210.”
22
Strong Shareholders-Allies
 MLB shares are listed on the Athens and the Cyprus Stock Exchanges
 Biggest shareholder is Dubai Investment Fund with 18,81%
 No exposure to Dubai fund or Dubai economy – confirmed by press
release and Rating Agencies comments
 Other key shareholders proposed purchase of stake
 http://www.dubaigroup.com/
 2nd biggest is Marfin Investment Group (MIG) with 9,55%
 Listed in Athens Stock Exchange
 €5,19bn capital raising through private placement completed in July
2007
 Most recent investment: Olympic Airlines
 http://www.marfininvestmentgroup.com/
23
Financial Information
Key balance sheet items (€m)
FY08
FY09
1Q10
Loans to customers (net)
23.427
25.082
26.041
Total assets
38.367
41.828
42.311
Customer deposits
24.828
23.886
24.791
Total equity
3.430
3.636
3.674
Tangible equity
2.165
2.358
2.388
FY08
FY09
1Q10
8,6%
9,7%
10,1%
Capital adequacy ratio
10,6%
11,8%
12,1%
Cost/income
54,5%
58,1%
56,8%
2,4%
1,72%
1,81%
94,4%
104,0%
105,0%
4,3%
6,1%
6,33%
61 bps
105 bps
108 bps
Key ratios
Tier 1
NIM
Loans/Deposits
NPLs
Provisioning
24
Comments on 2009 Results
UBS
Marfin delivered better than expected earnings of €30m: Marfin’s fourth
quarter earnings beat our estimates by 32%, coming in at €30m versus
our expectation for €23m. The beat came from lower impairments, while
fees also surprised positively. Earnings for the full year amounted to
€174m, down 56% y/y (€187m, down 44% adj). Overall a good set of
results, with positive trends in asset quality and equity levels, though
deposits were down q/q.
Unexpectedly good results
Cheuvreux
Q4 bottom line significantly beats our estimates
Surprise came from stronger NII (particularly in Greek operations)
improving fee generation and higher trading. The solid top line
performance more than offset the higher than expected costs in Q4.
25
Recent issue of capital securities
(April 2010) Hybrid Tier I Notes
 Size of issue: Through a private placement up to €200 m with
an option to extent
 Application process closed on Friday, 7th May 2010
 Oversubscribed to €250 m
 The proceeds to be used to further strengthen the Banks Tier I
capital
 June 2010-Public offer for €50m under way
26
Marfin Laiki Bank Achievements
“Best
Investment
Services
Provided, Cyprus
2008”
Awarded by “World
Finance of Reuters”
– (first time
awarded to a
Cypriot Bank)
“Innovation
Award- Cyprus”
Awarded by
“Money Markets
2008 International
Custody Awards”
“Special 10 Year
Recognition
Award for the
period 20002009”
For the quality of
US payments
Awarded by
“JP Morgan” –
(first time awarded
to a Cypriot Bank)
“Best Bank
in Cyprus
in 2009”
Awarded by
“World
Finance”
“Best Internet
Bank, Consumer
Bank in Cyprus,
2009” and
“Best Sub
Custodian Bank in
Cyprus, 2009”
Awarded by
“Global Finance”
27
ROSPROMBANK, Russia
28
Presence Throughout Russia
Branches:
8
Sub-branches: 12
Employees:
570
As of 31/05/2010
Credit Portfolio:
€ 117 m
Total Assets:
€ 458 m
Equity:
€ 59 m
29
HIGHLIGHTS
Commercial Bank “ROSPROMBANK” (LLC) was founded in 1995. In February
2008 it became part of the MARFIN POPULAR BANK PUBLIC CO LTD.
ROSPROMBANK (RPB) provides the full range of banking operations (all regular
banking operations, ForEx, cash collection, etc.).
Clients count on RPB for fast delivery of a wide spectrum of personalized
commercial banking products and services. RPB offers:
- Treasury Services
- Short and Long Term Financing including: Project Financing, Working
Capital Financing, revolving/non-revolving Credit Lines and Overdrafts
- Trade Financing, Letters of Guarantee and Letters of Credit
- Leasing
- Factoring
- Corporate and personal Credit Cards
RPB also provides a wide array of Deposit products, as well as Payroll
distribution products, for corporate, commercial and retail customers.
Today RPB renders services to over 1.000 companies.
30
Contact Us
31
Contact Us
 International Business Banking
Tel: +357 22 363923, Fax: +357 22 363900
e-mail: [email protected]
Mailing Address: PO Box 22032, CY-1598 Nicosia, Cyprus
 Nicosia International Business Centre 1 (178)
Tel: +357 22 363737, Fax: +357 22 363750
e-mail: [email protected]
 Nicosia International Business Centre 2 (168)
Tel: +357 22 363737, Fax: +357 22 363700
e-mail: [email protected]
 Limassol International Business Centre 1 (179)
Tel: +357 25 815959, Fax: +357 25 815972
e-mail: [email protected]
 Limassol International Business Centre 2 (158)
Tel: +357 25 815959, Fax: +357 25 815637
e-mail: [email protected]
32
Contact Us cont…
 Larnaca International Business Centre
Tel: +357 24 814291, Fax: +357 24 814290
e-mail: [email protected]
 Paphos International Business Centre
Tel: +357 26 816522, Fax: +357 26 911334
e-mail: [email protected]
 International Lending
Tel: +357 22 363718, Fax: +357 22 312878
e-mail: [email protected]
 International Corporate Banking Unit
Tel: +357 22 363903, Fax: +357 22 363900
e-mail: [email protected]
 Moscow Representative Office
Tel: +74959670185, Fax: +74959670186,
e-mail:[email protected]
35/2 Miasnitskaya Street
Moscow, Russia 101990
+7 (495) 967 1780
www.rosprombank.ru
33
DISCLAIMER
Recipients of this presentation in jurisdictions outside the UK or the US should inform themselves about and observe any applicable legal requirements. This
presentation is only being made available to interested parties on the basis that: (A) if they are UK persons, they are (i) persons who are "Investment
Professionals", as described in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Financial Promotion Order"), (ii)
persons falling within any of the categories of persons described in Article 49 of the Financial Promotion Order, (iii) persons to whom this Memorandum may
otherwise lawfully be made available; (B) if they are United States persons, they are ‘accredited investors’ as defined under Rule 501(a) promulgated under the
United States Securities Act of 1933, as amended; or (C) are outside the United Kingdom and the United States and eligible under local law to receive this
Memorandum (all such persons collectively being referred to as “Relevant Persons”). By accepting this document you represent and warrant that you are such a
person. This document must not be acted on or relied on and should be returned to Marfin Popular Bank by persons who are not Relevant Persons. Any
investment or investment activity to which this communication relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
Each person that receives a copy, by acceptance thereof, represents and agrees that he/she will not distribute or otherwise make available this document to any
other person.
This presentation contains forward-looking statements, which include comments, statements and opinions with respect to our objectives and strategies, and the
results of our operations and our business, considering environment and risk conditions.
However, by their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. We
caution that these statements represent the Group’s judgments and future expectations and that we have based these forward-looking statements on our
current expectations and projections about future events. The risk exists that these statements may differ materially from actual future results or events and
may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could
cause future Group results to differ materially from these targets.
Forward-looking statements may be influenced in particular by factors such as movements in local and international securities markets, fluctuations in interest
rates and exchange rates, the effects of competition in the areas in which we operate, general market, macroeconomic, governmental and regulatory trends and
changes in economic, regulatory and technological conditions. We caution that the foregoing list is not exhaustive.
When relying on forward-looking statements to make decisions, investors should carefully consider the aforementioned factors as well as other uncertainties and
events. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. All
forward - looking statements are based on information available to Marfin Popular Bank Public Co Ltd. on the date of this presentation and Marfin Popular Bank
Public Co Ltd. assumes no obligation to update such statements, unless otherwise required by applicable law.
Nothing on this presentation should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other
transaction. Neither this presentation nor a copy of it may be taken or transmitted into Australia, Canada or Japan, or distributed, directly or indirectly, in
Australia, Canada or Japan. Any failure to comply with this restriction may constitute a violation of Australian, Canadian or Japanese securities law. The
distribution of this presentation in other jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform
themselves about, and observe, any such restrictions.
34