En­ergy fu­ture, pri­vati­sa­tions very promis­ing New business and mo­bile bank­ing De­ci­sions on over­seas foot­print Must exit ELA as soon as pos­si­ble

Financial Mirror (Cyprus) - - FRONT PAGE -

But what makes the is­land and its big­gest bank most at­trac­tive to in­vestors such as Wil­bur Ross is the new­ly­found en­ergy re­sources ly­ing un­der the seabed be­tween Cyprus and Is­rael.

“There is also the pos­si­bil­ity of long term res­o­lu­tion of the is­sues with Turkey, but in my opin­ion there is a phe­nom­e­non al­ready un­der­way that is likely to be trans­for­ma­tive for the econ­omy and that is the ap­par­ently huge amount of nat­u­ral gas off­shore Cyprus. Ex­plo­ration is get­ting un­der­way by sev­eral ma­jor com­pa­nies and if they prove even a small frac­tion of the es­ti­mated re­serves, Cyprus’ econ­omy will have a third leg that dwarfs the two ex­ist­ing ones,” Ross told the Fi­nan­cial Mir­ror.

Mean­while, he be­lieves that the business ser­vices sec­tor “is per­form­ing some­what bet­ter than had been ex­pected.”

He pointed to the fact that “new en­ti­ties con­tinue to be in­cor­po­rated in Cyprus and there is a con­tin­u­ing in­flow of de­posits from abroad, in­clud­ing from some par­ties who had the great mis­for­tune to be bailed in. Cyprus has the high­est ra­tio of col­lege grad­u­ates-to-work­force of any OECD coun­try and there­fore has very so­phis­ti­cated ac­count­ing, le­gal, mar­ket­ing and gen­eral man­age­ment tal­ent. It also has favourable tax treaties with 28 coun­tries and has con­tin­ued to add them post cri­sis.”

As re­gards Bank of Cyprus pay­ing down some 800 mln euros of the Emer­gency Liq­uid­ity As­sis­tance (ELA) and low­er­ing the ex­po­sure to that fa­cil­ity, in­stead of re-in­vest­ing that amount to boost the lo­cal econ­omy, Ross con­curs that it was the right move.

“The bank as a pol­icy mat­ter would like to exit from them [the ELA] as soon as pos­si­ble, but is un­der no con­trac­tual obli­ga­tion to do so. The bank also has the liq­uid­ity and a 15.6% Tier 1 cap­i­tal ra­tio, with no AT1, so it is well po­si­tioned to meet the bor­row­ing needs of any credit wor­thy cus­tomer.”

Ross ex­plained that his­tor­i­cally, Bank of Cyprus had far more de­posits than loans, the re­verse of most Euro­pean banks.

“As to ge­og­ra­phy, the board will de­velop a long term plan as to what the bank’s map will look like in terms of its majority-owned bank in Rus­sia [Uni­as­trum]. The real ques­tion is how best to meet the bank­ing needs of its cur­rent and prospec­tive cus­tomers in a prof­itable man­ner.”

On a more per­sonal note, Wil­bur Ross, re­sponded to the var­i­ous ad­jec­tives at­trib­uted to his name, mostly be­cause of the of­ten painful strate­gies to re­struc­ture com­pa­nies or turn them around to prof­itabil­ity.

“As to what terms peo­ple ap­ply to me, I do not strip as­sets or liq­ui­date com­pa­nies. I try to breathe life back into them. Re­search my record and you will see the proof of that state­ment.”

After all, he helped res­cue Bank of Ire­land and tripled the re­turn on in­vest­ment, an ex­er­cise many hope he will achieve in Cyprus too.

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