CCyyp­prru­uss ffi­ir­rmmss lloossee € 4433 mm­llnn,, SSaaxxoo BBaannkk ssh­heed­dss $$110077 mm­llnn

Financial Mirror (Cyprus) - - FRONT PAGE -

Cypriot in­vest­ment firms lost 42.5 mln euros after the Swiss Na­tional Bank decision to re­move its cap on the Swiss franc’s ex­change rate with the euro, caus­ing a surge in the Swiss cur­rency. Deme­tra Kaloyirou, Chair­man of the Cyprus Se­cu­ri­ties and Ex­change Com­mis­sion that reg­u­lates more than 180 in­vest­ment firms and fund man­agers, said that 24 com­pa­nies had lost an ac­cu­mu­lated 42.5 mln euros from their client trad­ing ac­counts.

She added that of the vast majority, in­vest­ment firms, have not been af­fected.

“The re­main­ing CIFs said that they ex­pe­ri­enced some losses, which ei­ther do not af­fect their cap­i­tal ad­e­quacy or are in­signif­i­cant,” she said. “The af­fected in­vest­ment firms main­tain eq­uity and cap­i­tal ad­e­quacy ra­tio above the min­i­mum

or 158

ap­proved limit, set by the law, which is 9%”, Kaloyirou noted.

Mean­while, Den­mark’s re­tail forex bro­ker Saxo Bank, that also has a Cyprus pres­ence, re­ports that due mainly to neg­a­tive client bal­ances on which it may not be able to col­lect, the bank may be forced to take a loss of up to DKK 700 mln, or about $107 mln. How­ever, even if no col­lec­tions take place and it takes the max­i­mum pos­si­ble loss, it will re­main cap­i­talised well in ex­cess of reg­u­la­tory re­quire­ments.

Saxo Bank CFO/CRO Steen Blaafalk was quoted by LeapRate as say­ing that the re­duc­tion of lever­age on Swiss Franc CHF pair trades was low­ered well in ad­vance of the SNB’s re­moval of the CHFEUR 1.20 floor. A smart move, it seems, as the $107 mln fig­ure could in­deed have been a lot worse, if clients had used more lever­age in their CHF po­si­tions, LeapRate added. Mean­while, the SNB decision is un­likely to in­flict ma­jor dam­age on French re­gional and lo­cal gov­ern­ments (RLGs), or on banks ex­posed to the RLG sec­tor, ac­cord­ing to Moody’s. “French RLGs’ over­all ex­po­sure to CHF/EUR-in­dexed loans is con­cen­trated on a limited num­ber of en­ti­ties, and has been re­ced­ing in the last few years,” said Daniel Marty, as­so­ciate an­a­lyst at Moody’s. The rat­ing agency noted that French RLGs have al­ready ne­go­ti­ated with banks to pro­gres­sively exit their EUR/CHF in­dexed loan con­tracts, and have had support from a EUR 1.5 bln state support fund set up in 2014 which has helped lo­cal gov­ern­ments cover the cost of con­vert­ing their struc­tured loans into con­ven­tional debt.

In­for­ma­tion col­lected by Moody’s from lenders points to about EUR 3 bln of ex­po­sure for less than 500 en­ti­ties.

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