Hel­lenic Bank fol­lows peers, cuts base rate by 1%

Financial Mirror (Cyprus) - - FRONT PAGE -

Hel­lenic Bank has fol­lowed its Cyprus peers and an­nounced it will cut its base in­ter­est rate by 1 per­cent­age point as of March 1, af­ter the Cen­tral Bank de­cided to lower its ceil­ing on de­posit rate by 1% last week.

Hel­lenic Bank said in an an­nounce­ment that the re­duc­tion ap­plies to all per­form­ing and non-per­form­ing loans with the base rate re­duced from 5.25% to 4.25%, the busi­ness loans rate from 4.25% to 3.25%, the busi­ness over­draft base rate from 4.25% to 3.35%, the hous­ing loans base rate from 3.65% to 2.65% and for hous­ing loans linked to older rates from 4.50% to 3.50%.

The in­ter­est rate on all credit cards will also be re­duced by 1% from the cur­rent rate of 13% for most cards.

The bank added that the re­duc­tion in in­ter­est rates “will au­to­mat­i­cally cause ei­ther a re­duc­tion of the loan re­pay­ment in­stal­ments or shorten the re­pay­ment pe­riod, with­out any need for ad­di­tional pro­ce­dures, in ac­cor­dance to the cus­tomers’ loan agree­ments.”Hel­lenic Bank CEO Bert Pi­jls had said ear­lier that the bank had grad­u­ally re­duced its de­posit rates a month ago, start­ing from 3% for new loans to busi­nesses.

The Cen­tral Bank of Cyprus said that its gov­ern­ing coun­cil de­cided to lower the ceil­ing on its base in­ter­est rate by one per­cent­age point, urg­ing the is­land’s com­mer­cial banks to fol­low suit by cut­ting lend­ing rates and help spur money sup­ply and eco­nomic ac­tiv­ity as in­ter­est rates in Cyprus are the most ex­pen­sive in the Eu­ro­zone at 2% higher than the rest.

The banks were quick to re­spond say­ing they would go ahead with rate re­duc­tions as of March 1.

The Co-op­er­a­tive Cen­tral Bank (CCB) jumped the gun when it an­nounced it will cut in­ter­est rates on well-per­form­ing hous­ing loans by 1 point from 5.2% to 4.2% as of March 1, af­fect­ing about 34,000 house­holds ret­ro­spec­tively.

The Co-op­er­a­tive added, how­ever, that the re­duc­tion will only af­fect mort­gages that are be­ing ser­viced. Non-per­form­ing loans (NPLs) it added, will re­ceive a 0.5% in­ter­est rate cut only af­ter th­ese are restruc­tured and begin to be ser­viced, while the re­main­ing 0.5% rate cut will kick in ret­ro­spec­tively af­ter the loan emerges from the NPL sta­tus, usu­ally 90 days.

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