Tripartite meeting at the Presidential Palace with interest rates on the agenda

The CEOs of the country's two largest financial institutions, Bank of Cyprus and Hellenic Bank, are ascending the steps of the Presidential Palace for a tripartite meeting on the subject of interest rates and bank moves towards further support for households and businesses.

Panicos Nicolaou and Michalis Louis respectively, will be at the same table with the President of the Republic Nikos Christodoulides, in a meeting that is taking place in light of, on the one hand, the rejection of AKEL's bill by the Plenary of the Parliament on 12 December to impose an extraordinary tax on banks' windfall profits and, on the other hand, the new interest rate reduction that the European Central Bank (ECB) proceeded with on the same day.

The meeting was, of course, called by President Christodoulides, who, with a well-known and declared position that he had repeatedly and vehemently expressed against AKEL's proposed law on taxing banks, would like to see the banking institutions themselves take even more measures to mitigate the consequences caused by the high interest rate environment of recent years on households and businesses.

Even more so now, given the positive course of the Cypriot economy and the successive upgrades by international rating agencies, which now classify it in investment grade "A", creating favourable conditions and overall promising prospects for the future.

In the context of this approach by the President, it is no coincidence that in the written statement he issued on the new upgrade of the economy, this time by Standard & Poor's, President Christodoulides took care and chose to send relevant messages to the banks, stating specifically that "the state, institutions and citizens expect banking institutions to respond to the favourable conditions that the sacrifices of the Cypriot people made possible."

Nikos Christodoulides, through his statement, specifically asked banks to support the economy and society by reducing lending rates and at the same time narrowing the gap between deposit and lending rates.

To indicate in this regard that such a self-evident, as he characterised it, initiative:

• First: It will relieve thousands of households.
• Second: It will boost liquidity and investment activity.
• Third: It will send a message of trust and support to society, strengthening the role of banks as allies of development.

It is around these axes that on 16 December, as InBusinessNews is able to learn , Nikos Christodoulides' admonitions to the CEOs of the Bank of Cyprus and the Hellenic Bank will revolve, with Panikos Nikolaou and Michalis Louis in turn informing the President of the Republic in person about the decisions that the banking institutions they lead have taken and implemented towards the goal sought by all.

Which they have been fulfilling over time as an integral part of their mission, supporting the economy, households and businesses.

The movements of banks

It is recalled, with regard to the Bank of Cyprus, that on 13 December and just 24 hours after the new interest rate cut by the ECB, the bank announced its immediate response by reducing the reference interest rate on loans linked to the ECB's key interest rate, to 3.15% from 3.40%, effective from 18 December.

This is a development under which almost 10,000 borrowers whose loans are linked to the ECB's base interest rate will see their installments reduced immediately, at the same time that the bank has for months begun reducing the interest rates of another 8,000 borrowers whose loans are linked to Euribor.

As for Hellenic Bank, about a month ago the bank reduced its base interest rate by 21 basis points, which positively affected more than 90,000 borrowers.

It also reduced the reference interest rates on loans linked to ECB interest rates, from 3.65% to 3.40%, while due to the reduction in ECB interest rates, there were also reductions in the interest rates on loans linked to Euribor.

As a result of the latest moves above, approximately 6,000 Hellenic Bank borrowers, businesses and individuals, whose loans are linked to the ECB's base rate and Euribor, have already benefited due to the lower cost of financing.

It is noted that in addition to the above moves, Bank of Cyprus and Hellenic Bank have developed and launched a series of new products and services over the last several months with the aim of supporting their customers.

Last week, the Bank of Cyprus announced, against the backdrop of the Housing Revitalisation Plan for Mountainous, Remote and Disadvantaged Areas, a 1% subsidy on the interest rate of these loans for the first three years. After the subsidy, the interest rate will amount to 2.60%.

Moreover, also last week, Hellenic Bank announced the availability of a new mortgage loan with a fixed interest rate of 2.95% for the first three or 3.10% for the first five years, under the umbrella of the My Home Rewards program.

It is worth noting that according to the statistics published by the ECB, interest rates on loans to households in Cyprus have decreased by 0.69% from last January to last October, while for the corresponding period the average decrease in the EU was only 0.32%.

(Source: InBusinessNews)