Herodotou: European banks are healthy
The governor of the Central Bank of Cyprus (CBC), Constantinos Herodotou, said on Wednesday there is concern in the markets that problems with some European banks could evolve into something bigger. He added however that the European Central Bank (ECB) was reassuring about the health of the European banking system.
Asked about concerns over some European banks and whether the problem could spread throughout Europe, Herodotou expressed hope the concern in the markets does not escalate.
“The ECB confirms at the European level the good health of the European banking system and its readiness to intervene with liquidity or other measures if and when needed,” added Herodotou, a member of the Governing Council of the ECB.
The governor was replying to journalists’ questions after meeting with AKEL Secretary-General Stefanos Stefanou in Nicosia, with whom he discussed international developments in the banking sector and how they affect Cyprus. Herodotou assured Stefanou of the healthy state of the Cypriot banking system and added that “the liquidity and capital of Cypriot banks are very satisfactory.”
“We also discussed the concerns we all have in relation to both inflation and interest rates,” he said, and added that “lending rates are decisions of the Eurosystem and aim to limit inflation.”
Herodotou also said he anticipated some increases in deposit rates by the banks, while regarding the interest rates charged on loans by credit acquisition companies, he said that this is done “on the basis of the loan agreement that already exists.”
The CBC governor also said that he has been holding one-on-one meetings with some banks on deposit rates and has also met with the CEOs of all Cyprus banks, with whom he also raised this issue.
Asked if there are cases of noncompliance with the CBC’s code of conduct for nonperforming loans by the banks, the governor said that “unfortunately we see this anywhere we do an audit,” adding that if the banks are systemic they impose higher penalties.
In relation to lending rates, Herodotou said that we would all like to have less cost in loans, adding however that this matter concerns what European legislation and the Eurosystem allow the member-states.
