Could we start with your assessment of the current state of the Cyprus banking sector?
Restoring the soundness of the financial sector was one of the three pillars of the economic adjustment program. Cyprus had to restructure and down size its financial sector, capitalize it and improve its governance and supervision. Today we can say with certainty that we have ticked all the boxes. The best proof of this is the confidence displayed by international investors who are participating in the share capital of the banks and of course the confidence of the depositors who are returning their money to the system. Because we were able to tick all the boxes, the capital controls were entirely lifted earlier this year. We see that there is increased investor interest in the banking sector, at all levels and I can now say that, after two years of turbulence, the banking system is back on track, it is strong and is ready to support the Cyprus economy through its recovery.
Can you tell us a bit about the talks surrounding the possible acquisition of Piraeus Bank in Cyprus?
Acquisition possibly, but definitely not by Hellenic Bank. We have made that clear. Nonetheless, Hellenic Bank is a small bank but it has all of the ingredients and the ambition to grow. We have very comfortable liquidity ratios, with a loan-to-deposit ratio of 50 percent and we are consequently looking for opportunities to deploy our liquidity and grow both organically and inorganically. In this respect, we are assessing all possible market consolidation opportunities on the island.
In terms of the local market share, what is Hellenic Bank’s market share for local deposits?
Hellenic Bank has around 14 percent of the deposits market share.
Are most of those customers retail or corporate customers, or are there also individuals?
Our depositors’ base is quite diverse. We have a balance of both retail individuals and corporate depositors.
In terms of the size compared to the Bank of Cyprus or the Cooperative Central Bank, how would you rank?
We are the third largest. We have however, a single-digit market share, whereas the Bank of Cyprus has about a 35 percent market share and another 20 percent goes to the Cooperative Central Bank. We are the third banking institution on the island and we aim for a double digit market share of gross loans (we are currently at 7%).
How do you intend to achieve that?
Our growth plans are very ambitious, very aggressive and very specific. Hellenic Bank has a loan to deposit ratio of around 50%, meaning that we have excess liquidity that we can deploy in the market. We are ready to finance every new project and opportunity that comes along and offer solutions for new investment and new entities that are set up in Cyprus. We are determined to finance the growth of the economy and simultaneously take advantage of any inorganic growth opportunities that might arise. We are ready.
In terms of the competitiveness here, you mentioned that there has been recapitalization of some of the other banks, governance restructuring, etc. Could you tell us a bit more about that?
The Economic Adjustment Program was clear about the financial sector – in order to restore its soundness and market confidence, it had to be downsized, recapitalized and strengthened in terms of governance and supervision.
At Hellenic Bank recapitalization came from private international investors so we did not have to resource to any state aid or other resolution measures. At the same time, as a Bank we set a priority to raise the quality of governance and we had resourced international advisors to this effect. The supervision of the sector was strengthened primarily due to the fact that all systemic banks of the Island, Hellenic Bank being one of them, are supervised directly by the European Central Bank.
You mentioned the percentage of international shareholders. Can you tell us a bit about your shareholding structure?
About 70 percent of our shareholders are international investors. Our largest shareholder is the US Fund, Third Point, and the second largest is War Gaming. They own more than 25% each. The European Bank of Reconstruction and Development is also another major shareholder, holding approximately 5% of the share capital of the Bank.
At the same time, we also have a Board of Directors that reflects both the shareholder base and the strategy of the Bank. All board members have international experiences and are very dynamic.
You recently announced a profit for the first quarter?
We did. However it is still too early to declare victory as we are still undergoing a lot of changes. We are changing structures, processes and procedures. This country has learnt a big lesson over the past two years – that in order to succeed and be able to become a protagonist again, business cannot be as usual. This applies not only to Hellenic Bank or the banking sector, but for the economy as a whole. We all have to change and reinvent our business model, primarily as a country, to make it competitive and sustainable.
You are one of the most powerful women that we have met in Cyprus so far and you are in a very male dominant sector, banking. Tell us about yourself.
Well, things have to change in Cyprus – as I said, business cannot be as usual. I suppose that being a woman at the top of a banking institution helps to pass the message across that nothing is as we used to know it and that we need drastic and disruptive changes in order to win this battle.
It must have been very difficult because of what Greece has been through now in terms of the banks over there. How does Hellenic operate in terms of the head office? Is it completely independent here? Does it have branches in Greece or is it only in Cyprus?
Hellenic Bank has no presence in Greece other than a representative office. The Bank’s name is a bit of a misnomer, often creating the wrong impression, as it is a Cypriot bank. The instability of the Greek economy and the Greek banking system has however encouraged a number of Greek entities to look for banking relationships offshore Greece. We are currently servicing a number of Greek clients outside of Cyprus.
I have two questions: For the international investor, what would be your message? And where do you see potential and opportunities on the island?
Cyprus is a recovery and growth success story. We had a simple target as a country: we wanted to make Cyprus a better place to live in, visit, work and invest. We have worked very hard to achieve that target, making all the painful but necessary sacrifices, reforms and changes. Now, the banking sector has been successfully restructured, recapitalized and has strengthened its governance and supervision. Therefore the banks can now be a reliable partner for investors in the country.
As far as sectors are concerned, we have seen that, throughout the crisis, there were three sectors that were quite resilient: services, tourism and shipping. In addition, we see that the energy sector potentially offers a lot of opportunities and has a lot of prospect. I also want to mention the transformative effect on the economy of a potential reunification of the island. I am sure that this prospect of the reunification of Cyprus will have a multiplier effect on the growth prospect and future of this island. Cyprus has all the elements required to become a local hub in the area and a safe harbor for the region.
On a private note, what kind of experience did you have reaching the chairwoman position? Did you start in the banking sector or somewhere else?
I am a chartered accountant by profession. No, I have never worked in the banking sector before becoming Chairwoman of the Board of Hellenic Bank. I have worked in the private sector in managerial positions for a number of years, before joining the Ministry of Finance as Director of the Minister’s office in 2013. I was then appointed as Commissioner for the Reform of the Public Service and right after that the Hellenic Bank share holders offered me the position as Chairwoman of the Board. It is a very challenging task, to be chairing a bank in this transformative period, but the fact that I am uncontaminated from banking practices of the past and at the same time I am young, dynamic and hardworking makes this job truly fulfilling. I see things changing in the bank, in the banking system and in the country and I am really proud to be part of this change.
It is hard for people to go through these changes, but when you look back on it, you will see that you saved things.
That is true. In the short term, it is a painful process, in the medium term we will be happy to see our children growing up in a better place and in the long term we will have an exciting story with a happy ending to share with our grandchildren!
Thank you, Ms. Georgiadou, for meeting with us.