Cypriot banks grow
NICOSIA (Reuters) – Commercial banks extended further in May their share in the Cyprus loans market at the expense of cooperative societies, central bank figures showed yesterday. Analysts say increased commercial bank market share reflects a preference for euro-denominated loans as the island is poised to join the eurozone on January 1, 2008. Commercial banks increased their share to 76 percent of the 17.1 billion Cyprus pounds credit market (-29.6 billion) compared to 74 percent in May 2006, following a 24.9 percent year-on-year increase in bank credit. Loans by cooperative societies increased by 12.5 percent year-on-year. «Co-ops have a limited capacity for loans in foreign currency,» said Sophronis Eteocleous, manager of Economic Planning and Research at Marfin Popular Bank. «They have less flexibility in pricing and promotion of their products,» he added. Michalis Florentiades, head of economic analysis and research of Hellenic Bank, said commercial bank credit should also factor in an increased share of the market from local councils. «Some municipalities have turned their backs on co-ops. Otherwise, the increase of banks’ market share would have been lower,» he said. Acknowledging that co-ops had lost some municipality business, Cyprus’s largest cooperative said it would not offer euro-denominated loans until the changeover. «We are not profit-oriented. If we see our profits surging we can afford to lower rates,» said Nearchos Ioannou, general manager of the Limassol Cooperative Savings Bank. Cooperatives, once the mortgage borrower of choice for many Cypriots, have embarked on a major consolidation drive to become more competitive. Ioannou says the bank is pushing consumer loans, deviating slightly from its traditional role.
