Hourican expects neutral impact from Brexit on BOC


By Stelios Orphanides

Bank of Cyprus’s chief executive officer John Patrick Hourican said that a decision of Britons to vote in favour of leaving the European Union on the June 23 referendum will have a neutral impact on the bank, which owns a subsidiary in the UK.

Other political processes, including talks to reunite Cyprus and the US elections, may have an impact on Cyprus’s economy, Hourican told an audience comprised of the Bank of Cyprus Premier Banking Customers, who are clients with over €70,000 in deposits at Bank of Cyprus, on Wednesday.

The UK subsidiary, which accounted for 5 per cent of the group’s total loans in March, is “ring-fenced, capitalised, funded, and separate to Cyprus,” the former head of the Royal Bank of Scotland said. “Whatever happens inside sterling, will happen inside that bank in the majority”.

Still, a possible Brexit, as the eventuality of the UK leaving the EU is known, may have an impact for “the whole country, for the individual businesses that do the trading or tourism with the UK,” the Irish banker, who heads the lender since 2013, said.

While a possible Brexit would have “positives and negatives,” Cyprus is “organised and diversified enough for us to be able to cope reasonably well with every outcome, Brexit or Bremain,” he said.

“If there was a Brexit, then there is a currency issue and of course a little bit of volatility, we ‘ll have trade issues, services issues, but it will take some time. “I am more bothered about the consequences for the EU. I am more concerned about the conversations that occur in the Netherlands, in Spain, Italy, Greece because you begin to unravel the edifice that is the EU”.

“Our neighbourhood has never been less stable,” Hourican said in reference to the political situation in Middle East. “Discussions with Turkey, both at a super-national economic level and indeed in the Cyprus (problem) discussions have never been more dramatic. This is an interesting time to be alive, an interesting time to be an investor, and an interesting time to wonder what to do with your money with negative interesting rates”.

“Politics look good on some days and poor on other days,” he said about Cyprus’s reunification talks. “We need to do much more to understand the economics. The economics need a lot of work because we need to understand the transition if it occurs”.

He added that the bank holds executive meetings every month related to the negotiations between President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci in order to understand what the reunification of the island might mean for the bank.

Hourican described Hilary Clinton and Donald Trump, the presumptive candidates for the US president office in November, as “two interesting candidates” without naming them.

“We have very interesting and very polarised economic and political circumstances across the world, which of course for a small open economy like Cyprus will be things for us to think about,” he said.

Hourican added that the bank’s financial situation has been improving incrementally over the past years and months following the 2013 banking crisis. He added that the bank’s outstanding emergency liquidity from the European Central Bank fell to €2.7bn as per June 15, from €2.8bn on May 31.

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