BoC cuts mortgage base rates

BANK OF Cyprus (BoC) will cut its base mortgage rate by a full one per cent to 4.25 per cent in early June “as a first step in the gradual de-escalation of our interest rates,” BoC CEO Andreas Eliades announced yesterday.

The rate cuts will apply to all mortgage loans taken out before January 1, 2008, and all new mortgages up to a value of €200,000 taken out by permanent residents on their first home.

Eliades also announced the signing of BoC’s first securitisation of €1 billion of mortgage loans in Greece. Eliades pointed out that Cyprus does not yet have the institutional framework in place for using this financial instrument, “which offers the possibility of drawing liquidity from the European Central Bank (ECB) at a low cost”, adding that he hoped “that suitable legislation will be enacted soon.”

Securitisation is a structured finance process that involves the pooling and repackaging of cash-flow-producing financial assets into securities, which are then sold to investors. Once converted into negotiable instruments, the original loan portfolio can then be used as security for ECB loans.

Eliades’ third announcement related to its financial participation in large works being promoted by the government as a way of softening the impact in Cyprus of the current world economic crisis.

BoC is participating in financing the Limassol Marina project to the tune of €150 million, out of a total estimated cost of €300-400 million, and is financing a further €200 million in the first phase of the €1.5 billion Neapolis project in Paphos, covering the construction of a hospital and an aged care home.

BoC is Lead Manager for the funding of both these projects, which means it has made a commitment to provide 100 per cent of the required financing if other investors cannot be found.

Finally, BoC has taken a €50 million share in financing the Paphos-Polis highway project.

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.