THE MARFIN banking group remains fully committed to Cyprus and will increase its investment here, despite intending to move its headquarters to Greece, Efthimios Bouloutas, Chief Executive Officer of Marfin Popular Bank (MPB), said yesterday.
“The truth is that we are here and we are staying in the Cypriot market. We are bound to Cyprus, and all our decisions are aimed at becoming stronger”, he said. “The Marfin Group is changing in order to become stronger and have the facility to cover the needs of [Cypriot] society and the economy more effectively”, he added.
Bouloutas said that according to Cyprus Central Bank figures, MPB’s market share has been growing in all loan categories – mortgages, consumer loans and commercial loans – since the beginning of the year, despite the international crisis.
“MPB is the only Cypriot bank to have increased its market share this year, from 15.78 per cent to 15.91 per cent of loans”, he said, adding: “In the 12 months to the end of March 2009, we increased the total amount we extended in loans in Cyprus by €1.5 billion, which represents 11 per cent of our working capital.”
Bouloutas said that MPB’s commitment to Cyprus is further evidenced by a range of loans designed to make it easier for young people to buy their first home. He said that the new “House for All” mortgage is one of the new banking products which MPB is marketing “in almost every country we operate in, and which are aimed at attracting new customers and increasing our existing market share”, adding that “the strategic [expansion] plan at the moment is Cyprus, Greece and southeast Europe.”
Driving the message home that MPB cares about its customers, Bouloutas said that “a lot of people think that banking is all about money and nothing else. The truth is that money is the means we use; our real aim is to respond to people’s needs.”
Regarding the timing of the changes to the banking group, Bouloutas said it is unlikely that the merger process will be completed within the four-month period mentioned at the AGM last month. After the restructuring of the balance-sheets of MPB and Marfin Egnatia Bank on 30 June, “there is a four-page list of 80 action points to be completed”.
Meanwhile, the group is “preparing all the files that need to be presented to the supervisory authorities”, he said. The proposed merger requires the approval of various supervisory bodies, but mainly the Cypriot and Greek central banks, the respective securities commissions, and the two countries’ competition commissions.
Bouloutas rejected the argument that moving away from Cyprus’ beneficial tax environment was a bad business move. He said: “The restructured bank will pay more tax in Greece based on the presupposition that the profits of the new legal entity registered in Cyprus will be distributed through the share dividend. But if the profits are not distributed, and stay invested in Cyprus – as we intend to happen – so that the group can grow and expand, then they will not be taxed. So we expect the tax impact of the move to be minimised.”
Moving to Greece would also free up about €3 billion in capital as a result of the different way in which the Greek central bank calculates the capital adequacy ratio and interprets goodwill when a takeover is made. Under Cyprus Central Bank rules, the whole amount of goodwill is deducted from capital.
Bouloutas said that “this means that we will be able to lend around €3 billion more than before in Cyprus, and if we apply an average [interest] spread of 2.5 per cent, this gives around €75 million more revenues for the bank over two years”, he said.
The extra €3 million would certainly be useful as liquidity for new loans in Cyprus and elsewhere – or to help fund a future takeover bid.
