Fitch upgrades Bank of Cyprus and Hellenic Bank

Fitch Ratings upgraded on Monday the Bank of Cyprus` Long-Term Issuer Default Rating (IDR) to `B-` from `CCC` and Hellenic Bank`s Long-Term IDR to `B` from `B-`.
The rating agency said the outlooks for the two banks` Long-Term IDRs are stable.
“These rating actions reflect Fitch`s expectation that some improvement in the economic environment in Cyprus and the implementation of reforms to its insolvency framework will support domestic banks` efforts to manage and reduce very high non-performing loan volumes and enhance recoveries, primarily via forbearance,” the rating agency said in its announcement.
“Investor confidence is also improving following the completion of the international bailout programme in March 2016 and customer deposits in the system have remained broadly stable since capital controls were fully lifted in April 2015.”
Fitch noted that “nevertheless these banks` ratings remain deeply sub-investment grade, in particular because their capitalisation is still highly vulnerable to their very weak asset quality. Their internal capital generation capacity is also weak given that modest pre-impairment operating profits are eroded by impairment charges”.

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.