Fitch puts Bank of Cyprus on negative watch and downgrades Marfin

Fitch Ratings yesterday placed Bank of Cyprus’ (BoC) on negative watch and downgraded Marfin Popular Bank’s Long-term Issuer Default Rating to BBB- from BBB – placing its individual rating on negative watch — citing their exposure to Greece.

The agency also affirmed Hellenic Bank’s BBB- rating.

Fitch said the ratings indicate the agency’s expectation of further pressure on the banks’ credit risk profiles, profitability and capital due to the challenging operating environment in Greece.

The announcement came a day after Fitch cut Cyprus’s sovereign rating by three notches to A-, saying it was concerned about its banks’ exposure to Greek debt and the impact this could have on the island’s finances.

Marfin’s downgrade reflects its larger exposure to the Greek economy and sovereign and weaker funding profile with a higher reliance on ECB funding, the agency said.

Despite the risks, Fitch credited the Cypriot banks’ strong domestic franchises, good funding base supported by large domestic and, to a lesser extent foreign, deposit bases which have proved stable to date.

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.