Gold Magazine June - July 2013, Issue 27

THE PRUDENT BANKER Gold: In what way has the new financial environment, created in Cyprus after the Eurogroup decision and loan agreement, affected Hellenic Bank and the measures it has taken? Makis Keravnos: The changes to the financial sector and the economy, particularly those emanating from the decisions taken by the Eurogroup, as reflected in the Memorandum of Understanding (MoU) that Cyprus has signed, have created a new environment for Cyprus and changed the banking sector significantly. Hellenic Bank, despite taking precautions and, as always, managing the effects of the crisis in the best interest of its shareholders, customers and investors, has unfortunately also had to suffer the consequences of these decisions. obtains a license from the Securities and Exchange Commission to operate as a Cyprus Financial Services Company. 2004 Opening of the new Head Office building in Nicosia. • Adoption of EFQM (European Foundation for Quality Management). 2005 Hellenic Bank is recognised for the second consecutive year by Hellenic Bank Group CEO Makis Keravnos acknowledges that the decisions taken by the Eurogroup and the repercussions of the Memorandum of Understanding between Cyprus and the Troika have changed the banking sector significantly, caused a loss of confi- Although the Group is not subject to any reorganisation/resolution measures, and its customers “escaped” a levy on their deposits, it will be affected by the changes to the supervisory/regulatory framework that are included in the MoU. In addition, the restrictions imposed on the transfer of capital and, generally, the present negative economic environment and the drastic changes to the other two banks have all had a direct negative impact on the Group. We believe that the Eurogroup’s decision was unfair to Hellenic Bank’s customers and investors, who are feeling the consequences even though they chose a Bank which took timely decisions and preventive measures in order to minimise the effects of the crisis, which was not in any way caused by the actions of our Group. However, despite the decisions that have negatively affected the financial system, Hellenic Bank continues to provide a smooth service, to take preventive actions and to maintain its strong balance sheet. At the same time, it is making constant efforts to strengthen its capital base and to maintain a healthy liquidity position. Since the Eurogroup decision on Cyprus of 25 March 2013, the Board of Directors, the Executive and General Management of the Group have focused on taking measures to handle all potential and anticipated negative impacts on its operations due to the new circumstances. In particular, the loss of business confidence in Cyprus is a major hurdle and one that need to be overcome through a joint effort by the Government, the Central Bank, local businesses and individuals, as quickly as possible. JP Morgan for its fully automated transfers of almost all SWIFT payments sent from Hellenic Bank to JP Morgan. 2006 The leading quarterly magazine The Global Custodian, specializing in the international security services business, names Hellenic Bank’s Custodian Service as first among custodians in Cyprus. 32 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS What are the main challenges that Hellenic Bank is currently facing and how is it called to manage them? The biggest challenge that Hellenic Bank is facing at this moment is to ensure its recapitalisation, by achieving the goal of maintaining its private ownership and avoiding the need for state support. According to the PIMCO report – about which Hellenic has expressed its reservations, citing among other concerns its non-transparent nature – on the recapitalization needs of the banking sector, Hellenic Bank has a capital surplus of €23 millio n according to the baseline scenario and a capital gap of €333 million according to the extreme scenario. Following the sale of the Bank’s branch network in Greece to Piraeus Bank on 26 March, in addition to the savings resulting from the sale, the capital gap of the Bank was reduced to an estimated €300 million (according to the extreme scenario). The Central Bank of Cyprus has given the Bank until the end of September to find the funds required on the basis of this scenario and we are examining various financial and legal options in relation to this. The situation is quite complex and difficult, involving painful measures such as the sale of our Greek operations, but we are hopeful that we can maintain the private status of the Bank and that we will not need any state support, despite the difficult conditions and the negative environment in which we operate. How have the restrictions applied by the Central Bank of Cyprus (CBC) affected the banking system as a whole? Hellenic Bank is obliged to comply with the 2007 The Ukrainian Central Bank grants approval for the opening of a Representative Office in Kiev. • For the second consecutive year, The Global Custodian ranks the Custodian Services of Hellenic Bank first among custodians in Cyprus. • Hellenic Bank becomes the first Cypriot bank to offer trilingual Electronic Banking services, after the intro- duction of the Greek and Russian versions of Hellenic Net Banking. 2008 ISO 9002 international service quality certification is reconfirmed for the Limassol International Business Centre. • The Global Custodian recognises the Bank’s custodian services unit as the ‘Top Rated’ Custodian for the third consecutive year.

Gold Magazine June - July 2013, Issue 27 | Page 34