In March 2017, Greece’s Piraues Bank of Cyprus was rebranded as Astro Bank following its majority sale to an investor group led by a renowned Lebanese businessman, Maurice Sehnaoui. The deal included a fresh injection of 40 million euros in capital, which has stimulated growth that was previously thought to be out of reach. Marios Savvides, Deputy CEO of Astro Bank, tells us about the bank’s new direction.
What do you think led Maurice Sehnaoui, your largest shareholder, and his group of investors to acquire and rebrand Greece’s Piraeus Bank of Cyprus?
Maurice Sehnaoui is a banker, but he’s also an entrepreneur. In 2016, he sensed there was an opportunity to purchase a bank in Cyprus for two main reasons. The first is that the underlying economy had rebounded, and the second is that Greek subsidiaries operating in Cyprus were available for sale because the parent companies were under obligation to concentrate their local market. We are delighted that the deal was closed through a capital injection rather than through purchase of existing shares. Forty million euros of new capital has gone into the bank and has really set us up for growth, a strategy that we did not have until recently because of the reality of our former parent in Athens.
Since rebranding to Astro Bank in March, what have been the key messages that the bank has disseminated?
The main message is that we have dissociated from Greek risk, thus the change of our name. The second important thing is that we are out of a deleveraging mode and going after growth. Although we only relaunched in late March, I think the market is beginning to recognize us as a bank that is looking to lend, which is a good element. We hold liquidity of about 50% of our deposits, which is well above what the regulator thanks to the 40 million euro injection that came into the bank as part of the equity transaction.
How would you grade the pace of the recovery?
The rebound has come a long way, but it’s going to be a slow progress over a long time. The driver for the rebound of the economy is the banking sector. The banking sector, to be able to fund the economy, needs liquidity and capital, as well as good projects. We have liquidity, and all the previously lost capital in the banking sector has been replenished. But in terms of new projects, we are still lacking. This is linked to the NPL problems, which is to the order of 50% of all loans.
Why should investors consider Cyprus?
We are seeing a lot of international investors choosing Cyprus for organizing their regional affairs. Cyprus offers double tax treaties, a developed banking industry, and a developed advisory industry with all the big auditing firms and consulting firms in Cyprus. It’s generally a pleasant place to visit if you have the chance.
What role can Chinese investment play in Cyprus?
I believe that Cyprus has a lot to offer to the Chinese investor. One is we are in the European Union. Number two is it is in the Middle East as well. Thirdly, we are a rebounding economy. But it is important that international investors get good advice, and Cyprus is quite strong on advisory. Real estate is especially a great deal for Chinese investors because prices have certainly decreased. As a rule of thumb, I would say comfortably at least by 30% to 40% from their peak. Now there are very strong signals of stabilization and no signals of significant price rises on the horizon.