Investor Presentaiton
Capital Position
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SREP Process and onsite inspection
Current SREP and onsite inspection process and related considerations with the ECB expected to be
concluded by end-2015.
The onsite inspection and related draft recommendation letter state that, on the basis of a modified set of
assumptions, there is, in the ECB's view, a provision-related adjustment of around €300 mn for the
judgemental (specifically assessed) portfolio and around €700 mn for the statistical (collectively
assessed) portfolio, mostly relating to the recovery value of real estate collateral. The Group is
contesting certain of the assumptions used by ECB for the calculation of the provisions for the
credit risk inspection. The Group has substantially recognised the provisions for the judgmental portfolio
reviewed by the ECB and part (around €100 mn) of the provisions for the reviewed statistical portfolio in the
9M2015 results, as part of the normal application of its provisioning methodology. The Group considers that
the ECB calculated adjustments do not indicate that the Group is not in compliance with IFRS
If the impact of the provision-related adjustment calculated by the ECB and which, in the view of the Group,
has not been recognised to date amounting to around €600 million was to be considered, there would be a
decrease of 2,4% on CET1 ratio (pre-tax)
The Group estimates that ECB's current SREP dialogue and onsite inspection process and related
considerations will be concluded by the end of 2015. The CET1 Pillar II add-on capital requirement at 30
September 2015 stands at 5,2% (resulting in a total minimum CET1 of 13,2%) and it may be further reduced
by future losses of up to €658 million, up to a CET1 ratio of 8%. The revised Pillar II CET1 capital
requirement was preliminarily determined by the ECB to be 3,75%, resulting in a total minimum CET1 of
11,75%. Taking into account the Group's CET1 ratio of 15,6% as at 30 September 2015 and the
expectations for the SREP process outcome, even after adjusting for potential additional capital
requirements, as a result of the credit risk inspection, the Group expects to be compliant with both its
Pillar I and revised Pillar II add-on capital requirements and therefore does not expect to be required
to raise any capital
Bank of Cyprus
KOINO
WKYNРIW
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