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In September 2024, the Bank of Cyprus reached a deal with funds linked to Cerberus Global Investments B.V. to sell a portfolio of non-performing loans—primarily business loans backed by collateral. The loans in this portfolio had a total balance of around €149 million, though they held a book value of roughly €27 million as of June 2024. This sale is set to improve the bank’s finances, giving a slight boost to its profit and capital stability, according to its financial report. Pending final regulatory approvals, the sale should be complete by mid-2025.
This sale could have several positive effects for the bank, the country, and its citizens. For one, it will significantly lower the bank’s ratio of troubled loans to total loans, dropping it to 2.4%. Since hitting a peak in 2014, the bank has managed to reduce its non-performing loans by €14.7 billion, or 98%, bringing them below €0.3 billion today.
The benefits of this clean-up extend beyond the bank itself. With fewer troubled loans weighing it down, the bank can lend more to small businesses, homebuyers, and local entrepreneurs, helping to stimulate local economic activity. A stronger balance sheet also reduces financial risks within the bank and makes Cyprus’s banking system more stable overall. Stability attracts investors, who are more likely to put money into an economy with a solid, well-capitalized banking system. This could bring additional foreign investment into Cyprus, driving further growth.
For Cypriot consumers, a stable bank means greater confidence in saving, borrowing, and investing, which can help lift the broader economy. When banks feel more secure, they’re more willing to lend, which can foster recovery and create more jobs. In short, this sale doesn’t just improve the bank’s position; it strengthens the entire financial system in Cyprus, encouraging economic growth, investment, and consumer confidence.
