Panayiotis Rougalas
Developments involving two smaller Cypriot banks are reshaping the country’s banking sector, pointing to further consolidation in an industry that has steadily strengthened in recent years.
The transactions concern Ancoria Bank and CDB Bank. In Ancoria’s case, the bank is expected to undergo a significant change in ownership once regulatory approvals are completed. In the case of CDB Bank, Bank of Cyprus has already announced the acquisition of the “healthy” part of the bank, including selected loans, deposits and other assets and liabilities. Together, these moves are likely to be among the final major transactions in the Cypriot banking sector, barring any unexpected developments, leaving six banks operating on the island by the end of the year: Bank of Cyprus, Eurobank Ltd., Alpha Bank Cyprus, National Bank of Greece (Cyprus), Ancoria Bank and Societe Generale Cyprus.
Market sources say both processes are still ongoing and remain subject to approvals from Cypriot and European regulators.
In the case of Ancoria Bank, a detailed application submitted by major XM shareholders Kostas Kleanthous and Charalambos Panayiotou is still under review. Regulators are reportedly examining a series of questions and data points before making a decision. If approved, Kleanthous is expected to hold around 60% of the bank, Panayiotou about 20%, while current majority shareholder Sievert Larsson of Sweden would retain the remainder.
The CDB Bank deal with Bank of Cyprus is further along and has already been outlined in the lender’s financial disclosures. In March 2026, Bank of Cyprus signed an agreement with CDB Bank to acquire a portfolio of performing loans and deposits, along with selected assets and liabilities. The transaction covers approximately €150 million in performing loans and about €500 million in deposits, based on end-2025 figures. Completion is expected by the end of 2026, subject to regulatory approval and other conditions.
Before the deal is finalized, CDB Bank is expected to implement a voluntary exit scheme for staff, a required step ahead of transferring its “good” assets. The two sides have been in discussions for several months. While no official price has been disclosed, market estimates place the value of the transaction at around €30–35 million.
Interest in both banks has not been limited to traditional banking players. According to market information, investors from outside the banking sector, and even from outside the European Union, have also shown interest. While neither Ancoria nor CDB has consistently been profitable, aside from the high interest rate environment in recent years, they hold a key asset: a banking license within the European Union.
According to the Cyprus Bank Association’s 2025 annual review, CDB Bank operates two branches and employs around 140 staff, while Ancoria Bank has three branches, five ATMs and 122 employees.
Smaller banks are increasingly being viewed as attractive assets in a sector that has undergone a major transformation since the financial crisis and the 2013 banking haircut.
Central Bank of Cyprus data shows the sector remained highly resilient in 2025, supported by strong capital buffers, liquidity and profitability. The Common Equity Tier 1 (CET1) ratio stood at 25.8%, well above the European average of 16.3%. Liquidity levels were also exceptionally strong at 319%, far above the regulatory minimum of 100%.
Asset quality continued to improve, with non-performing exposures falling to 3.2% of total loans, down from 6.2% in 2024. Profitability remained robust, with return on equity at 14.2%, compared with the European average of 10.4%.
Net interest margins and cost efficiency also outperformed EU benchmarks, reinforcing the image of a banking system that is now significantly more stable, profitable and attractive to investors than it was a decade ago.
