Panayiotis Rougalas
With the aim of improving Cyprus’ image as an international financial center and showcasing the progress made in the banking sector as well as the wider economy, representatives of Cypriot banks traveled to Brussels. The trip resembled similar organized “roadshows” in the United States that began around a decade ago, in 2017, when Cyprus hired the law firm Pillsbury Winthrop to help improve the country’s reputation in the U.S. regarding Cypriot banks. That effort was considered successful, attracting investment from the U.S. and increasing the number of correspondent banks dealing in dollars to five.
This time, on European soil, bankers highlighted the country’s reform path, strengthened compliance framework, and economic prospects, including growth rates, low unemployment, high employment, and steadily declining public debt, as well as the improved standing of Cypriot banks.
At the heart of Brussels, including at Bloomberg’s headquarters, banking representatives presented the major changes made in recent years in corporate governance, anti–money laundering rules, KYC procedures, capital adequacy, non-performing loans, liquidity, cost-to-income ratios, new lending, and more. They also outlined the future direction of the Cypriot banking sector, its strategy through the national banking association, and how the industry is evolving alongside broader economic indicators.
The messages coming out of the meetings were positive for Cyprus, confirming the overall progress of the banking system and that the economy is indeed performing well in numerical terms. This is also reflected in the country’s credit ratings, with all four major rating agencies either upgrading Cyprus or reaffirming positive assessments in recent reviews.
The issue of sanctions compliance was also highlighted, including the implementation of financial restrictions on listed individuals and those linked to them. Cyprus is among the countries that apply sanctions lists issued by U.S., U.K., and EU authorities as soon as they are published. However, in the past the country has at times come under international scrutiny over cases involving investments, sanctions, and concerns about access to the financial system by high-risk individuals who, in some cases, should not have been admitted.
The delegation included the Director General of the Cyprus Bankers Association, Marios Skandalis; Deputy CEO of Bank of Cyprus Charis Pouangare; Deputy CEO of Eurobank Ltd. Charis Habbakis; and CEO of Alpha Bank Cyprus Miltos Michailas, essentially the top representatives of Cypriot banks alongside senior executives of the country’s three systemic banks. Alongside the Bloomberg events, the delegation also held meetings at the European Parliament, expanding the scope of the visit. Participants also included embassy officials, representatives, central bank officials, and institutional stakeholders in Brussels.
Key indicators
The data presented broadly reflected figures recently published by the Central Bank of Cyprus in its 2025 annual report.
By the end of December 2025, the Common Equity Tier 1 (CET1) ratio, which measures banks’ ability to absorb losses, stood at 25.8%, significantly above the European average of 16.3%.
Liquidity ratios also remained strong, reaching 319% at end-December 2025, well above the regulatory minimum of 100% and far higher than the EU average of 163%.
Asset quality continued to improve, reflecting ongoing balance sheet deleveraging. Non-performing exposures fell to 3.2% of total loans from 6.2% in 2024. Using the European Banking Authority methodology, the ratio dropped to 1.6%, below the EU average of 1.8% for the first time.
Profitability remained robust, with return on equity at 14.2% in 2025 compared with the EU average of 10.4%. Operational efficiency also remained strong, with net interest margin at 2.6% and cost-to-income ratio at 41%, both outperforming European averages of 1.6% and 53.3%, respectively.
