Bank of Cyprus H1 loss of 1.8 bn euros on Greece, bad loans

Nicosia (AFP) - Bank of Cyprus, the recession-hit Mediterranean island's largest lender, announced a 1.8 billion euro ($2.45 billion) first-half loss, mostly on the back of provisions for winding up its Greek operations and for bad loans.

The shortfall in the January-June period compared with 134 million euros a year earlier.

The bank said disposal of its Greek operations resulted in a loss of 1.4 billion euros.

In March, Cyprus clinched a 10-billion-euro ($13.6 billion) rescue package from the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and oversized banking system.

The deal included the closure of the island's second-largest bank, Laiki, and a 47.5 percent "haircut" on deposits above 100,000 euros at the Bank of Cyprus.

BoC's new CEO, John Patrick Hourican, said in a statement that "our priority remains to restore investor and customer confidence in the bank."

"This can only be achieved through our focusing on arresting asset quality deterioration, making progress on non-core disposals and maintaining capital ratios so as to build a strong platform for the safe return of depositors to the Bank."

He said the group's Core Tier 1 capital ratio, or ratio of its core equity capital to total risk-weighted assets, now stands at 10.5 percent. That exceeds the minimum nine percent set by the central bank.

BoC said loans in arrears of more than 90 days accounted for 38.8 percent of gross loans, compared with 27.4 percent a year earlier, and that provision for bad debts was 539 million euros.

The bank has only now been able to announce its results because it has undergone a major restructuring, which included absorbing the good assets of the former Laiki Bank.

It said it suffered not only from disposing of its Greek operations, but also absorbing Laiki's operations in Cyprus and Britain and discarding its retail business in Romania.

Deposits totalled 17 billion euros on June 30, compared with 28.4 billion euros at the end of 2012.