Cyprus banks will have to exhibit more flexibility when it comes to hotel businesses financing because of the coronavirus spread which may lead to an unprecedented cancellation of bookings, Phileleftheros reports.
However, a realistic assessment of the impact of coronavirus on the island’s banks cannot take place before June when the picture will be much clearer.
The blow to tourism will mainly affect recent bank lending to the hotel industry but new loans are not that many and the necessary measures for red old ones have already been taken, insiders said.
The leadership of Bank of Cyprus has recently met with the Board of Directors of the Cyprus Hoteliers Association (PASYXE), with CEO Panicos Nicolaou assuring that they will continue to stand by the tourism industry.
The same message has been sent out by the top management of other banks, while a collective response plan will be announced by the Cyprus Bank Association.
Bank of Cyprus invested €121 million in hotels and restaurants by end of the first nine months of 2019, €259 million in real estate, €74 million in construction, €371 million in trade and €429 million was lending to individuals.
Hellenic Bank’s lending by end of the first nine months of 2019 saw €128 million going to entrepreneurial activity, €140 million to business, and €215 million to retail banking.
At the same time, international rating agencies have started ringing alarm bells. A report by Moody’s said the coronavirus spread will have a negative impact on European banks since it will slow down economic activity, especially in the first half of 2020.
According to the report’s mildest scenario, the immediate negative impact on the European banking sector will be limited. However, a prolonged outbreak would have more serious consequences to the detriment of banks’ lending quality and profitability.
Cyprus is a small open economy and the slightest blow to the tourism sector makes it more vulnerable to rising external risks, according to a recent report by Standard & Poor’s.
The report takes into consideration Cyprus’ high public and private debt and the inherent vulnerability of a small open economy with a significant tourism sector, to growing external crises, including the recent coronavirus outbreak.
Read more:
https://in-cyprus.com/ccci-requests-measures-to-mitigate-coronavirus-impact-on-businesses-economy/
