Bank capital evolution projections based on the base case and the worst case scenario will be the yardstick by which SSM will judge the prospects for the 2022 dividend distribution. This was pointed out by the head of SSM, Andrea Enria, in an interview report to the Cyprus News Agency, asking about the intention of Cypriot banks to distribute dividends in 2023, twelve years later. A similar request was made by the Greek banks Eurobank and Ethniki, and according to the head of SSM, “as long as the banks can demonstrate that they can stay above our supervisory requirements even in an unfavorable scenario, the payment of dividends will not have a negative opinion on our part. ”, which is true for all European banks.

In an interview with the Cyprus News Agency, Mr. Enria explained that the baseline scenario against which banks’ capital reserves will be assessed is “a shallow and short-lived recession, while the worst-case scenario would lead to a more negative development in terms of growth and the level interest rate. In any case, all European banks should be able to document that their capital adequacy ratios can remain above the required limits,” he stressed.

Andrea Enria acknowledged the significant improvement in the Greek banking system.

In the same interview, Mr. Enria also noted that the exit from the policy of negative interest rates and their increase will have a positive impact on the profitability of banks and will play a positive role for some time to come. However, he clarified that, given that deposit rates also start to rise, the positive impact on margins will decrease accordingly.

When asked about the increase in the share of Eurobank-controlled Hellenic Bank and the prospects for a merger, the head of the CCM explained that he is not positioned as a supervisory authority for specific banks, but noted that “mergers are an important tool that European banks can use, since they represent the most representative opportunity change your business model. “This is a way to make the business model more profitable, generate more capital and put banks on a more sustainable path.”

It should be noted that Mr. Enria visited Athens and Cyprus, establishing a number of contacts with the banks he supervises, national supervisory authorities and government officials. According to a statement from the Bank of Greece following a meeting with Gov. Yiannis Sturnaras, “The current situation and outlook for Greek banks was at the center of discussions with Mr. Enrias, and in particular the issue of non-performing loans and the urgent need to achieve the goal of reducing them.” During a meeting with Finance Minister Christos Staikouras, Mr. Enria acknowledged the significant improvement in the Greek banking system over the past 3.5 years, while the Finance Minister highlighted the contribution of Hercules to a significant increase in deposits and improvement in the balance sheets of credit institutions.