Nicosia: Cyprus banking sector's "remarkable recovery from the 2013 crisis reflects the coherent and consistent functioning of two essential pillars, banks' commitment to act and supervisors' firm oversight," George Ioannou, Member of the Supervisory Board of the European Central Bank and Director of Supervision of Credit Institutions at the Central Bank of Cyprus, has said.
According to Cyprus News Agency, in an interview with Supervision Newsletter, Ioannou pointed out that the result is a more resilient, stable banking system. Asked about the progress since the financial crisis in Cyprus, he noted that the Cyprus banking sector's "remarkable recovery from the 2013 crisis reflects the coherent and consistent functioning of two essential pillars: banks' commitment to act and supervisors' firm oversight."
"Without the consistency and discipline of banks, paired with the rigorous and effective supervision of the Central Bank of Cyprus and ECB Banking Supervision, this progress would simply not have been achieved," he stressed.
Replying to another question, he said that banks have not only learned the lessons of the past - they've institutionalized them. "The result is a more resilient, stable banking system that can support growth without compromising on prudence," he noted.
Regarding NPLs, he said that despite heightened geopolitical tensions, the asset quality of the Cypriot banking sector remains robust. "We are not observing any signs of distress; on the contrary, NPLs are continuing their downward trend," he pointed out.
Asked about cross-border cooperation, he said that cross-border mergers and acquisitions are not unique to Cyprus. "Instead, there is a broader euro area trend, as banks strive to strengthen their competitiveness, scale their operations and deliver greater value to shareholders. What is notable, though, is how effectively Cyprus has positioned itself within this landscape, with two large-scale transactions completed in the past year," he continued.
Cross-border cooperation is not just beneficial - it is essential, he said, adding that consolidation boosts competitiveness, operational efficiency, and market depth. "To fully unlock these benefits though, it is essential for Europe to complete the banking union," he pointed out.
Ioannou said that being part of the SSM family for over a decade, they have experienced major challenges which have made them grow wiser and more resilient. "Harmonized supervision and a level playing field have ensured the consistent application of prudential standards. This has materially strengthened and improved banks' resilience," he said.
Looking ahead, he added, enhancing the supervisory culture and promoting greater integration remain pivotal to achieving the objectives set by European banking supervision. "These priorities are also at the heart of the Supervisory Board's comprehensive agenda, which aims to make European banking supervision more efficient, effective and risk-based. Nevertheless, while the progress achieved over the past decade has been remarkable, there is still room for further refinement," he pointed out.
Ioannou said that focus areas such as ensuring consistent and clear communication across European supervision, promoting common behaviors and training, and facilitating staff exchanges between the ECB and national supervisors to strengthen collaboration are all key and represent important steps towards building a stronger and better European supervision.