The Bank of Cyprus Group was founded in 1899 and headquartered in Nicosia, Cyprus. The financial institution offers directly, or through subsidiary companies, banking, insurance and other financial services. The company operates in Cyprus, Greece, the United Kingdom, Australia, Romania, Russia. and the Channel Islands. It offers retail, corporate and investment banking, private banking, factoring, leasing, life and general insurance, brokerage, mutual funds management. 3 As of December 2011, the Bank of Cyprus had €37,475 million of assets and liabilities and shareholders’ equity. Bank of Cyprus liquidity deteriorated in year-end 2011 compared to year-end 2010, as measured by the loan-to-deposit ratio. In 2011, liquidity reached 122.91%, while at 103.563% one year ago. As stated in their financial statement, Bank of Cyprus did not meet the capital adequacy ratios required by the Central Bank of Cyprus on September 30, 2012, which led the bank to apply for capital support from the government. During 2011, the bank ‘s non-performing assets ratio jumped from 45% in 2010 to 166% in 2011, contributing to an increase in Expected Default Frequency. Bank of Cyprus’ asset quality was affected by the economic crisis in the Republic of Cyprus and Greece. In the light of the situation answer the questions

i. “Deficiencies in the management of failing banks is a contributing factor”- Explain from the point of view of Bank of Cyprus.

ii. How can the regulators deal with the problem of failing banks?

iii. What do you think which determinant is responsible for the failure of Bank of Cyprus?

Answer rating: 100% (QA)

I Deficiencies in the management of Cyprus Bank As liquidity ratio in 2010 is 103563 as compared to ... View the full answer