The Bank of Cyprus continues to have plans to enlist itself on the London Stock Exchange (LSE) even amid the growing worries of the Brexit, the CEO John Patrick Hourican revealed to SigmaLive in an exclusive interview.
Downgrades have abounded from ratings agencies with Standard & Poor’s and Fitch Ratings both announcing that the UK’s economy would be rated as ‘double A’ instead of the ‘triple A’ or ‘AA+’ rating it had pre-Brexit.
Fallout on a political level has also been immediate, with EU leaders calling for a quick ‘divorce’ from the UK at an unofficial summit held earlier in the week.
However, Hourican suggests that despite the uncertainty of a post-Brexit Europe, London will continue to remain an important financial centre in global terms. “Look at the world and see how the large amounts of money invested in pensions is managed: it’s invested in New York, Frankfurt, Amsterdam, and London…
“London will remain a very big, very important, financial centre for the world,” Hourican explains.
Exemplary global city
In a report in 2013, the Brookings Institution think-tank, had said about the UK, “The capital of the United Kingdom and one of the four largest metropolitan areas in Europe, London has become an exemplary global city over the past two decades.
“The city rates second for global firm presence, just behind New York, and it ranks third in information/communications technology development among large world cities, enabling near-seamless communication.”
Hourican, in the meantime, has had a different outlook on the UK’s economy on the growing fears that led to a FTSE fall, after the Brexit. He has said, “And while this will change somewhat with Brexit, it won’t change to the extent that London will no longer be a centre for managing large amounts. The skills are there, the infrastructure is there, the money is already there, the history is there, the connections are there, and now they just need to find a better equilibrium to deal with the changes.”
Despite Hourican’s assertions that London will continue to be a global financial capital, he cautions that change is always disquieting, and should be carefully monitored: “We should all worry when there is change around us; when you have change in the geopolitics or geoeconomics you have to watch carefully and know what’s going on.”
BoC still seeking its listing on the LSE
Even with the Brexit, the Bank of Cyprus is still looking to join the London Stock Exchange, Hourican had mentioned.
He said, “The Bank hasn’t changed it plans to list in the LSE.”
Hourican did add however that with the Brexit the bank would be closely monitoring the situation, and would take its time in considering when the process to list itself on the LSE would happen.
In early April, the BoC had said in an official announcement: “A premium listing on the LSE fulfills one of the Bank’s objectives of listing on a major European stock exchange. The listing and, subject to meeting the eligibility criteria, potential inclusion in the FTSE UK Index series will enhance the Group’s visibility and share liquidity.”
However, with the Brexit, Hourican mentioned that the bank would need time to reflect and make sure that the choice of London, over other options, is still the right choice.
He said they will “Enlist on the LSE with a premium listing and at a time that is sensible for the bank.”
Business as usual
More specifically on what the bank foresees following the Brexit, Hourican made reference to the bank running “business as usual.”
He said that they continue to plan to grow their niche business with the BoC UK, as there are significant growth opportunities.
With the Bank of Cyprus on the island, Hourican explained that they will continue to follow what the Cypriot economy does, as their job is to support the economy.
Hourican has also said that the plan to enlist with the LSE will not be complicated following the Brexit, which had sparked concerns that new trade agreements would need to be made.
The EU, which allows members to benefit from a free-trade area, would have to negotiate new deals with the UK following the Brexit, officials had previously said.
“First you exit then you negotiate,” Cecilia Malmstrom, the EU Trade Commissioner has said following the referendum result.
A “third country”
After Brexit, the UK would become a “third country” in EU terms, she said – meaning trade would be carried out based on World Trade Organisation rules until a new deal was complete.
A recent trade deal with Canada took seven years to negotiate with the EU leaders. Malmstrom added that another one to two years are needed to have all the EU member states pass the agreeement.
In terms of the Bank of Cyprus though, Hourican said that there is no such complication in enlisting with the LSE.
He said that the holding company, which will own the BoC UK and the BoC, is planned to be listed on the LSE and designed to access investor capital and find stability for their stocks.
“Whether you discover that in New York, Singapore, London, or Amsterdam is a matter of choice for the management, and where they believe the best conditions for its investors are, which is a decision we will make at the time,” Hourican said.
Pound’s decline and the Bank of Cyprus
However, following the sharp decline in the worth of the pound following the Brexit, Hourican was clear that lending opportunities to UK borrowers would need to be closely looked into.
On the day after the referendum in the UK, the pound fell to its lowest level since 1985.
“Leave’s victory has delivered one of the biggest market shocks of all time. The pound has collapsed to its lowest level in over 30 years, suffering its biggest one-day fall in living memory. It’s fair to say we’ve never seen anything like it and the chances are markets will remain highly volatile over the coming hours and days,” said Joe Rundle, head of trading at ETX Capital, a UK based financial company, on the day following the Brexit.
Hourican mentioned that due to the decline in the sterling, they would need to make sure that a person whose earnings are in pounds is more of a risk.
“We will need to make sure that they will be able to pay us in euros if they borrow in euros. Our job is to support businesses in Cyprus, and therefore the Cypriot economy, which is currently doing very well today,” he said.
Furthermore, on the pound’s decline, Hourican has mentioned that Cyprus needs to be mindful of the effects on its own market.
“The Eurozone becomes a less attractive place for sterling tourists,” he said, adding that the island would become more expensive for them
To combat the Brexit’s effect on the markets in Cyprus, Hourican has suggested: “We have to plan for alternative tourists to come here, and we have to make sure that our exports from here to the UK are either more competitive, or we find new markets. So we have to get proactive in every sector, every company, in every line of business to try and find the advantage from the dislocation that is happening in Britain.”
Part two of Hourican’s interview on foreclosures, NPLs, and ELA will be on SigmaLive on Sunday.
Read more here.
RELATED TOPICS: Greece, Greek tourism news, Tourism in Greece, Greek islands, Hotels in Greece, Travel to Greece, Greek destinations , Greek travel market, Greek tourism statistics, Greek tourism report
