Cyprus Central Bank Governor Christodoulos Patsalides told MPs there is sufficient competition in banking product pricing, seeking to ease concerns about potential oligopolies following consolidation in the sector.
Patsalides addressed parliamentary concerns about whether the two large systemic banks, Bank of Cyprus and Eurobank Limited, and subsequently Alpha Bank Cyprus’s absorption of Astrobank’s good assets, could operate against customer interests through oligopoly formation.
Speaking at the House Finance Committee yesterday during the start of discussions on the 2026 state budget, the governor said it is important for banks to have sufficient size to compete with foreign banks, adding that having many small banks does not mean they can compete with large ones.
Bank charges align with eurozone
MPs’ questions predictably focused on the cost of banking services. The governor said the central bank cannot intervene in banks’ pricing activity.
He noted that borrowing costs align with the eurozone median, meaning overcharging is not an issue and competition functions in the market.
Regarding banks’ behaviour towards customers, especially those facing difficulties with obligations, he said it is important for banks to show sensitivity, as they could risk their reputation.
He rejected the argument that a large volume of properties has been sold relating to primary residences up to €350,000, stating that the disposal rate in this category is 2% of the total.
On the branch network in mountainous areas and the number of ATMs available, he told MPs that Cyprus has 22 branches per 100,000 residents compared to 19 in the eurozone and even fewer in countries of similar size.
He added that ATMs could be increased in these areas but this is left to the banks.
Cyber attacks rising but contained
On banking system security, Patsalides said cyber attacks in Cyprus have increased more compared to European Union banks, whilst assuring that all have been successfully dealt with by the banks so far.
He noted, however, that it remains an issue of concern given the banking sector’s ongoing transition to digital banking, and repeated the need for constant vigilance and strengthened protection.
€208 million stability package
Regarding banks’ fortification in terms of financial stability, the governor explained to MPs that targeted measures worth €208 million have been taken.
Specifically, the countercyclical buffer has been increased to 1.5% from 1.0%, an increase of €71 million. This decision commits part of the banking sector’s profits, enhancing its ability to absorb losses and its capacity to adequately finance the real economy during crisis periods.
The target level of available financial resources of the Deposit Guarantee Fund has been increased from the minimum 0.8% of covered deposits set by legislation to 1.25%.
The increase translates to additional contributions totalling approximately €137 million from banks in 10 biannual instalments. Consequently, the DGF’s available financial resources are expected to reach approximately €360 million.
On cryptocurrencies, the governor said the central bank together with European institutions has issued an announcement on the issue, which is also a concern at the ECB, whilst expressing agreement with the need for an awareness campaign.
On the digital euro, he said the ECB has an action plan, but no decision has yet been taken on its introduction, adding that the issue is included in the agenda of Cyprus’s EU Council Presidency.
