How important is compliance in a country like Cyprus that had to be bailed out?
MS: When you go through such a process having the second largest bank shutting down and the largest bank, Bank of Cyprus, having its depositors receiving a nearly 50% haircut of their deposits, then effective conformity with best practices and being ethical, becomes your number 1 priority.
Compliance is and should be present in all organizations where there is a risk of default and the compliance function acts as a deterrent to this respect. Our culture in ensuring conformity to best international standards and the recognition we received to this respect, like our recent successful listing in the very demanding London Stock Exchange, is a hallmark of our new sustainable culture. In Bank of Cyprus today, we have applied in practice the principle of Adam Smith and being ethical is not our vision or a mere corporate objective, but our own self- interest.
All relevant stakeholders in Cyprus including the banks, have pre-emptively taken the relevant measures to ensure no negative impact from a no-deal Brexit and as such our British expats clients do not have to worry to this respect"
Having the leader of the Cyprus banking industry taking such a revolutionary initiative, has meant that all financial institutions (not only banks) of the island had to align their approach in a similar way too. We are proud to say that Bank of Cyprus has set the new compliance path of the country for others to follow.
How do investors take it when you explain to them that that you are terminating accounts worth millions in the name of the best international practices?
MS: Up to now and following the crisis in 2013, Bank of Cyprus has terminated thousands of client accounts forfeiting billions of euros of turnover and millions of net annual profitability.
We are glad to note that all of our external stakeholders (customers, shareholders, investors, etc.) have seen this development positively as an investment, rather than a loss, in building a robust institution that is adequately resilient to future external threats.
How important is it for a bank to be transparent?
MS: It all depends on what outlook that bank wishes to have. If it wishes to have an ethical outlook then transparency should be infused in all areas of that bank and gradually to sculpt its culture.
If it wishes to have solely the outlook of a profitable and financially robust institution then obviously transparency is not that important.
In Cyprus, financial institutions and primarily Bank of Cyprus, have made their choice and chose the path of transparency because simply they made a conscious choice that their credibility towards clients and other stakeholders and the level of trust with them, should not be compromised under any circumstance.