Bank of Cyprus Group

International Banking Services

May 2012

Strategic Business Crossroad A reliable Financial Centre

Bank of Cyprus

Bank of Cyprus Group

Table of Contents
Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group

I.

Why Cyprus?

BOC - International Banking Services

II.

The Banking System in Cyprus

III.

Cyprus Banking Regulatory Environment

IV.

Bank of Cyprus Group

V.

BOC International Banking Services

3

Why Cyprus?
Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group BOC - International Banking Services

Why Cyprus?

Reputable International Financial Centre - 1

Strategic location at the crossroads of Europe, Asia and Africa, with very convenient time zone

Member of the European Union (2004) and the European Monetary Union (2008)
Economic, legal and institutional stability An attractive tax system, with the lowest corporate tax rate in the EU at 10% and a wide network of Double Tax Treaties A well-established legal system based on English standards

Reputable International Financial Centre - 2

High quality of legal, accounting and other professional services Business friendly legislation and government policies A highly educated and low-cost employee work force A well developed banking system, operating under a prudent regulatory and supervisory regime Cyprus is on the white list of the OECD About 256 thousand companies registered as at 29 February 2012

Cyprus Economy Gradually regaining its positive momentum

Real GDP (% growth)
Cyprus
1,1 0,5

A services-oriented economy benefiting from its growing importance as an international business and financial centre The economy is going through a shallow recession and is expected to return to growth in 2013 Government Debt % GDP at around 72%; significantly lower than European comparative

1,0

-1,0

2010

2011

2012f

2013f

Government debt (% of GDP)

87,0

68,5 64,7

66,3

70,1

79,8

85,3

58,8

48,9

58,5

61,5

71,6

2006

2007

2008

2009

2010

2011

Cyprus

Euro Area

Source: Eurostat, European Economic Forecast 7

Prospect of Natural Gas

Energy potential with Gas findings in East Mediterranean

Aphrodite gas field is an offshore natural gas field located 34km west of Israels Leviathan gas field, one of the largest natural gas finds over the last decade
Aphrodite is one of 13 gas fields within Cyprus demarcated maritime Exclusive Economic Zone (EEZ) Initial evaluation work estimated gross resource range of 5 to 8 trillion cubic feet (Tcf) with a gross mean of 7 Tcf

Development alternatives construction of liquefaction plant or pipeline

Source: Noble energy presentation

Foreign Direct Investments out of Cyprus

FDI into
Russia
Ukraine Czech Republic India Romania

Year
2010
2011 2010 04 /2010 03 /2011 2010

Volume (mn)
$12.276
$9.915 691 913 121

% Total
29%
22,2% 13,5% 4,7% 4,5%

Rank
1st
1st 4th 6th 7th

Banking in Cyprus
Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group BOC - International Banking Services

The Banking System in Cyprus

10

Structure and Growth of Cyprus Financial System

Size and structure of the Cyprus financial system reflects Cyprus role as an international business centre This is reflected in the growing number of companies registered in Cyprus and the increasing size of the banking system
80 70 60 50 40 30
2005-11 2006-04 2006-09 2007-02 2007-07

Source: Cyprus Registrar of Companies, Central Bank

Total Banking System Deposits ( bn)

Mar-2012: 70,7 bn

2010-11

2011-09

2007-12

2008-05

2008-10

2009-03

2009-08

2010-01

2010-06

2011-04

11

2012-02

Cyprus Banking System Balanced Expansion

Cypriot banks follow a traditional conservative, plain-vanilla commercial banking model Low high-risk/volatile activities such as investment banking and proprietary trading Income from trading activities is low, suggesting a high level of recurring income from financial intermediation between savers and borrowers

Model based on long-term customer relationships

No excessive compensation with misaligned incentives schemes vis-a-vis the stability of the bank / long-term career bankers, with the same institution for many years, suggesting significant personal franchises in place, acting as risk-deterrent A balanced business expansion, whollyfunded by customer deposits and with limited reliance on wholesale funding, and a liquid balance sheet

12

Cyprus Banking Regulatory Environment

Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group BOC - International Banking Services

Cyprus Banking Regulatory Environment

13

Strong Banking Regulatory Environment

Central Bank of Cyprus (www.centralbank.gov.cy)
Independent banking supervision

Continuous and close monitoring of the liquidity and capital adequacy position of financial institutions
Law compatible with EU Acquis Communitaire Strict banking secrecy per Banking Law

14

Security & Trust

Strict legal confidentiality restriction protecting bank customer.
It is prohibited by law to disclose any information concerning the account of a specific customer of the bank , except in cases of a criminal offence

Banking Law 66(1) of 1997: 5.29 (i):

It is prohibited for any Director, the Chief Executive Officer, Manager, Officer, employee or bank representative and to any other person who has by any means access to the Banks archives to give, reveal or use for his own benefit any information concerning the account of a specific customer of the Bank during the course of his employment or his professional relationship with the bank, depending on the case, or after the termination thereof

15

Bank of Cyprus
Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group BOC - International Banking Services

Bank of Cyprus
Legacies of the past, Shaping the future

16

Group profile
Established in 1899, Bank of Cyprus Group (Group) is the leading banking and financial services group in Cyprus, with assets totaling 43 bn Market shares of over 41% and 36% in deposits and loans Market shares of over 40% in foreign currency deposits Regional bank with focus on Corporate, Retail, International Banking and Wealth and Asset Management Operations in countries with strong links with Cyprus: Russia: Uniastrum Bank, 194 branches Greece: 187 branches Ukraine: 42 branches Romania: 10 branches UK 4 branches since 1955 Channel Islands: 1 branch Representative Offices (Russia (3), Ukraine, S. Africa, Serbia)

Future Developments: Dubai presence and India Representative Office

17

Key Geographical Operations

United Kingdom
Number of Branches 4

Russia
Number of Branches 194

Russia
Channel Islands
Number of Branches 1

United Kingdom Ukraine Romania Greece Cyprus

Cyprus
Number of Branches 135

Ukraine
Number of Branches 42

Greece
Number of Branches 187

Romania
Number of Branches 10

Representative offices (6)

Russia Ukraine Serbia South Africa

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Solid Funding Structure: Strong Deposit Franchise and Limited Dependence on Wholesale Funding
Healthy liquidity; one of the best loans/deposits ratios in Europe at 92% Primarily deposit funded: 78% of assets funded by customer deposits Limited reliance on wholesale funding and minimal repayments: only 23 mn due in 2012 (first call date) and 25 mn due in 2013

Net loans % Customer deposits **

120% 84% 87% 120% 86% 129% 135% 137%
77%

Customer deposits % Total assets

77% 55% 55% 78%

80%

78%

89%

92%

50%

48%
30.09.11

49%
31.12.11

31.12.10

31.03.11

30.06.11

30.09.11

31.12.11

31.12.10

31.03.11

30.06.11

Bank of Cyprus

Peers*

Bank of Cyprus

Peers*

Net loans 27,4 bn (31 December 2011) Customer Deposits 29,7 bn (31 December 2011)

Customer Deposits 29,7 bn (31 December 2011) Total assets 37,8 bn (31 December 2011)

Data shown is based on publicly available data as reported by the companies in their Interim and Annual statements. * Weighted average of Peer group comprising National Bank of Greece, Alpha Bank, EFG Eurobank, Marfin Popular Bank and Piraeus Bank. ** Net Loans = Gross loans minus loan loss reserves

19

Increased Pre-provision Profitability and High Efficiency

Higher recurring income and contained cost growth lead to increased pre-provision profitability

FY11 Profit before provisions at 805* mn (+11% yoy)

FY11 Cost-to-income ratio at 47,8% compared to 50,0% in FY10 Taking into consideration the impairment of GGBs, losses after tax for 2011 amounted to 1.371 mn

* Profit before provision is shown before the impairment of the Greek Government Bonds

20

The Group remains focused on strengthening capital

Including GGBs impairment of 74% and taking into account the 592 mn increase in Core tier 1 capital from the Capital Strengthening Plan the pro-forma Tier 1 capital ratio is estimated at 8,1% and the pro-forma Core Tier 1 capital ratio is estimated at 6,0% Taking into account the full completion of the Capital Strengthening Plan with the additional placement of up to 237 mn the pro-forma Tier 1 capital ratio is estimated at 9,1% and the pro-forma Core Tier 1 capital ratio is estimated at 6,9%

* Adjusting for additional 594 mn of Core Tier 1 capital and 160 mn of Tier 1 capital ** Taking into account the full completion of the Capital Strengthening Plan

21

International Banking Services

Why Cyprus? The Banking System in Cyprus Cyprus Banking Regulatory Environment Bank of Cyprus Group BOC - International Banking Services

Bank of Cyprus
A leader in International Banking Services
22

International Banking Services Sector

International Banking Services (IBS)

International Business Units (IBUs)
8 IBUs Small focused Customer Service Teams Highly educated, multilingual and specialised Business Relationship Bankers

6 Representative Offices
23

International Banking Services Sector

Bank of Cyprus International Banking Services has been assessed and found in conformity with the requirements of: ISO 9001-2008 (Mar 2009) & EFQM Excellence model (Oct 2011)
Committed to excellence level

24

International Business Units

International Business Units (IBUs)

25

International Business Units

Provide personal and specialized, high quality service to: Companies registered in Cyprus or other jurisdictions Non-resident individuals Qualified, highly trained and experienced staff (English, Russian, French, German, Chinese and other foreign language speakers) All clients serviced by a personal Customer Relationship Banker Extended working hours 07:30 18:00 Confidentiality and trust State-of-the-art technology Paperless Banking, Efficiency, Accuracy High Service Quality Targets annually reviewed based on: External customer surveys Internal customer surveys Focus Groups
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Representative Offices
Moscow St. Petersburg Ekaterinburg Kiev Ukraine Johannesburg South Africa Belgrade Serbia India

Russia

27

Products and Services offered by the IBUs

Traditional Banking Services
Bank accounts International Payments Commercial loans Housing loans Facilities to trade Debit / credit cards Internet banking International factoring Forex / Hedging Insurance (life & general)

Specialised Products
Trust Accounts Escrow Accounts Brokerage Private Banking Products Treasury related products Custody services Institutional Wealth Management Discretionary Asset Management

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Account Management

Access to accounts: Internet Banking Mobile Banking Cards ATMs Branch Network Secure payment instructions: by internet by fax

29

1bank

Telephone

Mobile Banking Internet Transfer between accounts International transfers Batch payments Digipass Device for secure access Online account details and balances Past transactions Online view of status of transactions /payments Statement ordering Interest certificates
30

Digipass Device

Enhances level of security Generates one-time dynamic codes Multiple signatures used for: Access to Internet Banking Third party transfers Faxed instructions coding

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International Banking Services

Thank you

32

Key information and contact details

Listing: ATHEX BOC CSE BOCY ISIN CY0000100111 Participation in indices: CSE General Index , FTSE/CySE 20 FTSE/ATHEX Top 20

FTSE Med 100, MSCI Greece Index,

FTSE New EU DJ STOXX EU Enlarged TMI

Contacts

Louis Pochanis Senior Manager International Banking Services

Tel: +357 22 121730 Email: ibs@cy.bankofcyprus.com

www.bankofcyprus.com
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