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Incorporated: 1899 as Nicosia Savings Bank
NAIC: 522110 Commercial Banking; 524113 Direct Life Insurance Carriers
SIC: 6021 National Commercial Banks; 6022 State Commercial Banks; 6029 Commercial Banks Nec; 6081 Foreign Banks - Branches & Agencies; 6311 Life Insurance

Bank of Cyprus Group represents that island's oldest bank and one of its largest publicly listed companies. The Nicosia-based organization operates 144 branches in Greek Cyprus, and claims a market share of more than 30 percent of all banking system deposits. Bank of Cyprus has also developed a complete portfolio of banking products and services for both the private and commercial sectors, including investment banking and assets management; life insurance and other insurance; automobile financing and leasing; and brokerage services. The company's Cyprus subsidiaries include General Insurance of Cyprus, Eurolife, the Cyprus Investment and Securities Corporation (CISCO), and the Kermia property development group. Bank of Cyprus has also been present on an international level since the early 1990s, having expanded into Greece. By the middle of the first decade of the 2000s, the bank's branch network in that country topped 120, for a total market share of nearly 4 percent. Bank of Cyprus subsidiary Kyprou Leasing is a major player in the Greek leasing market, claiming an 18 percent market share. Other international Bank of Cyprus operations include six branches in the United Kingdom; ten branches in Australia; a branch in Bucharest, Romania; and a subsidiary on the Channel Islands. By the end of 2006, the company's branch network totaled more than 280. The company also operates representative offices in Canada, the United States, South Africa, and Russia. Bank of Cyprus is listed on the Cyprus and Athens stock exchanges. In 2006, the bank's total assets topped EUR 25 billion ($34 billion).

Cypriot Banking Pioneer in 1899

Bank of Cyprus stemmed from the efforts of a group of Cypriot investors to create the island's first banking institution in 1899. At the time, Cyprus remained under British administration, and the creation of the Nicosia Savings Bank marked the first recognition of the island's growing importance as a British naval outpost. Leading the investment group was Ioannis Economides. The Nicosia bank applied to become a public company in 1909. Approval came only in 1912, just ahead of the United Kingdom's assertion of colonial control of the island in 1913.

The Nicosia bank remained focused on the local market through the 1920s. In 1930, the bank reincorporated as a limited company and at that time extended its operations beyond the savings market to include a full range of banking services and products. The transformation into the modern-day Cypriot banking giant began during the following decade, when the Nicosia bank began expanding across the island. Mergers formed a major part of this expansion, starting with those of banks in Famagusta and Larnaca in 1943. Over the next several years, the bank continued its spread to other communities on the island, taking over a number of smaller savings banks and other credit institutions. By the late 1940s, the bank had adopted a new name, Bank of Cyprus, to underscore its intention to serve the entire island.

Bank of Cyprus also developed activities in other financial areas. The bank began offering mortgage products in 1944, creating a dedicated subsidiary, Mortgage Bank of Cyprus. Into the early 1950s, Bank of Cyprus began developing insurance operations as well, starting with the creation of General Insurance Company of Cyprus in 1951. In 1955, the bank opened a representative office in London in order to serve Cypriots living overseas. The run-up to independence in 1960 saw the bank adopt a new logo and slogan: "Common to all Cypriots."

The initial years of Cypriot independence were marked by strong economic growth, as the country developed its infrastructure and industries. Cyprus became an important tourist destination, sparking a surge in property development and capital investments. Bank of Cyprus responded to the growing market, developing its own property development and investments arm. By the early 1970s, the bank had become the leading bank on the island. In 1973, Bank of Cyprus restructured its operations, creating the holding company Bank of Cyprus (Holdings) Ltd. for its diversified interests.

New Business

The right-wing coup backed by the Greek military in 1973, and the subsequent invasion of northern Cyprus by the Turkish army, put a temporary end to Bank of Cyprus's growth. The division of Cyprus along ethnic lines eliminated a large part of the bank's branch network, forcing the bank to refocus its business on the Greek-dominated southern half of the island. International support and recognition of the Republic of Cyprus, however, enabled Greek Cyprus to rebuild its economy quickly during the 1980s. In particular, Cyprus grew into a prominent offshore financial center, largely focused on the European market.

Bank of Cyprus took advantage of the country's expanding economy to reassert its position as the island's leading financial institution. The bank entered the investment banking market with the founding of subsidiary Cyprus Investment and Securities Corporation (CISCO) in 1982. That company, which later took its own listing on the Cyprus stock exchange, developed a range of services and products, including securities brokering, fund management services, corporate finance, and mutual funds management.

Also at the beginning of the 1980s, the company established a new property arm, called Kermia, in order to develop and operate the Kermia Beach Bungalow Hotel in Ayia Napa. At the same time, Bank of Cyprus continued to expand its presence in the banking market. The group took a new step forward in 1982 when it acquired the Cypriot assets of Standard Chartered Bank.

Diversifying

By the early 1990s, Bank of Cyprus had begun to near the limits of the relatively tiny Cyprus market. At the same time, the bank had begun to develop services for the large Cypriot expatriate population, particularly present in Greece and the United Kingdom. In 1991, Bank of Cyprus opened its first foreign branch in Athens. Through that decade, the company added more branches, creating a dedicated Greek banking subsidiary. By 1999, the group's Greek operations encompassed 17 branches.

At the same time Bank of Cyprus continued to seek other areas for diversification. The company added new specialized life insurance products through the creation of Eurolife, in a joint venture with Manufacturers Life Insurance Company in 1989. Bank of Cyprus later took full control of Eurolife in 1994.

The group also added factoring services during the 1990s, founding Bank of Cyprus (Factors) in 1992. The following year, the bank joined forces with Alpha Credit Bank in Greece to form the ABC Factors joint venture, the first factoring specialist in the Greek market. That country provided a new expansion opportunity for the company, when it founded Kyprou Leasing there, serving the professional equipment leasing market. Kyprou Leasing quickly grew into a leader in that sector, claiming the number two position and an 18 percent market share by the middle of the next decade. Meanwhile, in 1995, Bank of Cyprus became the first in the country to develop international mutual fund products, through a new subsidiary named BOC Global Equity Fund.

From the mid-1990s, Bank of Cyprus adopted a policy of expanding its international reach as well. The company opened an offshore international banking subsidiary in Guernsey, on the Channel Islands, in 1996. By then, the company had extended its network of representative offices to Australia in the early 1990s, then South Africa, starting from 1995, and to Canada, with the opening of an office in Toronto in 1996. The bank also added offices in New York, in 1998, then in Moscow. The following year, the company added a representative office in Bucharest, Romania, as well.

In London, meanwhile, the group opened its first full-scale branch in the United Kingdom. In 1998 the group listed its stock on the London Stock Exchange, making its shares more available to the international investment community. Bank of Cyprus then expanded its presence in Greece with the creation of Kyprou AEDAK, a mutual fund management company.

International Targets for the New Century

Bank of Cyprus began preparing for a new era of opportunity and competition as Cyprus prepared to enter the Euro zone, with the adoption of the young currency scheduled for the beginning of 2008. The opening of the Cypriot market to intensified international competition was accompanied by a consolidation of the domestic banking sector, as a number of smaller banks grouped together.

With its own growth prospects relatively limited at home, Bank of Cyprus targeted further expansion of its international operations. Greece received the group's initial focus. Starting from 1999, the group launched a rapid extension of its branch network in that market. By the middle of the decade, the group had transformed itself into a major player in the Greek banking sector, with a network of more than 120 branches and a market share approaching 4 percent. As part of its expansion effort, and because of the increasing volatility of the Cyprus exchange at the time, the company listed its stock on the Athens Stock Exchange in 2000.

The company also extended other areas of its operations to Greece at the beginning of the 2000s. These included its Eurolife business, which opened its first branch in Greece in 2001. For the Greek market, the company adopted the name Kyprou Zois for its life insurance business. At the same time, the company extended its general insurance operations to Greece as well, forming Kyprou Asfalistiki. The company also entered the brokerage market in Greece, buying a company there in 2001. That operation was then renamed Kyprou Hrimatisstiriaki (Kyprou Securities).

At the same time, Bank of Cyprus began converting its network of representative offices into full-scale branches during the first half of the 2000s. In 2000 the company received authorization to begin full banking activities in Australia, starting with the conversion of its offices in Melbourne, Sydney, and Adelaide. Over the next several years, Bank of Cyprus Australia opened seven more branches in these three markets.

Through the middle of the decade, Bank of Cyprus continued to deploy its international expansion. In 2006, the company opened its first branch in Romania, in Bucharest. In that year, the bank also received authorization to establish branches in Russia, starting from as early as 2007. In both countries, the bank's initial plans were to serve the local Greek and Cypriot communities. In Greece, in the meantime, the bank launched a takeover for smaller rival Emporiki bank, then in the process of being acquired by Crédit Agricole of France. Despite Bank of Cyprus's higher bid, the Greek government, holder of 40 percent of Emporiki, instead opted for the cash bid of the French banking giant. In the meantime, Cyprus-based rival Laiki Bank successfully completed a merger with Greece's Marfin Financial Group and its subsidiary Egnatia Bank, creating Marfin Popular Bank. That bank, which registered in Cyprus, then displaced Bank of Cyprus as the island's leading banking institution.

Nonetheless, as 2007 neared its end, Bank of Cyprus's prospects remained buoyant. The bank had successfully extended its branch network to more than 280, only half of which were located in Cyprus. The bank had also generated total assets of more than EUR 25 billion ($34 billion), and a 30 percent share of the Cypriot market. With the new opportunities and perspectives offered by Cyprus's entry into the Euro zone, Bank of Cyprus looked forward to its future development as Cyprus's financial flagship.

Principal Subsidiaries

Bank of Cyprus (Channel Islands) Ltd.; Bank of Cyprus Australia Pty Ltd. Commercial Bank; Bank of Cyprus Mutual Funds Ltd.; Bank of Cyprus Public Company Ltd.; Bank of Cyprus Public Company Ltd. (Greece); Bank of Cyprus Romania; Bank of Cyprus United Kingdom; BOC International Fund Management Ltd. (Ireland); BOC Ventures Ltd.; EuroLife Ltd.; General Insurance of Cyprus Ltd.; JCC Payment Systems Ltd.; Kermia Hotels Ltd.; Kermia Ltd.; Kermia Properties & Investments Ltd.; Kyprou Insurance Services Ltd. (Greece); Kyprou Leasing SA (Greece); Kyprou Securities SA (Greece); Mortgage Bank of Cyprus Ltd.; Tefkros Investments Ltd.; The Cyprus Investment and Securities Corporation Ltd.

Principal Competitors

Laiki Group; Hellenic Bank Public Company Ltd.; Alpha Bank Ltd.; National Bank of Greece (Cyprus) Ltd.; Emporiki Bank; Universal Bank Public Ltd.; Cyprus Development Bank Public Company Ltd.

Further Reading

"Bank of Cyprus/Alltel," Banker, November 2001, p. 95.

"Bank of Cyprus Offer Upsets CA's Emporiki Bid," Euroweek, June 23, 2006, p. 14.

"Bank of Cyprus Receives Preliminary Approval to Open Subsidiary," Russia & CIS Business and Financial Newsletter, April 18, 2006.

"Bank of Cyprus Set for Domestic Assault," Australian Banking & Finance, December 15, 2000, p. 3.

"Bank of Cyprus Signs Up to Amex Network," Cards International, October 23, 2002, p. 6.

"Bank of Cyprus to Open Local Branch," Bucharest Daily News, September 21, 2006.

"Bidding War Breaks Out over Ownership of Emporiki Bank," European Banker, July 2006, p. 1.

Hope, Kerin, "Bank of Cyprus Looks to Greece," Financial Times, October 19, 2000, p. 33.

------, "In Search of a Regional Role," Financial Times, December 19, 2006, p. 2.

— M. L. Cohen