Bank Of Cyprus fixed rate bonds?

gunnaknow

Does anyone have one of their fixed rate bonds? Or applied for one? I was thinking about applying for their 2 year fixed rate bond, at 6.55% AER. Does anyone know of any reason not to invest in Bank Of Cyprus? They are under the passport scheme of protection. The only thing that I've read so far which concerns me slightly is the paragraph in bold writing, in the page below. One would not want to be forgetful regarding this.

http://www.bankofcyprus.co.uk/Files/BOC%20UK%20Bond%20General%20Conditions%20(October%202008%20Version).pdf

Baldur

If you give written instructions, at the same time as applying for the bond, that you wish the funds accumulated to be paid into another of your accounts (e.g. your current account) on maturity, then you wouldn't need to remember to do so just before maturity.

gunnaknow

Good idea Baldur. I'd make sure by writing or calling near the end of the term though. Better to be safe than sorry. Something that has raised a concern is that their long term issuer default rating was downgraded on Nov 3rd.

http://www.fitchratings.com/corporate/ratings/issuer_content.cfm?issr_id=80362042&grp_typ_id=4&mm_id=&sector_flag=3&marketsector=1&detail=

I don't know how far it's rating has dropped but it's rating is now BBB+, which is quite low, although not quite at the lowest investment grade category. With the + designation it puts it somewhere between the two following descriptions.

A
High credit quality. 'A' ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings.

BBB
Good credit quality. 'BBB' ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category.

http://www.fitchratings.com/corporate/fitchResources.cfm?detail=1&rd_file=ltr

Reaper

gunnaknow wrote: »

They are under the passport scheme of protection.

Just to clarify - they are under the passport scheme with the FSCS top up option.
That means the first €20,000 (about £16,300) is the responsibility of Cyrus. The difference of that and £50,000 is covered by the FSCS.

soulsaver

gunnaknow wrote: »

Does anyone have one of their fixed rate bonds? Or applied for one? I was thinking about applying for their 2 year fixed rate bond, at 6.55% AER. Does anyone know of any reason not to invest in Bank Of Cyprus? They are under the passport scheme of protection. The only thing that I've read so far which concerns me slightly is the paragraph in bold writing, in the page below. One would not want to be forgetful regarding this.

http://www.bankofcyprus.co.uk/Files/BOC%20UK%20Bond%20General%20Conditions%20(October%202008%20Version).pdf

I have a 7.2% with them, but wasn;'t aware of the passport tosh at the time. Back then before everybody & his dog fell over I'd have gone ahead anyway. Not so sure now. Unless you're filled up elsewhere check saga ftbs if you're 50 yrs old, and ICICI is about same risk, about same 2yr rates, is online and full uk FSCS (no pass port)...

Baldur

Reaper wrote: »

Just to clarify - they are under the passport scheme with the FSCS top up option.
That means the first €20,000 (about £16,300) is the responsibility of Cyrus. The difference of that and £50,000 is covered by the FSCS.

It's actually 90% of the deposit, up to a maximum compensation limit of €20,000...http://www.bankofcyprus.co.uk/newsshow.asp?id=797

As a Cyprus registered bank, this protection is partly provided by the Central Bank of Cyprus Deposit Protection Scheme, which complies with EU standards. This Scheme covers 90% of any deposit, with a maximum compensation limit of €20,000. Protection for deposits in excess of this amount is provided via the UK's Financial Services Compensation Scheme. This means that if our bank failed, our UK customers could claim from the Central Bank of Cyprus Deposit Protection Scheme 90% of their deposit up to a maximum of €20,000**. They could also claim for the remainder of their deposit up to £50,000 from the FSCS. This is because the Central Bank of Cyprus Deposit Protection Scheme is only responsible for paying the first part of the compensation up to €20,000 and the FSCS is only responsible for paying the second part of compensation - the difference between £50,000 and what the Cyprus scheme would pay.

gozomark

Given Cyprus is in the EU, why isn't it € 50,000 protection now ? I thought that was the minimum permissible protection across the EU - maybe their website asn't been updated ??

Baldur

gozomark wrote: »

Given Cyprus is in the EU, why isn't it € 50,000 protection now ? I thought that was the minimum permissible protection across the EU - maybe their website asn't been updated ??

If so, the Central Bank website hasn't been updated either - http://www.centralbank.gov.cy/nqcontent.cfm?a_id=2794&lang=en

gozomark

Baldur wrote: »

If so, the Central Bank website hasn't been updated either - http://www.centralbank.gov.cy/nqcontent.cfm?a_id=2794&lang=en

possibly as a new entrant to EU, Cyprus has a drerogation allowing them not to apply the new limit - however Malta increased its guarantee to € 50,000...

alternatively its happening, but the legislation hasn't been passed in Cyprus to enable it ??

Baldur

gozomark wrote: »

possibly as a new entrant to EU, Cyprus has a drerogation allowing them not to apply the new limit - however Malta increased its guarantee to € 50,000...

alternatively its happening, but the legislation hasn't been passed in Cyprus to enable it ??

Possibly, the limit has also not yet been raised in Bulgaria, an even more recent EU member state, where it's 40,000 Leva (approx €20,000)