Bank Base Rates Definition

Formalisation of the calculation methodology  of the Bank of Cyprus (“the Bank”) Base rates

According to the calculation methodology of the Bank’s Base rates, the Bank’s Base rates are defined as follows:

For credit facilities entered into on or after the 1st January 2008:

  • The Bank’s Base rates are linked to the average interest rate paid on euro-denominated household deposits in the Republic of Cyprus (outstanding amounts) by euro area residents with agreed maturities of up to 2 years as published on the website of the Central Bank of Cyprus on a monthly basis[1] (‘the CBC benchmark rate’).
  • The Base rates are revised on a quarterly basis on 15 March, 15 June, 15 September and 15 December of each year (‘Adjustment Dates’)[2].The latest available CBC benchmark rate is used on each Adjustment Date.

 A. Definition of the Bank’s Base rates

For credit facilities entered into on or after the 1 January 2008, the Bank’s Base rates are defined as follows:

 Bank Base rate (BBR):                                 CBC benchmark rate + 2.24%

Bank Business Base rate (BBBR):               CBC benchmark rate + 1.24%

Bank Housing Base rate (BHBR):                CBC benchmark rate + 0.49%

 The latest Bank’s Base rates are displayed on the Bank’s website, under the Services & Rates section[3].

 Example

On 15 June 2017, given the latest available CBC benchmark rate which stood at 1.5911% for the month of April 2017, the Bank’s Base rates have been reset as following:

 

Bank Base rate (BBR):                                                  3.8311%

Bank Business Base rate (BBBR):                               2.8311%

Bank Housing Base rate (BHBR):                                2.0811%

 

B. Conditions and parameters which may contribute to changes in the methodology of calculating the Bank’s Base rates

The Bank may at a future date:

  • Include the cost of wholesale funding in the calculation methodology of any of the Bank’s Base rates at a later stage, if applicable.
  • Amend the methodology so as to link each of the Bank’s Base rates to another benchmark rate. In case the benchmark rate changes, the respective spread over that benchmark rate may change accordingly.
  • Amend the methodology of calculating any of the Bank’s Base rates if deemed appropriate due to potential changes in the regulatory framework, changes in market conditions or potential unavailability of the index used for the benchmark rate.

 

In the case of any change in the methodology of calculating any of the Bank’s Base rates, all customers will be notified. 

 


[1] Published under Monetary and Financial Statistics (‘MFI interest rates on euro-denominated deposits (outstanding amounts) by euro area residents’) at www.centralbank.cy.

[2] Or the next working day if not a business day.

[3] Link: http://www.bankofcyprus.com.cy/en-GB/Cyprus/Services--Rates/Banks-Base-Rates/

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