Fitch Ratings has today affirmed Alpha Bank's ratings at Long-term Issuer Default (IDR) 'A-' (A minus) with a Stable Outlook, Short-term IDR 'F2', Individual 'B/C' and Support '2'. The Support Rating Floor is affirmed at 'BBB'. The Long- and Short-term IDR and Individual rating reflect Alpha Bank's strengthened position in the Greek banking system, good, resilient operating profitability and cost efficiency, satisfactory capital and improved asset quality. They also consider potential pressure on asset quality from rapid lending growth in the relatively untested Greek retail market and risks associated with rapid expansion in south-east Europe (SEE).

The Stable Outlook reflects Fitch's expectations that Alpha Bank's sound fundamentals will enable it to continue to perform well and expand its business despite the current difficult global capital market conditions. The preservation of Alpha's sound profitability, asset quality and good management of its rapid expansion in SEE could influence its ratings positively. Downside rating risk could be triggered by asset quality problems arising from rapid loan growth in Greece and SEE, notably Romania, or a marked deterioration in its financial ratios or capital due to the bank's aggressive branch expansion plan.

Alpha Bank's 2007-2010 business plan aims to strengthen its retail banking business in Greece and expand its presence in SEE to take advantage of an under-banked region with still high growth potential. It plans to have 1,010 branches in SEE by 2010 and increase the region's contribution to group profits to 25% (16.4% at end-H108) which, in Fitch's view, is ambitious.

Alpha Bank continues to benefit from resilient GDP growth and credit demand in Greece and the parts of the SEE region where the bank operates. In H108, Alpha Bank was able to maintain its good operating profitability, with an operating average return on equity of 30.5%, thanks to increased contribution to profitability of its banking operations in SEE, a strong and stable cost/income ratio in Greece, and improving cost efficiency in SEE. At end-H108, Alpha Bank's credit risk was satisfactory, with a gross impaired loans/total gross loans ratio of 3.59%, almost in line with top domestic peers.

The considerable improvement of its asset quality since 2006 relates to the bank's strong loan growth, which Fitch sees as a major risk - and increased efforts on collection and significant write-offs. The agency views positively the bank's efforts to centralise and improve credit risk management. Alpha Bank's market risk appetite is moderate, with limited interest rate risk. Liquidity is sound, supported by growing customer deposits, relatively diversified funding sources and improved liquidity risk management. Capital is satisfactory and maintaining it at the current level is a prerequisite, given strong and rapid lending growth in Greece and SEE and the risk of a downturn in the credit cycle.

Source: Interactive Investor

The European Central Bank (ECB) has left interest rates unchanged at 4%.

High oil prices and an increase in the cost of food have buoyed inflation in the eurozone at a time when economic growth is seen slowing.

The ECB has said inflation remains a problem, noting that December's annual rate of 3.1% was above its 2% target.

It is not alone in having to balance growth and inflation problems. The Bank of England also left its main interest rate unchanged on Thursday.

The Bank left its main UK borrowing rate at 5.5%, despite calls from retailers and many business leaders for a cut to boost economic growth.

One analyst predicted that it would be a long wait for a change in eurozone rates.

"After the ECB raised interest rates to a roughly neutral 4.0% in June, the strong euro and the lingering turmoil in money and credit markets will likely keep the central bank on hold until September 2008," said Holger Schmieding at Bank of America.

There were strong comments from ECB President Jean-Claude Trichet at a news conference to explain the rate decision.

He warned eurozone employers not to allow wages to spiral.

"We call upon them to behave properly," he said.

"We will not tolerate that you will engage in a spiralling (of inflation)."

Mr Trichet appeared to be warning that employers need to control wages or there would be an immediate rise in interest rates.

"I think that the ECB feels that inflation expectations have not picked up sufficiently to warrant a rate hike today and they're just sending out the message to make sure the expectations don't pick up," said Mark Miller at Bank of Scotland Treasury Services.

Source: BBC

History was made this week in Cyprus when the central bank met to set interest rates.

Not because it was for the first time, but because it was for the last. For the record, governor Athanasios Orphanides said the three rates set, the key refinancing rate, the Lombard rate and the overnight deposit facility, would all stay as they were, the Cyprus Mail reports.

Mr Orphanides said any changes would have "no marked difference" and the monetary policy committee backed this view. Thus the curtain starts to fall on the Cypriot Pound.

New Year's Day will be a momentous one. It often is somewhere in the European Union, with 2007 seeing Bulgaria and Romania expanding the club to 27 members. 2008 will see the number of eurozone members in the union climb to 15, with Cyprus joining fellow Mediterranean island nation Malta.

The Cypriot central bank is on record as stating that this event is as momentous as it gets, saying: "Cyprus is preparing for one of the most important changes in its history." This is undoubtedly true in economic terms at least, for the central bank statement went on to add that this brought the country into an economic zone which is home to 310 million people.

While Mr Orphanides and his colleagues seek new employment, property investors should be very busy in the country, according to worldwide real estate firm Property Abroad. Director Les Calvert said that the country was already hugely popular, stating: "Cyprus has been increasing in popularity over the last year and more people are now making specific enquiries for property in Cyprus."

Part of this, he noted, was because of a financial situation which was in fact about to change: "There are still a few properties around that are free of VAT out there so people are jumping on and trying to snap up properties where they can."

Yet Mr Calvert was convinced that the country's property scene would benefit from the euro, predicting: "When the euro comes in it will make the property market a lot more open and I expect the market to rise quite healthily."

He advised that investors would be able to make good use of "excellent" foreign currency mortgages provided by Swiss and other banks, though these were "more advantageous" for those living or at least gaining income from overseas.

Cyprus will await the new year with interest, preparing for an economic and political future tied into the heart of Europe. For investors looking to sink their capital into property in the eurozone, a new opportunity awaits.

Source: The Move Channel

Consumer prices in Cyprus rose 2.4 percent on the year in July, up from a 1.9 percent annual rate in June, the national statistics service said Thursday.

The largest year-on-year increase came from sharply higher prices for health care costs, which were up 6.41 percent. Prices in the heavily weighted ...   more »