Announcement

Nicosia, 15 July 2011

Founded in 1899, the Bank of Cyprus Group is the leading Cypriot banking and financial services group.  In addition to retail and commercial banking, the Group's activities include finance, factoring, investment banking, brokerage, fund management, life and general insurance.  The Group currently operates through a total of 608 branches, of which 220 operate in Russia, 185 in Greece, 143 in Cyprus, 31 in Ukraine, 12 in Romania, 12 in Australia, 4 in the United Kingdom and 1 in the Channel Islands. Bank of Cyprus also has 9 representative offices in Russia, Romania, Ukraine, Canada, Serbia and South Africa. The Bank of Cyprus Group employs 12.892 staff worldwide.

At 31 March 2011, the Group's Total Assets amounted to €41,72 bn and the Shareholders' Funds were €2,93 bn.  The Bank of Cyprus shares are listed on the Cyprus and Athens Stock Exchanges. Additional information can be found on the Group's website www.bankofcyprus.com.

Bank of Cyprus Public Company Ltd (Bank of Cyprus) was subject to the 2011 EU-wide stress test conducted by the European Banking Authority (EBA), in cooperation with the Central Bank of Cyprus (CBC), the European Central Bank (ECB), the European Commission (EC) and the European Systemic Risk Board (ESRB).

Bank of Cyprus notes the announcements made today by the EBA, the CBC and the Ministry of Finance on the EU-wide stress test and fully acknowledges the outcomes of this exercise.

The EU-wide stress test, carried out across 91 banks covering over 65% of the EU banking system total assets, seeks to assess the resilience of European banks to severe shocks and their specific solvency to hypothetical stress events under certain restrictive conditions.

The assumptions and methodology were established to assess banks' capital adequacy against a 5% Core Tier 1 capital benchmark and are intended to restore confidence in the resilience of the banks tested. The adverse stress test scenario was set by the ECB and covers a two-year time horizon (2011-2012). The stress test has been carried out using a static balance sheet assumption as at December 2010. The stress test does not take into account future business strategies and management actions and is not a forecast of Bank of Cyprus profits.

As a result of the assumed shock, the estimated consolidated Core Tier 1 capital ratio of Bank of Cyprus would change to 6.2% under the adverse scenario in 2012 compared to 8.1% as of end of 2010. After taking into account mitigating measures taken by the Bank, the supervisory recognised capital ratio of the Bank rises to 9.5%. These mitigating measures relate to the issue in May 2011 of €887 million Convertible Enhanced Capital Securities which are fully loss-absorbing on a going-concern basis.

The EU-wide stress test requires that the results and weaknesses identified, which will be disclosed to the market, are acted on to improve the resilience of the financial system. Following completion of the EU-wide stress test, the results determine that Bank of Cyprus meets the capital benchmark set out for the purpose of the stress test. The Bank will continue to ensure that appropriate capital levels are maintained.

The results of the stress tests reaffirm the solid capital position of Bank of Cyprus, even under the most extreme, severe and theoretical stress conditions.  They also reflect the pro-activeness of the Group's policy in managing the crisis effectively and taking the necessary measures in maintaining adequate capital ratios, strong liquidity and profitability in adverse economic conditions.

Notes to editors

The detailed results of the stress test under the baseline and adverse scenarios as well as information on Bank of Cyprus Public Company Ltd credit exposures and exposures to central and local governments are provided in the accompanying disclosure tables based on the common format provided by the EBA.

The stress test was carried out based on the EBA common methodology and key common assumptions (e.g. constant balance sheet, uniform treatment of securitisation exposures) as published in the EBA Methodological note. Therefore, the information relative to the baseline scenarios is provided only for comparison purposes. Neither the baseline scenario nor the adverse scenario should in any way be construed as a bank's forecast or directly compared to bank's other published information.

See more details on the scenarios, assumptions and methodology on the EBA website: http://www.eba.europa.eu/EU-wide-stress-testing/2011.aspx