Half-year Report -Part 3

Bank of Cyprus Holdings PLC

09 August 2023

 

17.         Fair value measurement

The following table presents the carrying value and fair value of the Group's financial assets and liabilities.

	30 June 2023		31 December 2022 (restated)
	Carrying value	Fair value	Carrying value	Fair value
Financial assets	€000	€000	€000	€000
Cash and balances with central banks	9,127,429	9,127,429	9,567,258	9,567,258
Loans and advances to banks	431,812	419,210	204,811	193,349
Investments at FVPL	138,661	138,661	190,209	190,209
Investments at FVOCI	487,806	487,806	467,375	467,375
Investments at amortised cost	2,703,240	2,619,189	2,046,119	1,953,336
Derivative financial assets	49,302	49,302	48,153	48,153
Loans and advances to customers	10,007,819	10,038,152	9,953,252	10,011,741
Life insurance business assets attributable to policyholders	576,272	576,272	531,061	531,061
Other financial assets	423,334	462,915	402,462	456,402
	23,945,675	23,918,936	23,410,700	23,418,884
Financial liabilities
Funding from central banks and deposits by banks	2,453,193	2,401,740	2,484,332	2,399,266
Derivative financial liabilities	18,391	18,391	16,169	16,169
Customer deposits	19,166,155	19,124,073	18,998,319	18,963,934
Debt securities in issue	291,976	264,738	297,636	254,179
Subordinated liabilities	309,348	295,475	302,104	265,472
Other financial liabilities and lease liabilities	254,690	254,690	250,352	250,352
	22,493,753	22,359,107	22,348,912	22,149,372
The fair value of financial assets and liabilities in the above table is as at the reporting date and does not represent any expectations about their future value.

The Group uses the following hierarchy for determining and disclosing fair value:

Level 1: investments valued using quoted prices in active markets.

Level 2: investments valued using models for which all inputs that have a significant impact on fair value are market observable.

Level 3: investments valued using models for which inputs that have a significant impact on fair value are not based on market observable data.

For assets and liabilities that are recognised in the Consolidated Financial Statements at fair value, the Group determines whether transfers have occurred between levels in the hierarchy by re‑assessing categorisation at the end of each reporting period.

The following is a description of the determination of fair value for financial instruments which are recorded at fair value on a recurring and on a non‑recurring basis and for financial instruments which are not measured at fair value but for which fair value is disclosed, using valuation techniques. These incorporate the Group's estimate of assumptions that a market participant would make when valuing the instruments.

Derivative financial instruments

Derivative financial instruments valued using a valuation technique with market observable inputs are mainly interest rate swaps, currency swaps, currency rate options, forward foreign exchange rate contracts and interest rate collars. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.

Credit Valuation Adjustments (CVA) and Debit Valuation Adjustments (DVA)

The CVA and DVA are incorporated into derivative valuations to reflect the impact on fair value of counterparty risk and BOC PCL's own credit quality respectively.

The Group calculates the CVA by applying the PD of the counterparty, conditional on the non‑default of the Group, to the Group's expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default. Conversely, the Group calculates the DVA by applying BOC PCL's PD, conditional on the non‑default of the counterparty, to the expected positive exposure of the counterparty to the Group and multiplying the result by the loss expected in the event of default.

The expected exposure of derivatives is calculated as per the CRR and takes into account the netting agreements where they exist. A standard Loss Given Default (LGD) assumption in line with industry norms is adopted. Alternative LGD assumptions may be adopted when both the nature of the exposure and the available data support this.

The Group does not hold any significant derivative instruments which are valued using a valuation technique with significant non‑market observable inputs.

Investments at FVPL, investments at FVOCI and investments at amortised cost

Investments which are valued using a valuation technique or pricing models, primarily consist of unquoted equity securities and debt securities. These assets are valued using valuation models which sometimes only incorporate market observable data and at other times use both observable and non‑observable data. The rest of the investments are valued using quoted prices in active markets.

Loans and advances to customers

The fair value of loans and advances to customers is based on the present value of expected future cash flows. Future cash flows have been based on the future expected loss rate per loan portfolio, taking into account expectations for the credit quality of the borrowers. The discount rate includes components that capture the risk‑free rate per currency, funding cost, servicing cost and the cost of capital, considering the risk weight of each loan. The discount rate used in the determination of the fair value of the loans and advances to customers measured at FVPL during the six months ended 30 June 2023 ranges from 6.35% to 6.82% (31 December 2022: 2.66%‑4.86%).

Customer deposits

The fair value of customer deposits is determined by calculating the present value of future cash flows. The discount rate takes into account current market rates and the credit profile of BOC PCL. The fair value of deposits repayable on demand and deposits protected by the Deposit Protection Guarantee Scheme are approximated by their carrying values.

Loans and advances to banks

Loans and advances to banks with maturity over one year are discounted using an appropriate risk‑free rate plus the appropriate credit spread. For short‑term lending, the fair value is approximated by the carrying value.

Deposits by banks and funding from central banks

Deposits by banks and funding from central banks with maturity over one year are discounted using an appropriate risk‑free rate plus the appropriate credit spread. For short‑term funding, the fair value is approximated by the carrying value.

Debt securities in issue and Subordinated liabilities

Debt securities and subordinated liabilities issuances are traded in an active market with quoted prices.

Model inputs for valuation

Observable inputs to the models for the valuation of unquoted equity and debt securities include, where applicable, current and expected market interest rates, market expected default rates, market implied country and counterparty credit risk and market liquidity discounts.

The following table presents the fair value measurement hierarchy of the Group's financial assets and financial liabilities recorded at fair value and financial assets and financial liabilities for which fair value is disclosed, by level of the fair value hierarchy:

	Level 1	Level 2	Level 3	Total
30 June 2023	€000	€000	€000	€000
Financial assets measured at fair value
Loans and advances to customers measured at FVPL	-	-	210,385	210,385
Trading derivatives
Forward exchange rate contracts	-	204	-	204
Currency swaps	-	4,890	-	4,890
Interest rate swaps	-	360	-	360
Currency options	-	123	-	123
Interest rate caps/floors	-	3,699	-	3,699
	-	9,276	-	9,276
Derivatives qualifying for hedge accounting
Fair value hedges‑interest rate swaps	-	40,024	-	40,024
Net investments‑forward exchange rate contracts and currency swaps	-	2	-	2
	-	40,026	-	40,026
Investments at FVPL	42,828	92,469	3,364	138,661
Investments at FVOCI	476,228	-	11,578	487,806
	519,056	141,771	225,327	886,154
Other financial assets not measured at fair value
Loans and advances to banks	-	419,210	-	419,210
Investments at amortised cost	2,434,498	175,535	9,156	2,619,189
Loans and advances to customers	-	-	9,827,767	9,827,767
	2,434,498	594,745	9,836,923	12,866,166

For loans and advances to customers measured at FVPL categorised as Level 3, an increase in the discount factor by 10% would result in a decrease of €3,637 thousand in their fair value and a decrease in the discount factor by 10% would result in an increase of €1,888 thousand in their fair value.

For one investment included in other non‑equity securities mandatorily measured at FVPL as a result of the SPPI assessment and categorised as Level 3 with a carrying amount of €3,364 thousand as at 30 June 2023, a change in the conversion factor by 10% would result in a change in the value of the other non‑equity securities by €336 thousand.

	Level 1	Level 2	Level 3	Total
30 June 2023	€000	€000	€000	€000
Financial liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts	-	124	-	124
Currency swaps	-	3,615	-	3,615
Interest rate swaps	-	347	-	347
Currency options	-	2	-	2
Interest rate caps/floors	-	3,699	-	3,699
	-	7,787	-	7,787
Derivatives qualifying for hedge accounting
Fair value hedges‑interest rate swaps	-	10,604	-	10,604
	-	10,604	-	10,604
	-	18,391	-	18,391
Other financial liabilities not measured at fair value
Funding from central banks	-	1,996,982	-	1,996,982
Deposits by banks	-	404,758	-	404,758
Customer deposits	-	-	19,124,073	19,124,073
Debt securities in issue	264,738	-	-	264,738
Subordinated liabilities	295,475	-	-	295,475
	560,213	2,401,740	19,124,073	22,086,026

	Level 1	Level 2	Level 3	Total
31 December 2022	€000	€000	€000	€000
Financial assets measured at fair value
Loans and advances to customers measured at FVPL	-	-	214,359	214,359
Trading derivatives
Forward exchange rate contracts	-	103	-	103
Currency swaps	-	283	-	283
Interest rate swaps	-	437	-	437
Currency options	-	287	-	287
Interest rate caps/floors	-	3,094	-	3,094
	-	4,204	-	4,204
Derivatives qualifying for hedge accounting
Fair value hedges‑interest rate swaps	-	43,939	-	43,939
Net investments‑forward exchange rate contacts and currency swaps	-	10	-	10
	-	43,949	-	43,949
Investments at FVPL	84,743	96,498	8,968	190,209
Investments at FVOCI	455,110	-	12,265	467,375
	539,853	144,651	235,592	920,096
Other financial assets not measured at fair value
Loans and advances to banks	-	193,349	-	193,349
Investments at amortised cost	1,871,757	69,300	12,279	1,953,336
Loans and advances to customers	-	-	9,797,382	9,797,382
	1,871,757	262,649	9,809,661	11,944,067
For loans and advances to customers measured at FVPL categorised as Level 3, an increase in the discount factor by 10% would result in a decrease of €4,538 thousand in their fair value and a decrease in the discount factor by 10% would result in an increase of €1,145 thousand in their fair value.
For one investment included in other non‑equity securities mandatorily measured at FVPL as a result of the SPPI assessment and categorised as Level 3 with a carrying amount of €8,968 thousand as at 31 December 2022, a change in the conversion factor by 10% would result in a change in the value of the other non‑equity securities by €897 thousand.

	Level 1	Level 2	Level 3	Total
31 December 2022	€000	€000	€000	€000
Financial liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts	-	123	-	123
Currency swaps	-	10,316	-	10,316
Interest rate swaps	-	420	-	420
Currency options	-	65	-	65
Interest rate caps/floors	-	3,094	-	3,094
	-	14,018	-	14,018
Derivatives qualifying for hedge accounting
Fair value hedges‑interest rate swaps	-	2,151	-	2,151
	-	2,151	-	2,151
	-	16,169	-	16,169
Other financial liabilities not measured at fair value
Funding from central banks	-	1,944,145	-	1,944,145
Deposits by banks	-	455,121	-	455,121
Customer deposits	-	-	18,963,934	18,963,934
Debt securities in issue	254,179	-	-	254,179
Subordinated liabilities	265,472	-	-	265,472
	519,651	2,399,266	18,963,934	21,882,851
The cash and balances with central banks are financial instruments whose carrying value is a reasonable approximation of fair value because they are mostly short‑term in nature or are repriced to current market rates frequently. The carrying value of other financial assets, other than the deferred purchase payment consideration (Note 20), and other financial liabilities is a close approximation of their fair value and they are categorised as Level 3.
During the six months ended 30 June 2023 and the year ended 31 December 2022 there were no significant transfers between Level 1 and Level 2.
Movements in Level 3 assets measured at fair value
Transfers from Level 3 to Level 2 occur when the market for some securities becomes more liquid, which eliminates the need for the previously required significant unobservable valuation inputs. Following a transfer to Level 2 the instruments are valued using valuation models incorporating observable market inputs. Transfers into Level 3 reflect changes in market conditions as a result of which instruments become less liquid. Therefore, the Group requires significant unobservable inputs to calculate their fair value.

The movement in Level 3 financial assets which are measured at fair value is presented below:

	30 June 2023			31 December 2022
	Loans and advances to customers	Financial instruments	Total	Loans and advances to customers	Financial instruments	Total
	€000	€000	€000	€000	€000	€000
1 January	214,359	21,233	235,592	281,868	19,897	301,765
Additions	-	-	-	-	10,054	10,054
Disposals	-	-	-	-	(500)	(500)
Conversion of instruments into common shares	-	(6,521)	(6,521)	-	(4,102)	(4,102)
Fair value gains/(losses)	-	293	293	-	(4,133)	(4,133)
Net (losses)/gains on loans and advances to customers measured at FVPL (Note 10)	(9)	-	(9)	4,050	-	4,050
Derecognition/repayment of loans	(10,228)	-	(10,228)	(82,522)	-	(82,522)
Interest on loans (Note 8)	6,263	-	6,263	10,963	-	10,963
Foreign exchange adjustments	-	(63)	(63)	-	17	17
30 June/31 December	210,385	14,942	225,327	214,359	21,233	235,592

18.         Loans and advances to customers

	30 June 2023	31 December 2022
	€000	€000
Gross loans and advances to customers at amortised cost	9,995,335	9,917,335
Allowance for ECL for impairment of loans and advances to customers (Note 30.4)	(197,901)	(178,442)
	9,797,434	9,738,893
Loans and advances to customers measured at FVPL	210,385	214,359
	10,007,819	9,953,252
The following tables present the Group's gross loans and advances to customers at amortised cost by staging and by geographical analysis (based on the country in which the loans are managed).

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2023	€000	€000	€000	€000	€000
Gross loans at amortised cost before residual fair value adjustment on initial recognition	8,261,687	1,365,799	335,225	107,622	10,070,333
Residual fair value adjustment on initial recognition	(63,508)	(8,678)	(1,433)	(1,379)	(74,998)
Gross loans at amortised cost	8,198,179	1,357,121	333,792	106,243	9,995,335
Cyprus	8,197,984	1,357,121	333,263	106,243	9,994,611
Other Countries	195	-	529	-	724
	8,198,179	1,357,121	333,792	106,243	9,995,335

31 December 2022
Gross loans at amortised cost before residual fair value adjustment on initial recognition	7,931,511	1,586,488	372,821	115,544	10,006,364
Residual fair value adjustment on initial recognition	(64,255)	(20,885)	(1,803)	(2,086)	(89,029)
Gross loans at amortised cost	7,867,256	1,565,603	371,018	113,458	9,917,335
Cyprus	7,867,037	1,565,603	368,922	113,458	9,915,020
Other countries	219	-	2,096	-	2,315
	7,867,256	1,565,603	371,018	113,458	9,917,335

Residual fair value adjustment

The residual fair value adjustment on initial recognition mainly relates to the loans and advances to customers acquired as part of the acquisition of certain operations of Laiki Bank in 2013. In accordance with the provisions of IFRS 3, this adjustment decreased the gross balance of loans and advances to customers. The residual fair value adjustment is included within the gross balances of loans and advances to customers as at each balance sheet date. However, for credit risk monitoring, the residual fair value adjustment as at each balance sheet date is presented separately from the gross balances of loans and advances, as shown in the tables above.

Loans and advances to customers measured at FVPL are managed in Cyprus.

The following tables present the Group's gross loans and advances to customers at amortised cost by staging and by business line concentration.

30 June 2023	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate and Large Corporate	2,735,590	659,540	50,445	34,094	3,479,669
International corporate	694,641	124	37	20	694,822
SMEs	852,732	121,177	3,161	9,160	986,230
Retail
‑ housing	2,970,005	363,472	24,131	11,075	3,368,683
‑ consumer, credit cards and other	777,635	125,125	11,260	14,166	928,186
Restructuring
‑ corporate	3,615	19,549	20,046	10,206	53,416
‑ SMEs	10,357	12,003	14,622	2,806	39,788
‑ retail housing	5,466	20,629	41,537	2,258	69,890
‑ retail other	2,062	4,666	16,117	954	23,799
Recoveries
‑ corporate	-	-	17,483	1,154	18,637
‑ SMEs	-	-	29,414	1,664	31,078
‑ retail housing	-	-	78,342	12,168	90,510
‑ retail other	84	-	26,089	5,783	31,956
International business unit	105,910	24,658	1,103	177	131,848
Wealth management	40,082	6,178	5	558	46,823
	8,198,179	1,357,121	333,792	106,243	9,995,335

31 December 2022	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate and Large Corporate	2,502,630	807,282	54,259	34,616	3,398,787
International corporate	685,099	150	35	24	685,308
SMEs	825,123	189,825	3,299	10,364	1,028,611
Retail
‑ housing	2,982,436	305,714	30,071	12,413	3,330,634
‑ consumer, credit cards and other	704,959	152,815	14,376	15,746	887,896
Restructuring
‑ corporate	2,842	34,246	20,689	10,175	67,952
‑ SMEs	12,643	10,603	23,374	2,381	49,001
‑ retail housing	5,168	22,018	42,155	3,292	72,633
‑ retail other	1,713	5,364	16,237	1,029	24,343
Recoveries
‑ corporate	-	-	18,403	1,316	19,719
‑ SMEs	-	-	29,339	2,366	31,705
‑ retail housing	-	-	88,956	14,039	102,995
‑ retail other	108	-	28,569	4,953	33,630
International business unit	104,539	31,934	1,254	147	137,874
Wealth management	39,996	5,652	2	597	46,247
	7,867,256	1,565,603	371,018	113,458	9,917,335
Loans and advances to customers pledged as collateral are disclosed in Note 32.
Additional analysis and information regarding credit risk and analysis of the allowance for ECL of loans and advances to customers are set out in Note 30.

19.         Stock of property

The carrying amount of stock of property is determined as the lower of cost and net realisable value. Impairment is recognised if the net realisable value is below the cost of the stock of property. During the six months ended 30 June 2023 an impairment loss of €23,206 thousand (30 June 2022: €7,364 thousand) was recognised in 'Impairment net of reversals on non‑financial assets' in the consolidated income statement. At 30 June 2023, stock of property of €510,448 thousand (31 December 2022: €529,316 thousand) is carried at net realisable value. Additionally, at 30 June 2023 stock of property with a carrying amount of €49,137 thousand (31 December 2022: €108,010 thousand) is carried at approximately its fair value less costs to sell.

The stock of property includes residential properties, offices and other commercial properties, manufacturing and industrial properties, hotels and land (fields and plots). There is no stock of property pledged as collateral for central bank funding facilities under Eurosystem monetary policy operations.

The carrying amount of the stock of property is analysed in the tables below:

	30 June 2023	31 December 2022
	€000	€000
Net book value at 1 January	1,041,032	1,111,604
Additions	4,440	76,851
Disposals	(57,872)	(126,797)
Net transfers (to)/from property and equipment	(18,563)	-
Impairment (Note 12)	(23,206)	(20,628)
Foreign exchange adjustments	-	2
Net book value at 30 June/31 December	945,831	1,041,032
As at 30 June 2023 there are charges against stock of property of the Group with a carrying value €19,500 thousand (31 December 2022: €20,989 thousand).

Analysis by type and country	Cyprus	Greece	Romania	Total
30 June 2023	€000	€000	€000	€000
Residential properties	52,628	16,354	31	69,013
Offices and other commercial properties	114,797	11,129	-	125,926
Manufacturing and industrial properties	27,398	9,617	-	37,015
Hotels	22,570	417	-	22,987
Land (fields and plots)	687,054	3,836	-	690,890
Total	904,447	41,353	31	945,831

31 December 2022
Residential properties	63,724	16,947	32	80,703
Offices and other commercial properties	142,475	11,263	-	153,738
Manufacturing and industrial properties	29,172	11,710	48	40,930
Hotels	24,027	437	-	24,464
Land (fields and plots)	736,913	4,284	-	741,197
Total	996,311	44,641	80	1,041,032

20.         Prepayments, accrued income and other assets

	30 June 2023	31 December 2022 (restated)
	€000	€000
Financial assets
Debtors	32,363	29,220
Receivable relating to tax	4,397	4,536
Deferred purchase payment consideration	320,655	311,523
Other assets	65,919	57,183
	423,334	402,462
Non‑financial assets
Reinsurers' share of insurance contract liabilities	50,580	46,781
Current tax receivable	93,681	124,328
Prepaid expenses	1,426	682
Retirement benefit plan assets	850	816
Other assets	39,736	33,985
	186,273	206,592
	609,607	609,054
There were no financial assets classified as Stage 2 as at 30 June 2023 and 31 December 2022. In addition, no financial assets were measured at FVPL as at 30 June 2023 and 31 December 2022.
On the completion date of the sale of Project Helix 2 (the 'Transaction') in June 2021, the Group recognised an amount of €381,567 thousand in other financial assets, which represented the fair value of the deferred consideration receivable from the Transaction (the 'DPP'). This amount outstanding is payable in four instalments up to December 2025 and each instalment carries interest up to each payment date. An amount of €9,098 thousand, which represents the interest income on DPP has been recognised in the Consolidated Income Statement for the six months ended 30 June 2023 (30 June 2022: €4,314 thousand) within 'Interest income‑Financial assets at amortised cost‑Other financial assets' (Note 8). There are no other conditions attached. The DPP is classified as Stage 1 as at 30 June 2023 and 31 December 2022.

During the six months ended 30 June 2023, credit losses of €6,110 thousand were recognised in relation to other financial assets. This includes ECL losses of €246 thousand (of which €35 thousand relate to a partial reversal for 12‑months ECL of the DPP) and €5,864 thousand impairment losses. During the six months ended 30 June 2022, credit losses of €705 thousand were recognised in relation to prepayments, accrued income and other financial assets. This includes ECL losses of €117 thousand (of which €188 thousand relate to 12‑months ECL of the DPP) and €588 thousand impairment losses.

21.         Funding from central banks

Funding from central banks comprises funding from the ECB under Eurosystem monetary policy operations as set out in the table below:

	30 June 2023	31 December 2022
	€000	€000
Targeted Longer‑Term Refinancing Operations (TLTRO IΙI)	2,004,480	1,976,674
As at 30 June 2023, ECB funding amounted to €2 billion (31 December 2022: €2 billion) borrowed from various TLTRO III operations.
In recognition of the challenging credit environment during the pandemic period, the Governing Council of the ECB announced that for the counterparties whose eligible net lending reached the lending performance thresholds, the interest rate applied over the periods from 24 June 2020 to 23 June 2021 and 24 June 2021 to 23 June 2022 would be 50 basis points below the average interest rate on the deposit facility prevailing over the same period, and in any case not higher than minus 1%. BOC PCL exceeded the eligible net lending threshold applicable in the specified periods and was entitled to the beneficial rate of minus 1% for the period June 2020 to June 2022 and recognised interest at the beneficial rate over the corresponding period. Subsequently, BOC PCL updated the effective interest rate based on the contractual terms and applicable changes in terms of the operations as a change in the EIR applied prospectively.
ECB during its October 2022 meeting, announced that from 23 November 2022 onwards, the applicable interest rate would be indexed to the average applicable key ECB interest rates from that date onward.
The maturity of TLTRO III is three years from the settlement of each operation, but there is an option to early repay or reduce the amounts borrowed before their respective final maturity.
BOC PCL early repaid €1 billion of TLTRO III funding in December 2022.
Details on encumbered assets related to the above funding facilities are disclosed in Note 32.

22.         Customer deposits

	30 June 2023	31 December 2022
	€000	€000
By type of deposit
Demand	10,359,755	10,561,724
Savings	2,948,823	2,840,346
Time or notice	5,857,577	5,596,249
	19,166,155	18,998,319
By geographical area
Cyprus	13,378,996	13,019,109
Greece	1,845,882	1,933,771
United Kingdom	686,916	706,233
United States	149,455	178,962
Germany	117,613	168,785
Romania	60,772	69,514
Russia	636,234	700,465
Ukraine	301,407	290,050
Belarus	81,223	83,299
Other countries	1,907,657	1,848,131
	19,166,155	18,998,319
Deposits by geographical area are based on the country of passport of the Ultimate Beneficial Owner.

	30 June 2023	31 December 2022
	€000	€000
By currency
Euro	17,298,147	17,067,299
US Dollar	1,475,065	1,529,548
British Pound	325,625	333,458
Russian Rouble	1,825	3,466
Swiss Franc	11,150	11,796
Other currencies	54,343	52,752
	19,166,155	18,998,319

	30 June 2023	31 December 2022
	€000	€000
By business line
Corporate and Large corporate	1,964,893	1,915,300
International corporate	131,044	139,898
SMEs	962,581	1,007,555
Retail	11,667,105	11,333,783
Restructuring
- Corporate	13,700	16,017
- SMEs	6,992	6,375
- Retail other	13,142	10,152
Recoveries
- Corporate	1,155	1,262
International business unit	3,848,653	3,957,050
Wealth management	556,890	610,927
	19,166,155	18,998,319

23.         Debt securities in issue and Subordinated liabilities

			30 June 2023		31 December 2022
			Nominal value	Carrying value	Nominal value	Carrying value
Subordinated liabilities	Contractual interest rate	Issuer	€000	€000	€000	€000
Subordinated Tier 2 Capital Note ‑ April 2021	6.625% up to 23 October 2026	BOCH	300,000	309,348	300,000	302,104
			300,000	309,348	300,000	302,104
Debt securities in issue
Senior Preferred Notes ‑ June 2021	2.50% up to 24 June 2026	BOC PCL	300,000	291,976	300,000	297,636

BOCH and BOC PCL maintain a Euro Medium Term Note (ΕΜΤΝ) Programme with an aggregate nominal amount up to €4,000 million.

Subordinated Liabilities

Subordinated Tier 2 Capital Note ‑ April 2021

In April 2021, BOCH issued a €300 million unsecured and subordinated Tier 2 Capital Note under the EMTN Programme. The note was priced at par with a coupon of 6.625% per annum payable annually in arrears and resettable on 23 October 2026 at the then prevailing 5‑year swap rate plus a margin of 6.902% per annum up to 23 October 2031, payable annually. The note matures on 23 October 2031. BOCH has the option to redeem the note early on any day during the six‑month period from 23 April 2026 to 23 October 2026, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock Exchange's Euro MTF market.

The fair value of the subordinated liabilities as at 30 June 2023 and 31 December 2022 is disclosed in Note 17.

Debt securities in issue

Senior Preferred Notes ‑ June 2021

In June 2021, BOC PCL issued a €300 million senior preferred note under the EMTN Programme. The note was priced at par with a fixed coupon of 2.50% per annum, payable annually in arrears and resettable on 24 June 2026. The note matures on 24 June 2027. BOC PCL has the option to redeem the note early on 24 June 2026, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock Exchange's Euro MTF market. The note complies with the criteria for the minimum requirement for own funds and eligible liabilities (MREL) and contributes towards BOC PCL's MREL requirements.

The fair value of the debt securities in issue as at 30 June 2023 and 31 December 2022 is disclosed in Note 17.

24.         Accruals, deferred income, other liabilities and other provisions

	30 June 2023	31 December 2022 (restated)
	€000	€000
Income tax payable and related provisions	75,477	41,420
Special defence contribution payable	363	379
Retirement benefit plans liabilities	1,959	3,694
Provisions for financial guarantees and commitments	18,007	17,429
Liabilities arising from non‑participating investment contracts	60,029	47,847
Accrued expenses and other provisions	60,801	65,734
Deferred income	19,060	18,061
Items in the course of settlement	75,111	97,585
Lease liabilities	28,627	30,190
Other liabilities	90,151	56,843
	429,585	379,182
Other liabilities include an amount of €10,385 thousand (31 December 2022: €10,385 thousand) relating to the guarantee fee for the conversion of DTA into tax credits (Note 13) and an amount of €16,298 thousand (31 December 2022: €9,874 thousand) relating to card processing transactions.

25.         Share capital

	30 June 2023		31 December 2022
	Number of shares (thousand)	€000	Number of shares (thousand)	€000
Authorised
Ordinary shares of €0.10 each	10,000,000	1,000,000	10,000,000	1,000,000
Issued
1 January and 30 June/31 December	446,200	44,620	446,200	44,620

Authorised and issued share capital

All issued ordinary shares carry the same rights.

There were no changes to the authorised or issued share capital during the six months ended 30 June 2023 and the year ended 31 December 2022.

Share premium reserve

There were no changes to the share premium reserve during the six months ended 30 June 2023 and the year ended 31 December 2022.

Treasury shares of the Company

The consideration paid, including any directly attributable incremental costs (net of income taxes), for shares of the Company held by entities controlled by the Group is deducted from equity attributable to the owners of the Company as treasury shares, until these shares are cancelled or reissued. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or cancellation of such shares.

The life insurance subsidiary of the Group, as at 30 June 2023, held a total of 142 thousand ordinary shares of the Company of a nominal value of €0.10 each (31 December 2022: 142 thousand ordinary shares of a nominal value of €0.10 each), as part of its financial assets which are invested for the benefit of insurance policyholders. The cost of acquisition of these shares was €21,463 thousand (31 December 2022: €21,463 thousand).

Other equity instruments

	30 June 2023	31 December 2022
	€000	€000
2018 Reset Perpetual Additional Tier 1 Capital Securities (Existing Capital Securities)	15,517	220,000
2023 Reset Perpetual Additional Tier 1 Capital Securities (New Capital Securities)	220,000	-
	235,517	220,000
In December 2018, the Company issued €220 million Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities (the 'Existing Capital Securities'). The Existing Capital Securities constitute an unsecured and subordinated obligation of the Company. The coupon is at 12.50% and is payable semi‑annually. During the six months ended 30 June 2023, a coupon payment was made to the holders of a total amount of €13,750 thousand and has been recognised in retained earnings (30 June 2022: €13,750 thousand). The Existing Capital Securities are listed on the Luxembourg Stock Exchange's Euro Multilateral Trading Facility (MTF) market.
The Company, in June 2023, invited the holders of its outstanding €220 million Existing Capital Securities to tender their Existing Capital Securities for cash purchase by the Company at a price equal to 103% of the principal amount. The Company also paid accrued interest on the Existing Capital Securities, from the last coupon date, 15 June 2023 until the settlement date.
The Company received valid tenders of approximately €204 million in aggregate nominal amount, all of which were accepted by the Company. As a result, a cost of €6,554 thousand was recorded directly in equity in June 2023, forfeiting relevant future coupon payments.
In July 2023, the Company purchased in the open market approximately €7 million, further reducing the outstanding nominal amount of the Existing Capital Securities to approximately €8 million.
At the same time, the Company on 13 June 2023, successfully launched and priced an issue of €220 million Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities (the 'New Capital Securities'). The New Capital Securities constitute unsecured and subordinated obligations of the Company, are perpetual and are issued at par. They carry an initial coupon of 11.875% per annum, payable semi‑annually, and resettable on 21 December 2028 and every 5 years thereafter. The Company may elect to cancel any interest payment for an unlimited period, on a non‑cumulative basis, whereas it mandatorily cancels interest payment under certain conditions. The New Capital Securities are perpetual and have no fixed date of redemption, but can be redeemed (in whole but not in part) at the Company's option from, and including, 21 June 2028 to, and including, 21 December 2028 and on each interest payment date thereafter, subject to applicable regulatory consents and the relevant conditions to redemption. The New Capital Securities are listed on the Luxembourg Stock Exchange's Euro Multilateral Trading Facility (MTF) market.
Transaction costs of €3,530 thousand in relation to the transactions were recorded directly in equity in June 2023.

26.         Dividends

Based on the 2022 SREP decision, effective from 1 January 2023, any equity dividend distribution is subject to regulatory approval, both for the Company and BOC PCL. The requirement for approval does not apply if the distributions are made via the issuance of new ordinary shares to the shareholders which are eligible as Common Equity Tier 1 Capital nor to the payment of coupons on any AT1 capital instruments issued by the Company or BOC PCL.

In April 2023, the Company obtained the approval of the European Central Bank to pay a dividend. Following this approval, the Board of Directors of the Company recommended to the shareholders for approval at the Annual General Meeting ('AGM') on 26 May 2023, a final dividend of €0.05 per ordinary share in respect of the earnings of the year ended 31 December 2022 ('Dividend'). The AGM on 26 May 2023 declared a final dividend of €0.05 per share. The Dividend amounts to €22,310 thousand in total and is equivalent to a payout ratio of 14% of the financial year 2022 recurring profitability adjusted for the AT1 coupon or 31% based on the financial year 2022 profit after tax (as reported in the 2022 Annual Financial Report).

27.         Provisions for pending litigation, claims, regulatory and other matters

The Group, in the ordinary course of business, is involved in various disputes and legal proceedings and is subject to enquiries and examinations, requests for information, audits, investigations, legal and other proceedings by regulators, governmental and other public bodies, actual and threatened, relating to the suitability and adequacy of advice given to clients or the absence of advice, lending and pricing practices, selling and disclosure requirements, record keeping, filings and a variety of other matters. In addition, as a result of the deterioration of the Cypriot economy and banking sector in 2012 and the subsequent restructuring of BOC PCL in 2013 as a result of the bail‑in Decrees, BOC PCL is subject to a large number of proceedings and investigations that either precede or result from the events that occurred during the period of the bail‑in Decrees.

Apart from what is described below, the Group considers that none of these matters are material, either individually or in aggregate. Nevertheless, provisions have been made where: (a) there is a present obligation (legal or constructive) arising from past events, (b) the settlement of the obligation is expected to result in an outflow of resources embodying economic benefits, and (c) a reliable estimate of the amount of the obligation can be made. The Group has not disclosed an estimate of the potential financial effect on its contingent liabilities arising from these matters where it is not practicable to do so, because it is too early or the outcome is too uncertain or, in cases where it is practicable, where disclosure could prejudice conduct of the matters. Provisions have been recognised for those cases where the Group is able to estimate probable losses (Note 6.4). Where an individual provision is material, the fact that a provision has been made is stated except to the extent that doing so would be prejudicial. Any provision recognised does not constitute an admission of wrongdoing or legal liability. There are also situations where the Group may enter into a settlement agreement. This may occur only if such settlement is in BOC PCL's interest (such settlement does not constitute an admission of wrongdoing) and only takes place after obtaining legal advice and all approvals by the appropriate bodies of management. While the outcome of these matters is inherently uncertain, management believes that, based on the information available to it, appropriate provisions have been made in respect of legal proceedings, regulatory and other matters as at 30 June 2023 and hence it is not believed that such matters, when concluded, will have a material impact upon the financial position of the Group.

27.1       Pending litigation and claims

Investigations and litigation relating to securities issued by BOC PCL

A number of institutional and retail customers have filed various separate actions against BOC PCL alleging that BOC PCL is guilty of misselling in relation to securities issued by BOC PCL between 2007 and 2011. Remedies sought include the return of the money investors paid for these securities. Claims are currently pending before the courts in Cyprus and in Greece, as well as the decisions and fines imposed upon BOC PCL in related matters by Cyprus Securities and Exchange Commission (CySEC) and/or Hellenic Capital Market Commission (HCMC).

The bonds and capital securities in respect of which claims have been brought are the following: 2007 Capital Securities, 2008 Convertible Bonds, 2009 Convertible Capital Securities (CCS) and 2011 Convertible Enhanced Capital Securities (CECS).

BOC PCL is defending these claims, particularly with respect to institutional investors and retail purchasers who received investment advice from independent investment advisors. In the case of retail investors, if it can be demonstrated that the relevant BOC PCL's officers 'persuaded' them to proceed with the purchase and/or purported to offer 'investment advice', BOC PCL may face significant difficulties.

To date, a number of cases have been tried in Greece. BOC PCL has appealed against any such cases which were not ruled in its favour. The resolution of the claims brought in the courts of Greece is expected to take a number of years.

So far four capital securities cases have been adjudicated in favour of BOC PCL and four cases have been adjudicated against BOC PCL at Areios Pagos (Supreme Court of Greece). The cases that BOC PCL has won will be retried by the Court of Appeal as per the direction of the Supreme Court. One of the said cases has already been retried by the Court of Appeal and the ruling was in favour of BOC PCL. There has been a new petition for annulment against this decision of the Court of Appeal and the case will be retried before the Supreme Court in 2023. The four cases that BOC PCL has lost will not be retried and are therefore deemed as concluded.

In Cyprus nineteen judgments have been issued so far with regards to BOC PCL capital securities. Thirteen of the said judgments have been issued in favour of BOC PCL (dismissing the plaintiffs' claims) and six of them against BOC PCL. BOC PCL has filed appeals with regards to all of the cases where the judgment was issued against it. In six of the thirteen cases that BOC PCL won, the plaintiffs have filed an appeal. It is to be noted that the statutory limitation period for filing claims with respect to this and other matters for which the cause of action arose prior and up to 31 December 2015, expired on 31 December 2021.

Provision has been made based on management's best estimate of probable outflows for capital securities related litigation.

Bail‑in related litigation

Depositors

A number of BOC PCL's depositors, who allege that they were adversely affected by the bail‑in, filed claims against BOC PCL and other parties (such as the CBC and the Ministry of Finance of Cyprus) including against BOC PCL as the alleged successor of Laiki Bank on the grounds that, inter alia, the 'Resolution Law of 2013' and the Bail‑in Decrees were in conflict with the Constitution of the Republic of Cyprus and the European Convention on Human Rights. They are seeking damages for their alleged losses resulting from the bail‑in of their deposits. BOC PCL is defending these actions.

BOC PCL has won five cases with regards to bail‑in related litigation (on failure to follow instructions). The plaintiffs have filed appeals with respect to two of the said judgments. BOC PCL lost one case with regards to bail‑in related litigation (on failure to follow instructions) and has filed an appeal.

BOC PCL also won five bail‑in decree related cases. In summary, the court ruled that the measures that the government implemented were necessary to prevent the collapse of the financial sector, which would have detrimental consequences for the country's economy. Under the circumstances the government could rely on the doctrine of necessity when it imposed the bail‑in. Up to the date of the Consolidated Financial Statements only one appeal has been filed with respect to the above mentioned judgments. BOC PCL lost one Laiki Bail‑in decree case but it is the opinion of legal advisors of BOC PCL that this case is a one‑off case which turned on its own particular facts. An appeal by BOC PCL has been filed with respect to this case.

BOC PCL won two and lost three bail‑in wrongful application related cases. The appeals that have been filed by BOC PCL are still pending with regards to this matter. With regards to the cases that BOC PCL won, the plaintiffs have not filed an appeal.

Shareholders

A number of actions for damages have been filed with the District Courts of Cyprus alleging either the unconstitutionality of the Resolution Law and the Bail‑in Decrees, or a misapplication of same by BOC PCL (as regards the way and methodology whereby such Decrees have been implemented), or that BOC PCL failed to follow instructions promptly prior to the bail‑in coming into force. As at the present date, both the Resolution Law and the Bail‑in Decrees have not been annulled by a court of law and thus remain legally valid and in effect. BOC PCL contests all of these claims.

Legal position of the Group

All of the above claims are being vigorously disputed by the Group, in close consultation with the appropriate state and governmental authorities. The position of the Group is that the Resolution Law and the Decrees take precedence over all other laws. As matters now stand, both the Resolution Law and the Decrees issued thereunder are constitutional and lawful, in that they were properly enacted and have not so far been annulled by any court.

Provident fund case

In December 2015, the Bank of Cyprus Employees Provident Fund (the Provident Fund) filed an action against BOC PCL claiming €70 million allegedly owed as part of BOC PCL's contribution by virtue of an agreement with the Union dated 31 December 2011. Based on facts currently known, it is not practicable at this time for BOC PCL to predict the resolution of this matter, including the timing or any possible impact on BOC PCL.

Employment litigation

Former employees of the Group have instituted a number of employment claims including unfair dismissals and one claim for Provident Fund entitlements against BOC PCL and the Trustees of the Provident Fund. In July 2021 the claim for Provident Fund entitlements was settled. The Group does not consider that the pending cases in relation to employment will have a material impact on its financial position. A judgment has been issued in one of the unfair dismissal cases and BOC PCL lost. BOC PCL has filed an appeal with respect to this case and similarly, the plaintiff has also filed an appeal. The facts of this case are unique and it is not expected to affect the rest of the cases where unfair dismissal is claimed.

Additionally, a number of former employees have filed claims against BOC PCL contesting entitlements received relating to the various voluntary exit plans. As at the reporting date, the Group does not expect that these actions will have a material impact on its financial position.

Swiss Francs loans litigation in Cyprus and the UK

Α number of actions have been instituted against BOC PCL by borrowers who obtained loans in foreign currencies (mainly Swiss Francs). The central allegation in these cases is that BOC PCL misled these borrowers and/or misrepresented matters, in violation of applicable law. BOC PCL is contesting the said proceedings. The Group does not expect that these actions will have a material impact on its financial position.

UK property lending claims

BOC PCL is the defendant in certain proceedings alleging that BOC PCL is legally responsible for allegedly, inter alia, advancing and misselling loans for the purchase by UK nationals of property in Cyprus. The proceedings in the UK are currently stayed in order for the parties to have time to negotiate possible settlements. The Group does not expect that these negotiations will lead to outflows for the Group.

Banking business cases

There is a number of banking business cases where the amounts claimed are significant. These cases primarily concern allegations as to BOC PCL's standard policies and procedures allegedly resulting to damages and other losses for the claimants. Further, there are several other banking claims, where the amounts involved are not as significant. Management has assessed either the probability of loss as remote and/or does not expect any future outflows with respect to these cases to have a material impact on the financial position of the Group. Such matters arise as a result of the Group's activities and management appropriately assesses the facts and the risks of each case accordingly.

General criminal investigations and proceedings

The Attorney General and the Cypriot Police (the Police) are conducting various investigations and inquiries following and relating to the financial crisis which culminated in March 2013. BOC PCL is cooperating fully with the Attorney General and the Police and is providing all information requested of it. Based on the currently available information, the Group is of the view that any further investigations or claims resulting from these investigations will not have a material impact on its financial position.

Others

An investigation is in process related to potentially overstated and/or fictitious claims paid by the non‑life insurance subsidiary of the Group. The information usually required by IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' is not disclosed on the grounds that it is expected to seriously prejudice the outcome of the investigation and/or the possible taking of legal action. Based on the information available at present, management considers that it is unlikely for this matter to have a material adverse impact on the financial position and capital adequacy of the non‑life insurance subsidiary and thereby the Group, also taking into account that it is virtually certain that compensations will be received from a relevant insurance coverage, upon the settlement of any obligation that may arise.

27.2       Regulatory matters

The Hellenic Capital Market Commission (HCMC) Investigation

The HCMC is currently in the process of investigating matters concerning the Group's investment in Greek Government Bonds from 2009 to 2011, including, inter alia, related non‑disclosure of material information in BOC PCL's CCS, CECS and rights issue prospectuses (tracking the investigation carried out by CySEC in 2013), Greek government bonds' reclassification, ELA disclosures and allegations by some investors regarding BOC PCL's non‑compliance with Markets in Financial Instruments Directive (MiFID) in respect of investors' direct investments in Greek Government Bonds.

A specific estimate of the outcome of the investigations or of the amount of possible fines cannot be given at this stage, though it is not expected that any resulting liability or damages will have a material impact on the financial position of the Group.

The Cyprus Securities and Exchange Commission (CySEC) Investigations

CySEC has concluded (in two stages) during 2013 and 2014 its investigation with respect to BOC PCL exposure to Greek Government Bonds and the non‑disclosure of material information and other corporate governance deficiencies relating to the said exposure. In this respect, CySEC has issued two decisions, coming to the conclusion that BOC PCL was in breach of certain laws regarding disclosure of information. At all times, BOC PCL had filed recourses before the Administrative Court regarding the decisions of CySEC and the fines imposed upon it.

In October 2021 the Administrative Court ruled in favour of BOC PCL in relation to the fine of €160 thousand on the ground of flawed constitution of the CySEC Board. In May 2022, the Administrative Court (under a different bench) ruled against BOC PCL in relation to the fine of €950 thousand and found that the constitution of the CySEC Board was not flawed. In May 2023 the Administrative Court ruled in favour of BOC PCL in relation to the fine of €70 thousand on the ground of flawed constitution of the CySEC Board. All cases are now pending on appeal. Relevant provisions were made in prior years for the said cases.

As at 30 June 2023 and 31 December 2022 there were no pending CySEC investigations against BOC PCL.

Central Bank of Cyprus (CBC)

The CBC has carried out certain investigations to assess compliance of BOC PCL under the anti‑money laundering (AML) legislation which was in place during years 2008‑2015 and 2015‑2018.

Following the investigations and the on‑site audit findings, the CBC concluded on 27 January 2021 that in the case of AML legislation 2008‑2015 BOC PCL was in breach of certain articles of the said legislation and prima facie, failed to act in accordance with certain provisions of the AML/counter terrorism financing (CTF) Law and the CBC AML/CTF Directive. In October 2021 a fine of €277 thousand was imposed upon BOC PCL. BOC PCL paid a discounted fine and has filed a recourse against this decision and fine.

Following the investigation and the on‑site examination, the CBC concluded with regards to the files and transactions related to years 2015‑2018, that BOC PCL was in breach of certain articles of the legislation. In December 2021, a fine of €790 thousand was imposed upon BOC PCL. BOC PCL paid a discounted fine and has filed a recourse against the decision and the fine.

The CBC had conducted an investigation in the past into BOC PCL's issuance of capital securities and concluded that BOC PCL breached certain regulatory requirements concerning the issuance of Convertible Capital Securities (Perpetual) in 2009, but not in relation to the CECS in 2011. The CBC had, in 2013, imposed a fine of €4 thousand upon BOC PCL, who filed a recourse. The Administrative Court cancelled both the CBC's decision and the fine that was imposed upon BOC PCL in a respective judgment dated in 2020. CBC decided to re‑examine this matter and to re‑open the investigation.

Commission for the Protection of Competition Investigation (CPC)

In April 2014, following an investigation which began in 2010, CPC issued a statement of objections, alleging violations of Cypriot and EU competition law relating to the activities and/or omissions in respect of card payment transactions by, among others, BOC PCL and JCC Payment Systems Ltd (JCC), a card processing business currently 75% owned by BOC PCL. BOC PCL is expecting the final conclusion of this matter and has provided for it accordingly.

There was also an allegation concerning BOC PCL's arrangements with American Express, namely that such exclusive arrangements violated Cypriot and EU competition law. On both matters, the CPC has concluded that BOC PCL (in common with other banks and JCC) has breached the relevant provisions of the applicable law for the protection of competition. In May 2017, the CPC imposed a fine of €18 million upon BOC PCL and BOC PCL filed a recourse against the decision and the fine. The payment of the fine had been stayed, pending the final outcome of the recourse. In June 2018, the Administrative Court accepted BOC PCL's position and cancelled the decision as well as the fine imposed upon BOC PCL. During 2018, the Attorney General has filed an appeal before the Supreme court with respect to such decision. Until a judgment is issued by the Supreme Court, the decision of the CPC remains annulled and there is no subsisting fine upon BOC PCL. The said appeal is still pending as at 30 June 2023.

In 2019, the CPC initiated an ex officio investigation with respect to unfair contract terms and into the contractual arrangements/facilities offered by BOC PCL for the period from 2012 to 2016. To date no charges have been put forward nor have any formal proceedings been instituted against BOC PCL in this case. The Group is not aware of any further developments in this case.

Association for the Protection of Bank Borrowers (CYPRODAT)

CYPRODAT filed a complaint with the Commission for the Protection of Competition (CPC) in January 2022, claiming that BOC PCL and another bank have concerted in practices regarding the recent revisions of their commissions and charges. In April 2022, CPC informed BOC PCL of the initiation of an investigation with respect to this matter but for which no formulation of a Statement of Objections has been received to date which would indicate the initiation of formal proceedings.

Consumer Protection Service (CPS)

In July 2017, CPS imposed a fine of €170 thousand upon BOC PCL after concluding an ex officio investigation regarding some terms in both BOC PCL's and Marfin Popular Bank's loan documentation, that were found to constitute unfair commercial practices. Decisions of the CPS (according to rulings of the Administrative Court) are not binding but merely an expression of opinion. BOC PCL has filed a recourse before the Administrative Court against this decision. The Administrative Court has issued its judgment in 2022 in favour of BOC PCL, and the CPS decision along with the fine have been cancelled. An appeal has been submitted by CPS with regards to this judgment, which is still pending as at 30 June 2023.

In March 2020, BOC PCL has been served with an application by the director of CPS through the Attorney General seeking for an order of the court, with immediate effect, the result of which will be for BOC PCL to cease the use of a number of terms in the contracts of BOC PCL which are deemed to be unfair under the said order. The said terms relate to contracts that had been signed during 2006‑2007. Furthermore, the said application seeks for an order ordering BOC PCL to undertake measures to remedy the situation. BOC PCL will take all necessary steps for the protection of its interests. This matter is still pending before the court as at 30 June 2023.

In April 2021, the Director of CPS filed an application for the issuance of a court order against BOC PCL, prohibiting the use of a number of contractual terms included in BOC PCL's consumer contracts and requiring the amendment of any such contracts (present and future) so as to remove such unfair terms. This matter is still pending before the court as at 30 June 2023.

BOC PCL received a letter in July 2021 from CPS, initiating an ex officio investigation under the Distance Marketing of Financial Services to Consumers Law, with respect to the services and products of BOC PCL for which the contract between BOC PCL and the consumer is entered into online via BOC PCL's website.

BOC PCL received another letter in July 2021 from CPS, initiating an investigation with respect to an alleged wrong commercial practice of BOC PCL of promoting a product.

There have been no further developments on the aforementioned investigations since.

Cyprus Consumers' Association (CCA)

In March 2021, BOC PCL was served with an application filed by the CCA for the issuance of a court order prohibiting the use of a number of contractual terms included in BOC PCL's consumer contracts and requiring the amendment of any such contracts (present and future) so as to remove such terms deemed as unfair. The said contractual terms were determined as unfair pursuant to the decisions issued by the Consumer Protection Service of the Ministry of Energy, Commerce, Industry and Tourism against BOC PCL in 2016 and 2017. BOC PCL will take all necessary steps for the protection of its interests. This matter is still pending before the court as at 30 June 2023.

The new Law on Consumer Protection brings under one umbrella the existing legislation on unfair contract terms and practices with some enhanced powers vested in the Consumer Protection Service, i.e. power to impose increased fines which are immediately payable. The new Law on Consumer Protection has a retrospective effect in that it also applies to all contracts/practices entered into and/or terminated prior to this law coming into effect as opposed to contracts/practices which are only entered into/adopted as from the date of publication of the new Law on Consumer Protection.

There are many factors that may affect the range of outcomes, and the resulting financial impact, of these matters, is unknown.

UK regulatory matters

As part of the agreement for the sale of Bank of Cyprus UK Ltd, a liability with regards to UK regulatory matters remains an obligation for settlement by the Group. The level of the provision represents the best estimate of all probable outflows arising from customer redress based on information available to management.

27.3       Οther matters

Other matters include among others, provisions for various other open examination requests by governmental and other public bodies, legal matters and provisions for warranties and indemnities related to the disposal process of certain operations of the Group.

The provisions for pending litigation, claims, regulatory and other matters described above and provided in the tables below do not include insurance claims arising in the ordinary course of business of the Group's insurance subsidiaries as these are included in 'Insurance liabilities'.

27.4       Provisions for pending litigation, claims, regulatory and other matters

	Pending litigation and claims (Note 27.1)	Regulatory matters (Note 27.2)	Other matters (Note 27.3)	Total
2023	€000	€000	€000	€000
1 January	63,947	14,918	48,742	127,607
Net increase in provisions including unwinding of discount	14,682	-	4,095	18,777
Utilisation of provisions	(14,289)	-	-	(14,289)
Release of provisions	(4,629)	-	-	(4,629)
Transfer	-	-	767	767
Foreign exchange adjustments	-	34	-	34
30 June	59,711	14,952	53,604	128,267

	Pending litigation and claims (Note 27.1)	Regulatory matters (Note 27.2)	Other matters (Note 27.3)	Total
2022	€000	€000	€000	€000
1 January	57,844	16,415	29,849	104,108
Net increase in provisions including unwinding of discount	1,086	950	-	2,036
Utilisation of provisions	(78)	(759)	-	(837)
Release of provisions	(392)	-	(100)	(492)
Foreign exchange adjustments	-	(22)	-	(22)
30 June	58,460	16,584	29,749	104,793
Provisions for pending litigation, claims, regulatory and other matters recorded in the consolidated income statement during the six months ended 30 June 2023 amount to €14,148 thousand (30 June 2022: €594 thousand). The increase in the six months ended 30 June 2023 is driven by the revised approach on pending litigation fees and the progress on legal cases, as well as higher one‑off provisions for other matters in relation to the run‑down and disposal of the Group's legacy and non‑core operations.
Some information required by the IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation or the outcome of the negotiation in relation to provisions for warranties and indemnities related to the disposal process of certain operations of the Group.
An increase by 5% in the probability of loss rate for pending litigation and claims (31 December 2022: 5%) with all other variables held constant, would lead to an increase in the actual provision by €2,236 thousand at 30 June 2023 (31 December 2022: increase by €2,821 thousand).

27.5       Contingent liabilities and commitments

The Group, as part of its disposal process of certain of its operations, has provided various representations, warranties and indemnities to the buyers. These relate to, among other things, the ownership of the loans, the validity of the liens, tax exposures and other matters agreed with the buyers. As a result, the Group may be obliged to compensate the buyers in the event of a valid claim by the buyers with respect to the above representations, warranties and indemnities.

A provision has been recognised, based on management's best estimate of probable outflows, where it was assessed that such an outflow is probable.

Capital commitments for the acquisition of property, equipment and intangible assets as at 30 June 2023 amount to €22,159 thousand (31 December 2022: €10,647 thousand).

28.         Cash and cash equivalents

Cash and cash equivalents comprise:

	30 June 2023	31 December 2022
	€000	€000
Cash and non‑obligatory balances with central banks	8,988,967	9,452,721
Loans and advances to banks with original maturity less than three months	363,948	133,432
	9,352,915	9,586,153

Analysis of cash and balances with central banks and loans and advances to banks

	30 June 2023	31 December 2022
	€000	€000
Cash and non‑obligatory balances with central banks	8,988,967	9,452,721
Obligatory balances with central banks	138,462	114,537
Total cash and balances with central banks	9,127,429	9,567,258

Loans and advances to banks with original maturity less than three months	363,948	133,432
Restricted loans and advances to banks	67,864	71,379
Total loans and advances to banks	431,812	204,811
Restricted loans and advances to banks include collaterals under derivative transactions of €1,750 thousand (31 December 2022: €7,380 thousand) which are not immediately available for use by the Group, but are released once the transactions are terminated.

29.         Analysis of assets and liabilities by expected maturity

	30 June 2023			31 December 2022 (restated)
	Less than one year	Over one year	Total	Less than one year	Over one year	Total
Assets	€000	€000	€000	€000	€000	€000
Cash and balances with central banks	8,988,967	138,462	9,127,429	9,452,721	114,537	9,567,258
Loans and advances to banks	363,948	67,864	431,812	133,432	71,379	204,811
Derivative financial assets	7,189	42,113	49,302	904	47,249	48,153
Investments	821,389	2,508,318	3,329,707	460,070	2,243,633	2,703,703
Loans and advances to customers	1,116,605	8,891,214	10,007,819	880,158	9,073,094	9,953,252
Life insurance business assets attributable to policyholders	16,787	571,095	587,882	15,486	526,835	542,321
Prepayments, accrued income and other assets	267,403	342,204	609,607	256,077	352,977	609,054
Stock of property	202,887	742,944	945,831	301,275	739,757	1,041,032
Investment properties	14,385	59,954	74,339	24,749	60,350	85,099
Deferred tax assets	37,909	190,044	227,953	37,909	190,025	227,934
Property, equipment and intangible assets	-	314,956	314,956	-	305,924	305,924
	11,837,469	13,869,168	25,706,637	11,562,781	13,725,760	25,288,541
Liabilities
Deposits by banks	155,885	292,828	448,713	191,635	316,023	507,658
Funding from central banks	2,004,480	-	2,004,480	1,976,674	-	1,976,674
Derivative financial liabilities	4,614	13,777	18,391	10,538	5,631	16,169
Customer deposits	5,945,245	13,220,910	19,166,155	5,893,802	13,104,517	18,998,319
Insurance liabilities	87,461	544,456	631,917	88,647	511,345	599,992
Accruals, deferred income and other liabilities and provisions for pending litigation, claims, regulatory and other matters	382,818	175,034	557,852	295,678	211,111	506,789
Debt securities in issue and subordinated liabilities	-	601,324	601,324	-	599,740	599,740
Deferred tax liabilities	1,622	32,996	34,618	1,207	33,427	34,634
	8,582,125	14,881,325	23,463,450	8,458,181	14,781,794	23,239,975
The main assumptions used in determining the expected maturity of assets and liabilities are set out below.
Cash and balances with central banks are classified in the relevant time band based on the contractual maturity, with the exception of obligatory balances with central banks which are classified in the 'Over one year' time band.
The investments are classified in the relevant time band based on expectations as to their realisation. In most cases this is the maturity date, unless there is an indication that the maturity will be prolonged or there is an intention to sell, roll or replace the security with a similar one.
Performing loans and advances to customers in Cyprus are classified based on the contractual repayment schedule. Overdraft accounts are classified in the 'Over one year' time band. The Stage 3 Loans are classified in the 'Over one year' time band except cash flows from expected receipts which are included within time bands, according to historic amounts of receipts in the recent months.

Stock of property is classified in the relevant time band based on expectations as to its realisation.

A percentage of customer deposits maturing within one year is classified in the 'Over one year' time band, based on the observed behavioural analysis.

The expected maturity of all prepayments, accrued income and other assets and accruals, deferred income and other liabilities is the same as their contractual maturity. If they do not have a contractual maturity, the expected maturity is based on the timing the asset is expected to be realised and the liability is expected to be settled.

30.         Risk management ‑ Credit risk

In the ordinary course of its business the Group is exposed to credit risk which is monitored through various control mechanisms across all Group entities in order to prevent undue risk concentrations and to price credit facilities and products on a risk‑adjusted basis.

Credit risk is the risk that arises from the possible failure of one or more customers to discharge their credit obligations towards the Group.

The Credit Risk Management department, in co‑operation with the Credit Risk Control and Monitoring department, set the Group's credit risk policies and monitor compliance with credit risk policies applicable to each business line and the quality of the Group's loans and advances portfolio through the timely credit risk assessment of customers. The credit exposures of related accounts are aggregated and monitored on a consolidated basis.

The Credit Risk Management department, in co‑operation with the Credit Risk Control and Monitoring department, also safeguard the effective management of credit risk at all stages of the credit cycle, monitor the quality of decisions and processes and ensure that the credit sanctioning function is being properly managed.

The credit policies are complemented by the methods used for the assessment of the customers' creditworthiness (credit rating and credit scoring systems).

The loan portfolio is analysed on the basis of the customers' creditworthiness, their economic sector of activity and geographical concentration.

The credit risk exposure of the Group is diversified across the various industry sectors of the economy. Credit Risk Management department determines concentration limits for each industry sector, sets prohibited sectors and defines sectors which may require prior approval before credit applications are submitted.

The Market & Liquidity Risk department assesses the credit risk relating to exposures to Credit Institutions and Governments and other debt securities.

Models and limits are presented to and approved by the Board of Directors, through the relevant authority based on the authorisation level limits.

The Group's significant judgements, estimates and assumptions regarding the determination of the level of provisions for impairment are described in Note 6 'Significant and other judgements, estimates and assumptions' of these Consolidated Financial Statements.

30.1       Maximum exposure to credit risk and collateral and other credit enhancements

Loans and advances to customers

The Credit Risk Management department determines the level and type of collateral and other credit enhancements required for the granting of new loans to customers.

The main types of collateral obtained by the Group are mortgages on real estate, cash collateral/blocked deposits, bank guarantees, government guarantees, pledges of equity securities and debt instruments of public companies, fixed and floating charges over corporate assets, assignment of life insurance policies, assignment of rights on contracts of sale and personal and corporate guarantees.

The Group regularly monitors the changes in the market value of the collateral and, where necessary, requests the pledging of additional collateral in accordance with the relevant agreement.

Off‑balance sheet exposures

The Group offers guarantee facilities to its customers under which the Group may be required to make payments on their behalf and enters into commitments to extend credit lines to secure their liquidity needs.

Letters of credit and guarantee facilities (including standby letters of credit) commit the Group to make payments on behalf of customers in the event of a specific act, generally related to the import or export of goods. Such commitments expose the Group to risks similar to those of loans and advances and are therefore monitored by the same policies and control processes.

Other financial instruments

Collateral held as security for financial assets other than loans and advances to customers is determined by the nature of the financial instrument. Debt securities and other eligible bills are generally unsecured with the exception of asset‑backed securities and similar instruments, which are secured by pools of financial assets. In addition, some debt securities are government‑guaranteed.

The Group has chosen the ISDA Master Agreement for documenting its derivatives activity. It provides the contractual framework within which dealing activity across a full range of over‑the‑counter (OTC) products is conducted and contractually binds both parties to apply close‑out netting across all outstanding transactions covered by an agreement, if either party defaults. In most cases the parties execute a Credit Support Annex (CSA) in conjunction with the ISDA Master Agreement. Under a CSA, the collateral is passed between the parties in order to mitigate the market contingent counterparty risk inherent in their open positions. As at 30 June 2023, the majority of derivative exposures are covered by ISDA netting arrangements. A detailed analysis of derivative asset and liability exposures is available in Note 16. Information about the Group's collaterals under derivative transactions is provided in Note 28.

Settlement risk arises in any situation where a payment in cash or securities is made in the expectation of a corresponding receipt in securities or cash. The Group sets daily settlement limits for each counterparty.  Settlement risk is mitigated when transactions are effected via established payment systems or on a delivery upon payment basis.

Maximum Exposure to credit risk

The table below presents the maximum exposure to credit risk before taking into account the tangible and measurable collateral and credit enhancements held.

	30 June 2023	31 December 2022 (restated)
	€000	€000
Balances with central banks	9,039,067	9,475,541
Loans and advances to banks (Note 28)	431,812	204,811
Other non‑equity securities at FVPL (Note 15)	3,364	8,968
Debt securities classified at amortised cost and FVOCI (Note 15)	3,178,127	2,499,894
Derivative financial instruments (Note 16)	49,302	48,153
Loans and advances to customers (Note 18)	10,007,819	9,953,252
Debtors (Note 20)	32,363	29,220
Reinsurers' share of insurance contract liabilities (Note 20)	50,580	46,781
Deferred purchase payment consideration (Note 20)	320,655	311,523
Other assets (Note 20)	65,919	57,183
On‑balance sheet total	23,179,008	22,635,326
Contingent liabilities
Acceptances and endorsements	3,034	5,175
Guarantees	696,362	651,219
Commitments
Documentary credits	3,399	17,624
Undrawn formal stand‑by facilities, credit lines and other commitments to lend	1,957,084	1,909,487
Off‑balance sheet total	2,659,879	2,583,505
	25,838,887	25,218,831

30.2       Credit risk concentration of loans and advances to customers

There are restrictions on loan concentrations which are imposed by the Banking Law in Cyprus, the relevant CBC Directives and CRR. The Group's Risk Appetite Statement may impose stricter concentration limits which are monitored by the Group.

The credit risk concentration, which is based on industry (economic activity) and business line, as well as the geographical concentration, is presented below.

The geographical analysis, for credit risk concentration purposes, is based on the Group's Country Risk Policy which is followed for monitoring the Group's exposures. Market and Liquidity Risk department is responsible for analysing the country risk of exposures. ALCO reviews the country risk of exposures on a quarterly basis and the Board, through its Risk Committee, reviews the country risk of exposures and any breaches of country risk limits on a regular basis and at least annually.

The table below presents the geographical concentration of loans and advances to customers by country of risk based on the country of residency for individuals and the country of registration for companies.

30 June 2023	Cyprus	Greece	United Kingdom	Russia	Other countries	Gross loans at amortised cost
By economic activity	€000	€000	€000	€000	€000	€000
Trade	915,396	337	38	-	38	915,809
Manufacturing	310,474	44,480	-	-	27,251	382,205
Hotels and catering	962,779	27,120	37,020	-	39,863	1,066,782
Construction	526,060	8,677	18	1	373	535,129
Real estate	931,771	101,245	1,960	-	52,189	1,087,165
Private individuals	4,534,353	11,616	65,551	15,684	51,257	4,678,461
Professional and other services	547,629	621	5,280	336	41,780	595,646
Shipping	22,858	24	-	-	209,886	232,768
Other sectors	469,361	-	1	3	32,005	501,370
	9,220,681	194,120	109,868	16,024	454,642	9,995,335

30 June 2023	Cyprus	Greece	United Kingdom	Russia	Other countries	Gross loans at amortised cost
By business line	€000	€000	€000	€000	€000	€000
Corporate and Large corporate	3,450,891	28,255	-	333	190	3,479,669
International corporate	100,541	157,853	43,818	-	392,610	694,822
SMEs	982,114	529	1,215	-	2,372	986,230
Retail
‑ housing	3,315,768	2,486	32,680	91	17,658	3,368,683
‑ consumer, credit cards and other	926,010	793	561	-	822	928,186
Restructuring
‑ corporate	52,376	-	975	-	65	53,416
‑ SMEs	39,320	-	397	71	-	39,788
‑ retail housing	67,332	101	2,002	275	180	69,890
‑ retail other	23,723	36	18	-	22	23,799
Recoveries
‑ corporate	17,060	-	458	176	943	18,637
‑ SMEs	25,994	-	1,039	2,147	1,898	31,078
‑ retail housing	61,682	210	17,670	2,981	7,967	90,510
‑ retail other	29,889	24	1,336	274	433	31,956
International business unit	88,667	1,672	7,607	9,676	24,226	131,848
Wealth management	39,314	2,161	92	-	5,256	46,823
	9,220,681	194,120	109,868	16,024	454,642	9,995,335

31 December 2022	Cyprus	Greece	United Kingdom	Russia	Other countries	Gross loans at amortised cost
By economic activity	€000	€000	€000	€000	€000	€000
Trade	922,093	384	37	-	35	922,549
Manufacturing	323,074	44,978	-	-	27,943	395,995
Hotels and catering	928,346	16,565	35,614	-	40,086	1,020,611
Construction	545,421	8,955	23	1	1,985	556,385
Real estate	978,708	94,823	1,866	-	51,617	1,127,014
Private individuals	4,496,081	11,146	73,120	19,103	54,985	4,654,435
Professional and other services	551,269	980	5,311	313	37,830	595,703
Shipping	13,338	-	-	-	173,830	187,168
Other sectors	427,535	2	-	3	29,935	457,475
	9,185,865	177,833	115,971	19,420	418,246	9,917,335

31 December 2022	Cyprus	Greece	United Kingdom	Russia	Other countries	Gross loans at amortised cost
By business line	€000	€000	€000	€000	€000	€000
Corporate and Large corporate	3,380,542	17,781	50	312	102	3,398,787
International corporate	139,813	152,143	42,327	-	351,025	685,308
SMEs	1,021,950	1,036	1,451	-	4,174	1,028,611
Retail
‑ housing	3,272,253	2,450	36,839	186	18,906	3,330,634
‑ consumer, credit cards and other	885,558	856	576	1	905	887,896
Restructuring
‑ corporate	66,151	-	869	-	932	67,952
‑ SMEs	48,027	-	432	158	384	49,001
‑ retail housing	70,283	104	1,841	291	114	72,633
‑ retail other	24,093	16	21	192	21	24,343
Recoveries
‑ corporate	19,063	-	452	172	32	19,719
‑ SMEs	26,150	-	1,117	2,664	1,774	31,705
‑ retail housing	69,790	260	19,778	3,431	9,736	102,995
‑ retail other	31,967	12	1,265	49	337	33,630
International business unit	90,652	1,722	8,953	11,964	24,583	137,874
Wealth management	39,573	1,453	-	-	5,221	46,247
	9,185,865	177,833	115,971	19,420	418,246	9,917,335
The loans and advances to customers include lending exposures in Cyprus with collaterals in Greece with a carrying value as at 30 June 2023 of €134,730 thousand (31 December 2022: €106,701 thousand).
The loans and advances to customers reported within 'Other countries' as at 30 June 2023 include exposures of €2,2 million in Ukraine (31 December 2022: €2,6 million).

30.3       Analysis of loans and advances to customers

The movement of the gross loans and advances to customers at amortised cost by staging, (30 June 2022: including the loans and advances to customers classified as held for sale), is presented in the tables below:

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2023	€000	€000	€000	€000	€000
1 January	7,867,256	1,565,603	371,018	113,458	9,917,335
Transfers to stage 1	599,556	(599,556)	-	-	-
Transfers to stage 2	(415,621)	435,606	(19,985)	-	-
Transfers to stage 3	(8,755)	(12,000)	20,755	-	-
Foreign exchange and other adjustments	(25)	-	21	-	(4)
Write offs	(188)	(310)	(17,728)	(2,958)	(21,184)
Interest accrued and other adjustments	158,717	26,902	22,496	3,339	211,454
New loans originated or purchased and drawdowns of existing facilities	969,848	24,136	558	364	994,906
Loans derecognised or repaid (excluding write offs)	(974,108)	(84,076)	(41,624)	(11,439)	(1,111,247)
Changes to contractual cash flows due to modifications	1,499	816	(1,719)	(170)	426
Acquisition of Velocity 2 portfolio	-	-	-	3,649	3,649
30 June	8,198,179	1,357,121	333,792	106,243	9,995,335

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2022	€000	€000	€000	€000	€000
1 January	7,418,695	1,701,255	1,047,802	228,572	10,396,324
Transfers to stage 1	292,741	(292,741)	-	-	-
Transfers to stage 2	(405,422)	429,065	(23,643)	-	-
Transfers to stage 3	(4,782)	(19,409)	24,191	-	-
Foreign exchange and other adjustments	(24)	-	905	-	881
Write offs	(398)	(295)	(100,301)	(17,522)	(118,516)
Interest accrued and other adjustments	94,167	38,719	37,154	13,327	183,367
New loans originated or purchased and drawdowns of existing facilities	1,060,453	46,984	200	852	1,108,489
Loans derecognised or repaid (excluding write offs)	(763,291)	(103,101)	(56,132)	(25,008)	(947,532)
Changes to contractual cash flows due to modifications	(798)	1,150	(3,074)	(119)	(2,841)
30 June	7,691,341	1,801,627	927,102	200,102	10,620,172
For revolving facilities, overdrafts and credit cards the net positive change in balance by stage excluding write‑offs is reported in 'New loans originated' and the net negative change is reported in 'Loans derecognised or repaid'.
The analysis of gross loans and advances to customers at amortised cost by staging and by business line concentration is included in Note 18.
During the six months ended 30 June 2023, the Group purchased back certain loans disposed in 2020 as part of Velocity 2. The loans, which relate primarily to retail unsecured facilities, were classified as POCI and have a net book value of €1,257 thousand as at 30 June 2023.

30.4       Credit losses of loans and advances to customers

The movement in ECL of loans and advances to customers (30 June 2022: including the ECL for loans and advances to customers held for sale), is as follows:

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2023	€000	€000	€000	€000	€000
1 January	22,288	27,041	113,573	15,540	178,442
Transfers to stage 1	8,441	(8,441)	-	-	-
Transfers to stage 2	(933)	4,583	(3,650)	-	-
Transfers to stage 3	(62)	(455)	517	-	-
Impact on transfer between stages during the period*	(4,696)	2,670	2,572	(2)	544
Foreign exchange and other adjustments	-	2	10	-	12
Write offs	(188)	(310)	(17,728)	(2,958)	(21,184)
Interest (provided) not recognised in the income statement	-	-	1,653	464	2,117
New loans originated or purchased*	1,124	-	-	4	1,128
Loans derecognised or repaid (excluding write offs)*	(771)	(159)	(308)	(241)	(1,479)
Write offs*	170	244	3,171	623	4,208
Changes to models and inputs (changes in PDs, LGDs and EADs) used for ECL calculations*	(3,514)	8,466	24,083	5,005	34,040
Changes to contractual cash flows due to modifications not resulting in derecognition*	(601)	498	352	(176)	73
30 June 2023	21,258	34,139	124,245	18,259	197,901
Individually assessed	8,928	11,882	58,998	11,640	91,448
Collectively assessed	12,330	22,257	65,247	6,619	106,453
	21,258	34,139	124,245	18,259	197,901
* Individual components of the 'Impairment net of reversals on loans and advances to customers' (Note 12).
The impairment loss for the six months ended 30 June 2023 was driven mainly from additional net credit losses of €11 million recorded on NPEs as part of the Group's de‑risking activities and additional ECL charge of €9 million following the overlays applied during the period, as explained in Note 6.2.

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2022	€000	€000	€000	€000	€000
1 January	15,457	29,383	478,796	67,781	591,417
Transfers to stage 1	4,837	(4,837)	-	-	-
Transfers to stage 2	(1,355)	5,604	(4,249)	-	-
Transfers to stage 3	(34)	(591)	625	-	-
Impact on transfer between stages during the period*	(4,177)	2	5,205	(41)	989
Foreign exchange and other adjustments	-	-	1,406	-	1,406
Write offs	(398)	(295)	(100,781)	(17,522)	(118,996)
Interest (provided) not recognised in the income statement	-	-	7,697	1,471	9,168
New loans originated or purchased*	1,985	-	-	27	2,012
Loans derecognised or repaid (excluding write offs)*	(254)	(830)	(7,779)	(1,490)	(10,353)
Write offs*	380	196	6,565	734	7,875
Changes to models and inputs (changes in PDs, LGDs and EADs) used for ECL calculations*	625	(3,302)	28,536	4,162	30,021
Changes to contractual cash flows due to modifications not resulting in derecognition*	(158)	1,685	(3,755)	(261)	(2,489)
30 June 2022	16,908	27,015	412,266	54,861	511,050
Individually assessed	6,380	12,327	63,636	4,530	86,873
Collectively assessed	10,528	14,688	348,630	50,331	424,177
	16,908	27,015	412,266	54,861	511,050
The analysis of credit losses of loans and advances to customers by business line is presented in the table below:

	Stage 1	Stage 2	Stage 3	POCI	Total
30 June 2023	€000	€000	€000	€000	€000
Corporate and Large corporate	12,277	12,871	31,053	2,277	58,478
International corporate	827	1	37	5	870
SMEs	2,299	2,741	575	285	5,900
Retail
‑ housing	2,111	7,144	4,307	557	14,119
‑ consumer, credit cards and other	3,231	7,791	5,294	1,224	17,540
Restructuring
‑ corporate	13	476	9,157	9,764	19,410
‑ SMEs	229	1,115	6,042	732	8,118
‑ retail housing	117	1,245	13,778	240	15,380
‑ retail other	71	570	8,417	610	9,668
Recoveries
‑ corporate	-	-	8,630	307	8,937
‑ SMEs	-	-	13,106	172	13,278
‑ retail housing	-	-	15,984	1,241	17,225
‑ retail other	-	-	7,673	834	8,507
International business unit	69	165	191	6	431
Wealth management	14	20	1	5	40
	21,258	34,139	124,245	18,259	197,901

	Stage 1	Stage 2	Stage 3	POCI	Total
31 December 2022	€000	€000	€000	€000	€000
Corporate and Large corporate	13,997	12,096	28,951	1,498	56,542
International corporate	567	5	36	4	612
SMEs	2,444	3,009	1,998	214	7,665
Retail
‑ housing	2,378	2,738	5,146	398	10,660
‑ consumer, credit cards and other	2,552	4,794	5,763	1,020	14,129
Restructuring
‑ corporate	22	2,133	7,481	9,005	18,641
‑ SMEs	184	706	9,157	741	10,788
‑ retail housing	19	682	9,222	347	10,270
‑ retail other	29	536	7,309	513	8,387
Recoveries
‑ corporate	-	-	7,917	387	8,304
‑ SMEs	-	-	11,096	288	11,384
‑ retail housing	-	-	11,937	651	12,588
‑ retail other	-	-	7,494	465	7,959
International business unit	73	332	65	5	475
Wealth management	23	10	1	4	38
	22,288	27,041	113,573	15,540	178,442
During the six months ended 30 June 2023 the total non‑contractual write‑offs recorded by the Group amounted to €11,582 thousand (30 June 2022: €98,625 thousand). The contractual amount outstanding on financial assets that were written off during the six months ended 30 June 2023 and that are still subject to enforcement activity is €100,687 thousand (31 December 2022: €972,621 thousand).
For the calculation of expected credit losses three scenarios were used; base, adverse and favourable with 50%, 30% and 20% probability respectively.
For Stage 3 customers, the base scenario focuses on the following variables, which are based on the specific facts and circumstances of each customer: the operational cash flows, the timing of recovery of collaterals and the haircuts from the realisation of collateral. The base scenario is used to derive additional favourable and adverse scenarios. Under the adverse scenario operational cash flows are decreased by 50%, applied haircuts on real estate collateral are increased by 50% and the timing of recovery of collaterals is increased by one year with reference to the baseline scenario. Under the favourable scenario, applied haircuts are decreased by 5%, with no change in the recovery period with reference to the baseline scenario. Assumptions used in estimating expected future cash flows (including cash flows that may result from the realisation of collateral) reflect current and expected future economic conditions and are generally consistent with those used in the Stage 3 collectively assessed exposures.
The above assumptions are also influenced by the ongoing regulatory dialogue BOC PCL maintains with its lead regulator, the ECB, and other regulatory guidance and interpretations issued by various regulatory and industry bodies such as the ECB and the EBA, which provide guidance and expectations as to relevant definitions and the treatment/classification of certain parameters/assumptions used in the estimation of provisions.
Any changes in these assumptions or difference between assumptions made and actual results could result in significant changes in the estimated amount of expected credit losses of loans and advances to customers.

Sensitivity analysis

The Group has performed sensitivity analysis relating to the loan portfolio in Cyprus, which represents more than 99% of the total loan portfolio of the Group with reference date 30 June 2023 and 31 December 2022.

The Group has applied sensitivity analysis to the below parameters and the impact on the ECL, for both individually and collectively assessed ECL calculations, is presented in the table below:

	Increase/(decrease) on ECL for loans and advances to customers at amortised cost
	30 June 2023	31 December 2022
	€000	€000
Increase the adverse weight by 5% and decrease the favourable weight by 5%	1,899	1,999
Decrease the adverse weight by 5% and increase the favourable weight by 5%	(1,874)	(2,077)
Increase the expected recovery period by 1 year	5,210	4,955
Decrease the expected recovery period by 1 year	(4,610)	(4,344)
Increase the collateral realisation haircut by 5%	9,659	11,335
Decrease the collateral realisation haircut by 5%	(8,399)	(8,930)
Increase in the PDs of stages 1 and 2 by 20%*	7,808	7,367
Decrease in the PDs of stages 1 and 2 by 20%*	(6,687)	(6,964)
The increase/(decrease) on ECL, for loans and advances to customers at amortised cost, is further analysed, per stage, in the table below:

	Stage 1	Stage 2	Stage 3	Total
30 June 2023	€000	€000	€000	€000
Increase the adverse weight by 5% and decrease the favourable weight by 5%	266	300	1,333	1,899
Decrease the adverse weight by 5% and increase the favourable weight by 5%	(278)	(263)	(1,333)	(1,874)
Increase the expected recovery period by 1 year	838	1,776	2,596	5,210
Decrease the expected recovery period by 1 year	(784)	(1,541)	(2,285)	(4,610)
Increase the collateral realisation haircut by 5%	1,231	2,464	5,964	9,659
Decrease the collateral realisation haircut by 5%	(1,033)	(1,966)	(5,400)	(8,399)
Increase in the PDs of stages 1 and 2 by 20%*	2,105	5,703	-	7,808
Decrease in the PDs of stages 1 and 2 by 20%*	(1,857)	(4,830)	-	(6,687)

	Stage 1	Stage 2	Stage 3	Total
31 December 2022	€000	€000	€000	€000
Increase the adverse weight by 5% and decrease the favourable weight by 5%	175	321	1,503	1,999
Decrease the adverse weight by 5% and increase the favourable weight by 5%	(139)	(435)	(1,503)	(2,077)
Increase the expected recovery period by 1 year	552	1,590	2,813	4,955
Decrease the expected recovery period by 1 year	(495)	(1,374)	(2,475)	(4,344)
Increase the collateral realisation haircut by 5%	1,036	2,747	7,552	11,335
Decrease the collateral realisation haircut by 5%	(842)	(2,021)	(6,067)	(8,930)
Increase in the PDs of stages 1 and 2 by 20%*	406	6,961	-	7,367
Decrease in the PDs of stages 1 and 2 by 20%*	(2,217)	(4,747)	-	(6,964)
*The impact on the ECL also includes the transfer between stages of the loans and advances to customers following the increase/decrease in the PD.

The sensitivity analysis performed on the collateral realisation haircut and its impact on the ECL by business line is presented in the table below:

	Increase the collateral realisation haircut by 5%	Decrease the collateral realisation haircut by 5%	Increase the collateral realisation haircut by 5%	Decrease the collateral realisation haircut by 5%
	30 June 2023	30 June 2023	31 December 2022	31 December 2022
	€000	€000	€000	€000
Corporate and Large corporate	2,415	(2,080)	2,322	(1,478)
International corporate	109	(91)	68	(30)
SMEs	401	(331)	487	(409)
Retail
‑ housing	1,163	(986)	1,260	(1,085)
‑ consumer, credit cards and other	421	(379)	527	(457)
Restructuring
‑ corporate	742	(882)	1,253	(1,333)
‑ SMEs	401	(387)	628	(633)
‑ retail housing	832	(728)	824	(738)
‑ retail other	270	(238)	324	(287)
Recoveries
‑ corporate	511	(547)	720	(665)
‑ SMEs	904	(785)	948	(819)
‑ retail housing	1,027	(706)	1,378	(690)
‑ retail other	441	(243)	540	(255)
International business unit	21	(16)	53	(49)
Wealth management	1	-	3	(2)
	9,659	(8,399)	11,335	(8,930)

30.5       Currency concentration of loans and advances to customers

The following table presents the currency concentration of the Group's loans and advances at amortised cost.

	30 June 2023	31 December 2022
Gross loans at amortised cost	€000	€000
Euro	9,502,915	9,456,220
US Dollar	369,495	334,663
British Pound	90,278	89,244
Russian Rouble	333	312
Swiss Franc	31,385	35,430
Other currencies	929	1,466
	9,995,335	9,917,335

30.6       Forbearance/Restructuring

Forborne/restructured loans are those loans that have been modified because the borrower is considered unable to meet the terms and conditions of the contract due to financial difficulties. Taking into consideration these difficulties, the Group decides to modify the terms and conditions of the contract to provide the borrower with the ability to service the debt or refinance the contract, either partially or fully.

The practice of extending forbearance/restructuring measures constitutes a grant of a concession whether temporarily or permanently to that borrower. A concession may involve restructuring the contractual terms of a debt or payment in some form other than cash, such as an arrangement whereby the borrower transfers collateral pledged to the Group.

Forborne/restructured loans and advances are those facilities for which the Group has modified the repayment programme (e.g. provision of a grace period, suspension of the obligation to repay one or more instalments, reduction in the instalment amount and/or elimination of overdue instalments relating to capital or interest).

For an account to qualify for forbearance/restructuring it must meet certain criteria including the viability of the customer. The extent to which the Group reschedules accounts that are eligible under its existing policies may vary depending on its view of the prevailing economic conditions and other factors which may change from year to year. In addition, exceptions to policies and practices may be allowed in specific situations in response to legal or regulatory requirements.

Forbearance/restructuring activities may include measures that restructure the borrower's business (operational restructuring) and/or measures that restructure the borrower's financing (financial restructuring).

Forbearance/restructuring options may be of a short or long‑term nature or a combination thereof. The Group has developed and deployed sustainable restructuring solutions, which are suitable for the borrower and acceptable for the Group.

Short‑term restructuring solutions are defined as restructured repayment solutions of duration of less than two years. In the case of loans for the construction of commercial property and project finance, a short‑term solution may not exceed one year.

Short‑term restructuring solutions can include the following:

i.    Suspension of capital or capital and interest: granting to the borrower a grace period in the payment of capital (i.e. during this period only interest is paid) or capital and interest, for a specific period of time.

ii.    Reduced payments: decrease of the amount of repayment instalments over a defined short‑term period in order to accommodate the borrower's new cash flow position.

iii.   Arrears and/or interest capitalisation: capitalisation of the arrears and of any unpaid interest to the outstanding principal balance for repayment under a rescheduled program.

Long‑term restructuring solutions can include the following:

i.    Interest rate reduction: permanent or temporary reduction of interest rate (fixed or variable) into a fair and sustainable rate.

ii.    Extension of maturity: extension of the maturity of the loan which allows a reduction in instalment amounts by spreading the repayments over a longer period.

iii.   Sale of Assets: Part of the restructuring can be the agreement with the borrower for immediate or over time sale of assets (mainly real estate) to reduce borrowing.

iv.   Modification of existing terms of previous decisions: In the context of the new sustainable settlement/restructuring solution, review any terms of previous decisions that may not be met.

v.   Consolidation/refinancing of existing facilities: In cases where the borrower maintains several separate loans with different collaterals, these can be consolidated and a new repayment schedule can be set and the new loan can be secured with all existing collaterals.

vi.   Hard Core Current Account Limit: In such cases a loan with a longer repayment may be offered to replace / reduce the current account limit.

vii.  Split and freeze: the customer's debt is split into sustainable and unsustainable parts. The sustainable part is restructured to a sustainable repayment program. The unsustainable part is 'frozen' for the restructured duration of the sustainable part. At the maturity of the restructuring, the frozen part is either forgiven pro rata (based on the actual repayment of the sustainable part) or restructured.

viii. Rescheduling of payments: the existing contractual repayment schedule is adjusted to a new sustainable repayment program based on a realistic, current and forecasted, assessment of the cash flow generation of the borrower.

ix.   Liquidation Collateral: An agreement between BOC PCL and a borrower for the voluntary sale of mortgaged assets, for partial or full repayment of the debt.

x.   Currency Conversion: This solution is provided to match the credit facility currency and the borrower's income currency.

i.    Additional Financing: This solution can be granted, simultaneously with the restructuring of the existing credit facilities of the borrower, to cover any financing gap.

ii.    Partial or total write off: This solution corresponds to the Group forfeiting the right to legally recover part or the whole of the amount of debt outstanding by the borrower.

iii.   Debt/equity swaps: debt restructuring that allows partial or full repayment of the debt in exchange of obtaining an equivalent amount of equity by the Group, with the remaining debt right sized to the cash flows of the borrower to allow repayment. This solution is used only in exceptional cases and only where all other efforts for restructuring are exhausted and after ensuring compliance with the banking law.

iv.   Debt/asset swaps: agreement between the Group and the borrower to voluntarily transfer the mortgaged asset or other immovable property to the Group, to partially or fully repay the debt. Any residual debt may be restructured within an appropriate repayment schedule in line with the borrower's reassessed repayment ability.

The loans forborne continue to be classified as Stage 3 in the case they are performing forborne exposures under probation for which additional forbearance measures are extended, or performing forborne exposures, previously classified as NPEs that present more than 30 days past due within the probation period.

Forbearance modifications of loans and advances that do not affect payment arrangements, such as restructuring of collateral or security arrangements, are not regarded as sufficient to categorise the facility as credit impaired, as by themselves they do not necessarily indicate credit distress affecting payment ability such that would require the facility to be classified as NPE.

The forbearance characteristic contributes in two specific ways for the calculation of lifetime ECL for each individual facility. Specifically, it is taken into consideration in the scorecard development, where, if this characteristic is identified as statistically significant, it affects negatively the rating of each facility. It also contributes in the construction through the cycle probability of default and cure curves, where, when feasible, a specific curve for the forborne products is calculated and assigned accordingly.

The below table presents the movement of the Group's forborne loans and advances to customers measured at amortised cost.

	30 June 2023	31 December 2022
	€000	€000
1 January	1,106,298	1,469,182
New loans and advances forborne in the period/year	18,467	130,547
Loans no longer classified as forborne and repayments	(418,125)	(241,739)
Write off of forborne loans and advances	(3,698)	(77,357)
Interest accrued on forborne loans and advances	28,095	57,795
Foreign exchange adjustments	(47)	3,115
Derecognition of Helix 3 and Sinope portfolios	-	(235,245)
30 June/31 December	730,990	1,106,298
The forborne loans classification is discontinued when all EBA criteria for the discontinuation of the classification as forborne exposure are met. The criteria are set out in the EBA Final draft Implementing Technical Standards (ITS) on supervisory reporting and non‑performing exposures.
The below tables present the Group's forborne loans and advances to customers by staging, economic activity and business line classification, as well as the ECL allowance and tangible collateral held for such forborne loans.

	30 June 2023	31 December 2022
	€000	€000
Stage 1	-	-
Stage 2	517,449	857,356
Stage 3	187,020	215,730
POCI	26,521	33,212
	730,990	1,106,298

Fair value of collateral

	30 June 2023	31 December 2022
	€000	€000
Stage 1	-	-
Stage 2	493,444	818,138
Stage 3	147,787	172,501
POCI	24,600	30,188
	665,831	1,020,827
The fair value of collateral presented above has been computed to the extent that the collateral mitigates credit risk.

Credit risk concentration

	30 June 2023	31 December 2022
By economic activity	€000	€000
Trade	30,420	41,038
Manufacturing	13,612	17,080
Hotels and catering	132,823	282,460
Construction	143,637	245,695
Real estate	97,245	145,840
Private individuals	224,242	279,934
Professional and other services	62,616	76,135
Shipping	-	-
Other sectors	26,395	18,116
	730,990	1,106,298

30 June 2023	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate and Large corporate	-	367,669	48,720	2,915	419,304
SMEs	-	29,320	1,333	631	31,284
Retail
‑ housing	-	54,408	14,021	1,721	70,150
‑ consumer, credit cards and other	-	14,378	5,676	166	20,220
Restructuring
‑ corporate	-	18,975	6,422	10,169	35,566
‑ SMEs	-	6,081	8,600	2,042	16,723
‑ retail housing	-	18,453	27,422	1,935	47,810
‑ retail other	-	4,385	7,369	387	12,141
Recoveries
‑ corporate	-	-	5,132	383	5,515
‑ SMEs	-	-	12,266	496	12,762
‑ retail housing	-	-	38,193	4,680	42,873
‑ retail other	-	-	10,830	995	11,825
International business unit	-	3,152	1,036	1	4,189
Wealth management	-	628	-	-	628
	-	517,449	187,020	26,521	730,990

31 December 2022	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate and Large corporate	-	628,104	50,688	5,590	684,382
SMEs	-	72,727	869	878	74,474
Retail
‑ housing	-	62,312	20,502	2,505	85,319
‑ consumer, credit cards and other	-	20,207	7,653	1,084	28,944
Restructuring
‑ corporate	-	31,637	6,060	10,143	47,840
‑ SMEs	-	7,240	11,918	1,844	21,002
‑ retail housing	-	19,912	30,649	2,755	53,316
‑ retail other	-	4,924	9,021	457	14,402
Recoveries
‑ corporate	-	-	5,837	442	6,279
‑ SMEs	-	-	14,449	1,186	15,635
‑ retail housing	-	-	44,191	5,049	49,240
‑ retail other	-	-	12,705	1,278	13,983
International business unit	-	10,293	1,188	1	11,482
	-	857,356	215,730	33,212	1,106,298

ECL allowance

	30 June 2023	31 December 2022
	€000	€000
Stage 1	-	-
Stage 2	13,102	13,939
Stage 3	73,271	68,557
POCI	11,641	11,259
	98,014	93,755

31.         Risk management ‑ Market risk

Market risk is the risk of loss from adverse changes in market prices namely from changes in interest rates, foreign currency exchange rates, property and security prices. The Market and Liquidity Risk department is responsible for monitoring the risk on financial instruments resulting from such changes with the objective to minimise the impact on earnings and capital. The department also monitors liquidity risk and credit risk from counterparties and countries. It is also responsible for monitoring compliance with the various market risk policies and procedures.

Interest rate risk

Interest rate risk refers to the current or prospective risk to Group's capital and earnings arising from adverse movements in interest rates that affect the Group's banking book positions.

Interest rate risk is measured mainly using the impact on net interest income and impact on economic value. In addition to the above measures, interest rate risk is also measured using interest rate risk gap analysis, where the assets, liabilities and off‑balance sheet items are classified according to their remaining repricing period. Items that are not sensitive to rate changes are recognised as non‑rate sensitive (NRS) items. The present value of one basis point (PV01) is also calculated. Interest rate risk is managed through a 1‑Year Interest Rate Effect (IRE) limit on the maximum reduction of net interest income under the various interest rate shock scenarios. Limits are set as a percentage of the Group regulatory capital and as a percentage of the net interest income. There are overall limits as well as different limits for the Euro and the US Dollar.

Sensitivity analysis

The table below sets out the impact on the Group's net interest income, over a one‑year period, from reasonably possible changes in the interest rates of the Euro and the US Dollar, being the main currencies, using the assumption of the prevailing market risk policy for the current and the comparative period:

		Impact on Net Interest Income in €000
Currency	Interest Rate Scenario	30 June 2023 (60 bps for Euro and 75 bps for US Dollar)	31 December 2022 (60 bps for Euro and 75 bps for US Dollar)
All	Parallel up	67,248	73,126
All	Parallel down	(73,993)	(77,043)
All	Steepening	(52,944)	(56,569)
All	Flattening	55,446	59,657
All	Short up	65,839	70,381
All	Short down	(69,914)	(73,896)

Euro	Parallel up	66,600	71,829
Euro	Parallel down	(72,536)	(75,343)
Euro	Steepening	(52,115)	(55,812)
Euro	Flattening	55,162	59,132
Euro	Short up	65,230	69,180
Euro	Short down	(68,587)	(72,216)

US Dollar	Parallel up	648	1,298
US Dollar	Parallel down	(1,457)	(1,700)
US Dollar	Steepening	(829)	(757)
US Dollar	Flattening	284	525
US Dollar	Short up	609	1,202
US Dollar	Short down	(1,327)	(1,680)

The above sensitivities incorporate assumptions on the pass‑through change of time deposits.

The table below sets out the impact on the Group's equity, from reasonably possible changes in the interest rates under various interest rate scenarios for the Euro and the US Dollar in line with the EBA guidelines.

		Impact on Equity in €000
Currency	Interest Rate Scenario	30 June 2023 (60 bps for Euro and 75 bps for US Dollar)	31 December 2022 (60 bps for Euro and 75 bps for US Dollar)
All	Parallel up	16,609	31,739
All	Parallel down	(7,861)	(68,581)
All	Steepening	(6,201)	11,884
All	Flattening	1,122	369
All	Short up	5,947	27,212
All	Short down	(17,438)	(35,032)

Euro	Parallel up	27,669	54,878
Euro	Parallel down	(1,962)	(59,502)
Euro	Steepening	(6,671)	23,018
Euro	Flattening	2,960	526
Euro	Short up	7,726	47,696
Euro	Short down	(13,089)	(28,040)

US Dollar	Parallel up	5,549	8,599
US Dollar	Parallel down	(5,899)	(9,079)
US Dollar	Steepening	940	750
US Dollar	Flattening	(358)	212
US Dollar	Short up	4,167	6,727
US Dollar	Short down	(4,349)	(6,992)
The aggregation of the impact on equity was performed as per the EBA guidelines by adding the negative and 50% of the positive impact of each scenario.
In addition to the above fluctuations in net interest income, interest rate changes can result in fluctuations in the fair value of investments at FVPL (including investments held for trading) and in the fair value of derivative financial instruments impacting the profit and loss of the Group.
The equity of the Group is also affected by changes in market interest rates. The impact on the Group's equity arises from changes in the fair value of fixed rate debt securities classified at FVOCI.
The sensitivity analysis is based on the assumption of a parallel shift of the yield curve. The table below sets out the impact on the Group's profit/loss before tax and equity as a result of reasonably possible changes in the interest rates of the major currencies.

Parallel change in interest rates ((increase)/decrease in net interest income)	Impact on profit/loss before tax	Impact on equity
30 June 2023	€000	€000
+0.75% for US Dollar +0.6% for Euro +0.4% for British Pound	(651)	(402)
‑0.75% for US Dollar ‑0.6% for Euro ‑0.4% for British Pound	651	402

	Impact on profit/loss before tax	Impact on equity
Parallel change in interest rates ((increase)/decrease in net interest income)	€000	€000
31 December 2022
+0.75% for US Dollar +0.6% for Euro +0.4% for British Pound	(466)	(394)
‑0.75% for US Dollar ‑0.6% for Euro ‑0.4% for British Pound	466	386
Interest rate benchmark reform
The LIBOR and the EURIBOR (collectively referred to as IBORs) have been the subject of international, national and other regulatory guidance and proposals for reform. Some of these reforms are already effective while others are still to be implemented. These reforms may cause such benchmarks to perform differently from the past or cease to exist entirely or have other consequences that cannot be predicted.
Regarding LIBOR reform, regulators and industry working groups have identified alternative rates to transition to. In March 2021 the Financial Conduct Authority (FCA) confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative of the underlying market they intended to measure:
i.    immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1 week and 2 month US dollar settings; and
ii.    immediately after 30 June 2023, in the case of the remaining US dollar settings.
In September 2022, the FCA confirmed that the publication of 1‑month and 6‑month synthetic GBP LIBOR will be required until the end of March 2023, after which date these settings permanently ceased. On 3 April 2023, the FCA confirmed that the 3‑month synthetic GBP LIBOR setting is expected to cease to be published at the end of March 2024.
Also, under their new use restriction power they would prohibit new use of USD LIBOR from the end of 2021, except in specific circumstances. On 3 April 2023, the FCA announced its decision to require IBA to continue to publish the 1‑month, 3‑month and 6‑month USD LIBOR settings using an unrepresentative synthetic basis and it is expected to cease to be published at the end of September 2024. They have decided to permit the use of these settings in all legacy contracts except cleared derivatives.
How the Group is managing the transition to alternative benchmark rates
BOC PCL established a project to manage the transition to alternative interest rate benchmarks with the Director of Treasury as the project owner and with oversight from a dedicated Benchmark Steering Committee. The main divisions involved in the project at the highest level are the Legal Department, Treasury, Risk Management, Finance, Information Technology (IT), Operations and the business lines. The Assets and Liabilities Committee (ALCO) monitors the project.
The Group's transition project also involved the drawing up of appropriate fallback provisions for LIBOR linked contracts and transition mechanisms in its floating rate assets and liabilities with maturities after 2021.

For the legacy non‑cleared derivatives exposures, the Group has adhered to the International Swaps and Derivatives Association (ISDA) protocol which came into effect in January 2021, while for cleared derivatives, BOC PCL adopted the market wide standardised approach to be followed by the relevant clearing house.

The Group proactively engaged with its customer base and market counterparties for the amendment of substantially all impacted LIBOR contracts for transitioning to alternative rates. Those legacy credit facilities in CHF for which the contract was not amended by the first interest period commencing in 2022 ('tough legacy'), have been transitioned to the statutory rate provided by EU legislation. The Group has also transitioned its tough legacy JPY and GBP credit facilities to alternative rates by notifying its customer base accordingly and reserving the right to use a statutory rate provided by EU legislation in case such a rate is nominated in the future.

The Group has also made the necessary arrangements to transition its tough legacy USD credit facilities to alternative rates and notified its customer base accordingly and reserving the right to use a statutory rate provided by EU legislation in case such a rate is nominated in the future.

The Group has also engaged in client communication to inform customers and ensure a smooth transition of credit facilities to RFRs. New RFR lending products have also been introduced and adopted across the Group's key currencies.

BOC PCL has dedicated teams in place to support the transition and continuously assess, monitor and dynamically manage risks arising from the transition when required.

The Group has also been actively monitoring any market and regulatory developments published by regulatory bodies, as well as by relevant Working Groups across various jurisdictions.

The Group will continue to assess, monitor and dynamically manage risks, and implement specific mitigating controls when required, progressing towards an orderly transition to alternative benchmarks.

The following table summarises the significant non‑derivative exposures impacted by interest rate benchmark reform which have yet to transition as at 30 June 2023 and as at 31 December 2022 to the replacement benchmark rate at the respective date:

30 June 2023	USD LIBOR	Other LIBOR	Total
Non‑derivative financial assets	€000	€000	€000
Loans and advances to customers	210,761	145	210,906
Loans and advances to banks	-	3,276	3,276
Total	210,761	3,421	214,182
Non‑derivative financial liabilities
Deposits by banks	-	281	281
Total	-	281	281

31 December 2022	USD LIBOR	Other LIBOR	Total
Non‑derivative financial assets	€000	€000	€000
Loans and advances to customers	283,509	316	283,825
Loans and advances to banks	26,607	4,297	30,904
Total	310,116	4,613	314,729
Non‑derivative financial liabilities
Deposits by banks	7,416	248	7,664
Total	7,416	248	7,664
EURIBOR is in compliance with the EU Benchmarks Regulation and can continue to be used as a benchmark interest rate for existing and new contracts. The Group therefore, does not consider that Group's exposure to EURIBOR is affected by the BMR reform.

For derivatives in hedging relationships subject to IBOR reform refer to Note 16.

Currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates.

The impact on equity arises mainly from the impact of hedging instruments used to hedge part of the net assets of the subsidiaries. At Group level, there is an approximately equal and opposite impact on equity from the revaluation of the net assets of the foreign operations of the Group.

Price risk

Equity securities price risk

The risk of loss from changes in the price of equity securities arises when there is an unfavourable change in the prices of equity securities held by the Group as investments.

Debt securities price risk

Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities held by the Group. Debt security prices change as the credit risk of the issuer changes and/or as the interest rate changes mainly for fixed rate securities. The Group invests a significant part of its liquid assets in highly rated securities. The average Moody's Investors Service rating of the debt securities portfolio of the Group as at 30 June 2023 was A2 (31 December 2022: A2). The average rating excluding the Cyprus Government bonds and non‑rated transactions as at 30 June 2023 was Aa2 (31 December 2022: Aa2).

Property price risk

A significant part of the Group's loan portfolio is secured by real estate, the majority of which is located in Cyprus. Furthermore, the Group holds a substantial number of properties mainly arising from loan restructuring activities; the enforcement of loan collateral and debt for asset swaps. These properties are held by the Group primarily as stock of properties and some are held as investment properties.

Property risk is the risk that the Group's business and financial position will be affected by adverse changes in the demand for, and prices of, real estate, or by regulatory capital requirements relating to increased charges with respect to the stock of properties held.

32.         Risk management ‑ Liquidity and funding risk

Liquidity Risk

Liquidity risk is the risk that the Group is unable to fully or promptly meet current and future payment obligations as and when they fall due. This risk includes the possibility that the Group may have to raise funding at high cost or sell assets at a discount to fully and promptly satisfy its obligations.

It reflects the potential mismatch between incoming and outgoing payments, taking into account unexpected delays in repayment and unexpectedly high payment outflows. Liquidity risk involves both the risk of unexpected increases in the cost of funding of the portfolio of assets and the risk of being unable to liquidate a position in a timely manner on reasonable terms.

In order to limit this risk, management has adopted the Liquidity Policy of managing assets, taking liquidity into consideration and monitoring cash flows and liquidity on a regular basis. The Group has developed internal control processes and contingency plans for managing liquidity risk.

Management and structure

The Board of Directors sets the Group's Liquidity Risk Appetite which defines the level of risk at which the Group should operate.

The Board of Directors, through its Risk Committee, approves the Liquidity Policy Statement and reviews at frequent intervals the liquidity position of the Group.

The ALCO is responsible for setting the policies for the effective management and monitoring of liquidity risk across the Group.

The Treasury Division is responsible for liquidity management at Group level, ensuring compliance with internal policies and regulatory liquidity requirements and providing direction as to the actions to be taken regarding liquidity needs. Treasury Division assesses on a continuous basis the adequacy of the liquid assets and takes the necessary actions to ensure a comfortable liquidity position.

Liquidity is also monitored by Market and Liquidity Risk department, to ensure compliance with both internal policies and limits, and with the limits set by the regulatory authorities. Market and Liquidity Risk department reports the liquidity position to ALCO at least monthly. It also provides the results of various stress tests to ALCO at least quarterly.

Liquidity is monitored and managed on an ongoing basis through:

(i)          Risk appetite: establishes the Group's Risk Appetite Statement together with the appropriate limits for the management of all risks including liquidity risk.

(ii)         Liquidity Policy: sets the responsibilities for managing liquidity risk as well as the framework, limits and reporting on liquidity and funding.

(iii)         Liquidity limits: a number of internal and regulatory limits are monitored on a regular basis. Where applicable, a traffic light system (RAG) has been introduced for the ratios, in order to raise flags and take action when the ratios deteriorate.

(iv)        Early warning indicators: monitoring of a range of indicators for early signs of liquidity risk in the market or specific to the Group. These are designed to immediately identify the emergence of increased liquidity risk so as to maximise the time available to execute appropriate mitigating actions.

(v)         Liquidity Contingency Plan: maintenance of a Liquidity Contingency Plan (LCP) which is designed to provide a framework where a liquidity stress could be effectively identified and managed. The LCP provides a communication plan and includes management actions to respond to liquidity stresses.

(vi)        Recovery Plan: the Group has developed a Recovery Plan (RP), the key objectives of which are, among others, to set key Recovery and Early Warning Indicators and to set in advance a range of recovery options to enable the Group to be adequately prepared to respond to stressed conditions and restore the Group's liquidity position.

Monitoring process

Daily

The daily monitoring of the stock of highly liquid assets is important to safeguard and ensure the uninterrupted operations of the Group's activities. Market and Liquidity Risk department prepares a daily report analysing the internal liquidity buffer and comparing it to the previous day's buffer. Results are made available to members of the Risk and Treasury Divisions. In addition, Treasury monitors daily and intraday the customer inflows and outflows in the main currencies used by the Group.

The liquidity buffer is made up of: Banknotes, CBC balances (excluding the Minimum Reserve Requirements (MRR)), unpledged cash and nostro current accounts, as well as money market placements up to the stress horizon, available ECB credit line and market value net of haircut of unencumbered/available liquid bonds.

Market and Liquidity Risk department also prepares daily stress testing for bank specific, market wide and combined scenarios. The requirement is to have sufficient liquidity buffer to enable BOC PCL to survive a twelve‑month stress period, including capacity to raise funding under all scenarios.

Moreover, an intraday liquidity stress test takes place to ensure that the Group maintains sufficient liquidity buffer in immediately accessible form, to enable it to meet the stressed intraday payments.

The designing of the stress tests follows guidance and is based on the liquidity risk drivers which are recognised internationally by both the Prudential Regulation Authority (PRA) and EBA. In addition, it takes into account SREP recommendations, as well as the Annual Risk Identification Process of the Group. The stress test assumptions are reviewed on an annual basis and approved by the Board through its Risk Committee. Whenever it is considered appropriate to amend the assumptions during the year, approval is requested from ALCO and the Risk Committee. The main items shocked in the different scenarios are: deposit outflows, wholesale funding, loan repayments, off balance sheet commitments, marketable securities, own issue covered bond, additional credit claims, interbank takings and cash collateral for derivatives and repos.

Weekly

Market and Liquidity Risk department prepares a report indicating the level of Liquid Assets including Credit Institutions Money Market Placements as per LCR definitions.

Monthly

Market and Liquidity Risk department prepares reports monitoring compliance with internal and regulatory liquidity ratios requirements and submits them to the ALCO, the Executive Committee and the Risk Committee. It also calculates the expected flows under a stress scenario and compares them with the  available liquidity buffer in order to calculate the survival days. The fixed deposit renewal rates, the percentage of International business unit deposits over total deposits and the percentage of instant access deposits are also presented. The liquidity mismatch in the form of the Maturity Ladder report (for both contractual and behavioural flows) is presented to ALCO and the resulting mismatch between assets and liabilities is compared to previous month's mismatch.

Market and Liquidity Risk department also reports the Liquidity Coverage Ratio (LCR) and Additional Liquidity Monitoring Metrics (ALMM) to the CBC/ECB on a monthly basis.

Quarterly

The results of the stress testing scenarios are reported to ALCO and Risk Committee quarterly as part of the quarterly Internal Liquidity Adequacy Assessment Process (ILAAP) review. Market and Liquidity Risk department reports the Net Stable Funding Ratio (NSFR) to the CBC/ECB quarterly.

Annually

The Group prepares on an annual basis its ILAAP package. The ILAAP package provides a holistic view of the Group's liquidity adequacy under normal and stress conditions. Within ILAAP, the Group evaluates its liquidity risk in the context of established policies and processes for the identification, measurement, management and monitoring of liquidity risk as implemented by the institution.

Market and Liquidity Risk department also prepares an annual liquidity report, run and submitted for five consecutive days to the ECB. The report includes information on deposits breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap (through the Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the overall liquidity position of BOC PCL and describes the measures implemented and to be implemented in the short‑term to improve liquidity position if needed.

As part of the Group's procedures for monitoring and managing liquidity risk, there is a Group Liquidity Contingency Plan (LCP) for handling liquidity difficulties. The LCP details the steps to be taken in the event that liquidity problems arise, which escalate to a special meeting of the Crisis Management Committee for LCP (CMC‑LCP). The LCP sets out the members of this committee and a series of the possible actions that can be taken. The LCP is reviewed and tested at least annually.

Liquidity ratios

The Group LCR is calculated based on the Delegated Regulation (EU) 2015/61. It is designed to establish a minimum level of high quality liquid assets sufficient to meet an acute stress lasting for 30 calendar days. Τhe minimum requirement is 100%. The Group also calculates its NSFR as per Capital Requirements Regulation II (CRR II), with the limit set at 100%. The NSFR is the ratio of available stable funding to required stable funding. NSFR has been developed to promote a sustainable maturity structure of assets and liabilities.

Funding risk

Funding risk is the risk that the Group does not have sufficiently stable sources of funding or access to sources of funding may not always be available at a reasonable cost and thus the Group may fail to meet its obligations, including regulatory ones (e.g. MREL).

Main sources of funding

As at 30 June 2023, the Group's main sources of funding were its deposit base and central bank funding, through the Eurosystem monetary policy operations. Wholesale funding is also becoming an important source of funding, following the refinancing of the Tier 2 for €300 million in April 2021, the issuance of senior preferred debt of €300 million in June 2021, the refinancing of AT1 for €220 million in June 2023 and the issuance of senior preferred debt of €350 million in July 2023 (Note 37).

With respect to TLTRO III operations, the carrying value of the ECB funding as at 30 June 2023 (after the early repayment of €1 billion within December 2022), was €2,004 million (31 December 2022: €1,977 million).

As at 30 June 2023, the wholesale funding nominal amount was €836 million (31 December 2022: €820 million). This includes funding raised from the wholesale debt capital markets of €236 million AT1 as described in Note 25, €300 million Tier 2 issued in April 2021 and €300 million senior preferred debt issued in June 2021.

Funding to subsidiaries

The funding provided by BOC PCL to its subsidiaries for liquidity purposes is repayable as per the terms of the respective agreements.

The subsidiaries may proceed with dividend distributions in the form of cash to BOC PCL, provided that they are not in breach of their regulatory capital and liquidity requirements, where applicable.

Collateral requirements and other disclosures

Collateral requirements

The carrying values of the Group's encumbered assets as at 30 June 2023 and 31 December 2022 are summarised below:

	30 June 2023	31 December 2022
	€000	€000
Cash and other liquid assets	69,345	73,557
Investments	257,147	284,343
Loans and advances	3,334,668	3,273,369
	3,661,160	3,631,269
Cash is mainly used to cover collateral required for derivatives, trade finance transactions and guarantees issued. It may also be used as part of the supplementary assets for the covered bond.
As at 30 June 2023 and 31 December 2022 investments are mainly used as collateral for ECB funding or as supplementary assets for the covered bond.
Loans and advances indicated as encumbered as at 30 June 2023 and 31 December 2022 are mainly used as collateral for funding from the ECB and the covered bond.
Loans and advances to customers include mortgage loans of a nominal amount of €1,015 million as at 30 June 2023 (31 December 2022: €1,007 million) in Cyprus, pledged as collateral for the covered bond issued by BOC PCL in 2011 under its Covered Bond Programme. Furthermore, as at 30 June 2023 housing loans of a nominal amount of €2,310 million (31 December 2022: €2,287 million) in Cyprus, are pledged as collateral for funding from the ECB (Note 21).
BOC PCL maintains a Covered Bond Programme set up under the Cyprus Covered Bonds legislation and the Covered Bonds Directive of the CBC. Under the Covered Bond Programme, BOC PCL has in issue covered bonds of €650 million secured by residential mortgages originated in Cyprus. The Covered Bonds have a maturity date of 12 December 2026 and pay an interest rate of 3‑months Euribor plus 1.25% on a quarterly basis. On 9 August 2022, BOC PCL proceeded with an amendment to the terms and conditions of the covered bonds following the implementation of Directive (EU) 2019/2162 in Cyprus. The covered bonds are listed on the Luxemburg Bourse. The covered bonds have a conditional Pass‑Through structure. All the bonds are held by BOC PCL. The covered bonds are eligible collateral for the Eurosystem credit operations and are placed as collateral for accessing funding from the ECB.
Other disclosures
Deposits by banks include balances of €25,003 thousand as at 30 June 2023 (31 December 2022: €29,100 thousand) relating to borrowings from international financial and similar institutions for funding, aiming to facilitate access to finance and improve funding conditions for small or medium sized enterprises, active in Cyprus. The carrying value of the respective loans and advances granted to such enterprises serving this agreement amounts to €47,783 thousand as at 30 June 2023 (31 December 2022: €55,152 thousand).

33.         Capital management

The primary objective of the Group's capital management is to ensure compliance with the relevant regulatory capital requirements and to maintain healthy capital adequacy ratios to cover the risks of its business and support its strategy and maximise shareholders' value.

The capital adequacy framework, as in force, was incorporated through the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) which came into effect on 1 January 2014 with certain specified provisions implemented gradually. The CRR and CRD transposed the new capital, liquidity and leverage standards of Basel III into the European Union's legal framework. CRR establishes the prudential requirements for capital, liquidity and leverage for credit institutions. It is directly applicable in all EU member states. CRD governs access to deposit taking activities and internal governance arrangements including remuneration, board composition and transparency. Unlike the CRR, member states were required to transpose the CRD into national law and national regulators were allowed to impose additional capital buffer requirements.

On 27 June 2019, the revised rules on capital and liquidity (Regulation (EU) 2019/876 (CRR II) and Directive (EU) 2019/878 (CRD V)) came into force. As an amending regulation, the existing provisions of CRR apply unless they are amended by CRR II. Certain provisions took immediate effect (primarily relating to Minimum Requirement for Own Funds and Eligible Liabilities (MREL)), but most changes became effective as of June 2021. The key changes introduced consist of, among others, changes to qualifying criteria for Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (T2) instruments, introduction of requirements for MREL and a binding Leverage Ratio requirement (as defined in the CRR) and a Net Stable Funding Ratio (NSFR).

The amendments that came into effect on 28 June 2021 are in addition to those introduced in June 2020 through Regulation (EU) 2020/873, which among other, brought forward certain CRR II changes in light of the COVID‑19 pandemic. The main adjustments of Regulation (EU) 2020/873 that had an impact on the Group's capital ratio relate to the acceleration of the implementation of the new SME discount factor (lower RWAs), extending the IFRS 9 transitional arrangements and introducing further relief measures to CET1 allowing to fully add back to CET1 any increase in ECL recognised in 2020 and 2021 for non‑credit impaired financial assets and phasing‑in this starting from 2022 (phasing‑in at 25% in 2022 and 50% in 2023) and advancing the application of prudential treatment of software assets as amended by CRR II (which came into force in December 2020). In addition, Regulation (EU) 2020/873 introduced a temporary treatment of unrealized gains and losses on exposures to central governments, to regional governments or to local authorities measured at fair value through other comprehensive income which the Group elected to apply and implemented from the third quarter of 2020. This temporary treatment was in effect until 31 December 2022.

The Group and BOC PCL have complied with the minimum capital requirements (Pillar I and Pillar II).

In October 2021, the European Commission adopted legislative proposals for further amendments to the CRR, CRD and the BRRD (the '2021 Banking Package'). Amongst other things, the 2021 Banking Package would implement certain elements of Basel III that have not yet been transposed into EU law. The 2021 Banking Package is subject to amendment in the course of the EU's legislative process; and its scope and terms may change prior to its implementation. In addition, in the case of the proposed amendments to CRD and the BRRD, their terms and effect will depend, in part, on how they are transposed in each member state. The European Council's proposal on CRR and CRD was published on 8 November 2022. During February 2023, the European Parliament's ECON Committee voted to adopt Parliament's proposed amendments to the Commission's proposal, and the 2021 Banking Package is currently in the final stage of the EU legislative process. It is expected that the 2021 Banking Package will come in force on 1 January 2025; and certain measures are expected to be subject to transitional arrangements or to be phased in over time.

The insurance subsidiaries of the Group, the General Insurance of Cyprus Ltd and EuroLife Ltd, comply with the requirements of the Superintendent of Insurance including the minimum solvency ratio. The regulated investment firm (CIF) of the Group, The Cyprus Investment and Securities Corporation Ltd (CISCO) complies with the minimum capital adequacy ratio requirements. In February 2023, the activities of the regulated UCITS management company of the Group, BOC Asset Management Ltd, were absorbed by CISCO and BOC Asset Management Ltd was dissolved without liquidation. The payment services subsidiary of the Group, JCC Payment Services Ltd, complies with the regulatory capital requirements.

Additional information on regulatory capital is disclosed in 'Risk and Capital Management Report', which is included in the Interim Financial Report 2023.

34.         Related party transactions

Related parties of the Group include associates and joint ventures, key management personnel, members of the Board of Directors and their connected persons. Connected persons for the purpose of this disclosure include spouses, minor/dependent children and companies in which the directors/key management personnel, hold directly or indirectly, at least 20% of the voting shares in a general meeting, or act as executive director or exercise control of the entities in any way.

Fees and emoluments of members of the Board of Directors and key management personnel

	Six months ended 30 June
	2023	2022
Directors' emoluments	€000	€000
Executives
Salaries and other short‑term benefits	530	523
Employer's contributions	36	35
Retirement benefit plan costs	47	44
Share‑based benefits	114	-
	727	602
Non‑executives
Fees	568	663
Total directors' emoluments	1,295	1,265
Key management personnel emoluments
Salaries and other short‑term benefits	1,530	1,397
Employer's contributions	176	163
Retirement benefit plan costs	133	105
Share‑based benefits	197	-
Total key management personnel emoluments	2,036	1,665
Total	3,331	2,930
The fees of the non‑executive Directors include fees as members of the Board of Directors of the Company and its subsidiaries, as well as fees as members of committees of the Board of Directors.

Key management personnel

The emoluments of key management personnel include the remuneration of the members of the Executive Committee since the date of their appointment to the Committee and the emoluments of other members of the Senior Management team (Extended EXCO) (prior to the change in the Group organisational structure, in 2022 the key management personnel included those members of the management team who reported directly to the Chief Executive Officer or to the Deputy Chief Executive Officer & Chief of Business).
Aggregate amounts outstanding and additional transactions
The tables below show the deposits, loans and advances and other credit balances held by the members of the Board of Directors and key management personnel and their connected persons, as at the balance sheet date.
	30 June 2023	31 December 2022
Loans and advances	€000	€000
‑ members of the Board of Directors and key management personnel	2,149	2,296
‑ connected persons	653	681
	2,802	2,977
Deposits
‑ members of the Board of Directors and key management personnel	4,428	5,534
‑ connected persons	3,179	3,178
	7,607	8,712

The above table does not include period/year‑end balances of members of the Board of Directors and key management personnel and their connected persons who resigned during the period/year, nor balances of customers that do not meet the definition of connected persons as at the reporting periods.
The aggregate expected credit loss allowance on the above loans and credit facilities is below €16 thousand as at 30 June 2023 (31 December 2022: below €6 thousand). All principal and interest that has fallen due on these loans or credit facilities has been paid.
All transactions with members of the Board of Directors and their connected persons are made on normal business terms as for comparable transactions, including interest rates, with customers of a similar credit standing. A number of loans and advances have been extended to key management personnel on the same terms as those applicable to the rest of the Group's employees and to their connected persons on the same terms as those of customers.
The table below discloses interest, commission and insurance premium income, as well as other transactions and expenses with the members of the Board of Directors, key management personnel and their connected persons for the reference period.
	Six months ended 30 June
	2023	2022
	€000	€000
Interest income for the period	49	29
Interest expense for the period	2	-
Commission income for the period	1	3
Insurance premium income for the period	236	206
Subscriptions and insurance expenses for the period	381	488
Interest income and expense are disclosed for the period during which they were members of the Board of Directors or served as key management personnel.
During the six months ended 30 June 2022 connected persons of key management personnel transacted with REMU for the purchase of a property amounting to €58 thousand. The transaction was made on normal business terms as for comparable transactions with third parties.
In addition to loans and advances, there were contingent liabilities and commitments in respect of members of the Board of Directors and their connected persons, mainly in the form of documentary credits, guarantees and commitments to lend, amounting to €141 thousand as at 30 June 2023 (31 December 2022: €120 thousand).
There were also contingent liabilities and commitments to key management personnel and their connected persons amounting to €1,429 thousand as at 30 June 2023 (31 December 2022: €1,227 thousand).
The total unsecured amount of the loans and advances and contingent liabilities and commitments to members of the Board of Directors, key management personnel and their connected persons (using forced‑sale values for tangible collaterals and assigning no value to other types of collaterals) at 30 June 2023 amounted to €1,744 thousand (31 December 2022: €1,212 thousand).
During the six months ended 30 June 2023 premiums of €89 thousand (30 June 2022: €94 thousand) and nil claims (30 June 2022: €20 thousand) were paid by/to the members of the Board of Directors of the Company and their connected persons to/from the insurance subsidiaries of the Group.
There were no other transactions during the six months ended 30 June 2023 and the six months ended 30 June 2022 with connected persons of the current members of the Board of Directors or with any members who resigned during the period/year.

35.         Group companies

The main subsidiary companies and branches included in the Consolidated Financial Statements of the Group, their country of incorporation, their activities and the percentage held by the Company (directly or indirectly) as at 30 June 2023 are:

Company	Country	Activities	Percentage holding (%)
Bank of Cyprus Holdings Public Limited Company	Ireland	Holding company	n/a
Bank of Cyprus Public Company Ltd	Cyprus	Commercial bank	100
EuroLife Ltd	Cyprus	Life insurance	100
General Insurance of Cyprus Ltd	Cyprus	Non‑life insurance	100
JCC Payment Systems Ltd	Cyprus	Card processing transaction services	75
The Cyprus Investment and Securities Corporation Ltd (CISCO)	Cyprus	Investment banking and brokerage and management administration and safekeeping of UCITS Units	100
Jinius Ltd	Cyprus	Digital Economy Platform	100
LCP Holdings and Investments Public Ltd	Cyprus	Investments in securities and participations in companies and schemes that are active in various business sectors and projects	67
Kermia Ltd	Cyprus	Property trading and development	100
Kermia Properties & Investments Ltd	Cyprus	Property trading and development	100
S.Z. Eliades Leisure Ltd	Cyprus	Land development and operation of a golf resort	70
Auction Yard Ltd	Cyprus	Auction company	100
BOC Secretarial Company Ltd	Cyprus	Secretarial services	100
Bank of Cyprus Public Company Ltd (branch of BOC PCL)	Greece	Administration of guarantees and holding of real estate properties	n/a
BOC Asset Management Romania S.A.	Romania	Collection of the existing portfolio of receivables, including third party collections	100
MC Investment Assets Management LLC	Russia	Problem asset management company	100
Fortuna Astrum Ltd	Serbia	Problem asset management company	100

In December 2022 the Company incorporated Jinius Ltd, a 100% subsidiary, which has been set up to provide and administrate a Digital Economy Platform. As at 31 December 2022 this subsidiary was inactive and in the six months ended 30 June 2023 the activities of BOC PCL in relation to the Digital Economy Platform were transferred to Jinius Ltd. Jinius Ltd is 100% subsidiary of BOC PCL as at 30 June 2023.

In February 2023, the Group proceeded with a restructuring of its investment banking and brokerage activities through the absorption by CISCO of BOC Asset Management Ltd's activities. BOC Asset Management Ltd was subsequently dissolved.

In addition to the above companies, as at 30 June 2023 BOC PCL had 100% shareholding in the companies listed below, whose activity is the ownership and management of immovable property:

Cyprus: Hamura Properties Ltd, Tolmeco Properties Ltd, Dilero Properties Ltd, Pelika Properties Ltd, Cobhan Properties Ltd, Ramendi Properties Ltd, Nalmosa Properties Ltd, Emovera Properties Ltd, Estaga Properties Ltd, Skellom Properties Ltd, Blodar Properties Ltd, Cranmer Properties Ltd, Les Coraux Estates Ltd, Natakon Company Ltd, Oceania Ltd, Dominion Industries Ltd, Ledra Estate Ltd, EuroLife Properties Ltd, Laiki Lefkothea Center Ltd, Labancor Ltd, Joberco Ltd, Zecomex Ltd, Domita Estates Ltd, Memdes Estates Ltd, Edoric Properties Ltd, Kernland Properties Ltd, Jobelis Properties Ltd, Melsolia Properties Ltd, Koralmon Properties Ltd, Spacous Properties Ltd, Calinora Properties Ltd, Marcozaco Properties Ltd, Soluto Properties Ltd, Solomaco Properties Ltd, Linaland Properties Ltd, Unital Properties Ltd, Neraland Properties Ltd, Wingstreet Properties Ltd, Nolory Properties Ltd, Lynoco Properties Ltd, Fitrus Properties Ltd, Lisbo Properties Ltd, Mantinec Properties Ltd, Colar Properties Ltd, Irisa Properties Ltd, Provezaco Properties Ltd, Hillbay Properties Ltd, Ofraco Properties Ltd, Forenaco Properties Ltd, Hovita Properties Ltd, Astromeria Properties Ltd, Regetona Properties Ltd, Camela Properties Ltd, Fareland Properties Ltd, Barosca Properties Ltd, Fogland Properties Ltd, Tebasco Properties Ltd, Valecross Properties Ltd, Altco Properties Ltd, Olivero Properties Ltd, Jaselo Properties Ltd, Elosa Properties Ltd, Flona Properties Ltd, Toreva Properties Ltd, Resoma Properties Ltd, Mostero Properties Ltd, Helal Properties Ltd, Pendalo Properties Ltd, Frontyard Properties Ltd, Bonsova Properties Ltd, Thermano Properties Ltd, Venicous Properties Ltd, Lorman Properties Ltd, Eracor Properties Ltd, Rulemon Properties Ltd, Maledico Properties Ltd, Bascone Properties Ltd, Balasec Properties Ltd, Bendolio Properties Ltd, Diafor Properties Ltd, Kartama Properties Ltd, Paramina Properties Ltd, Nouralia Properties Ltd, Resocot Properties Ltd, Soblano Properties Ltd, Talamon Properties Ltd, Weinar Properties Ltd, Zemialand Properties Ltd, Asianco Properties Ltd, Coeval Properties Ltd, Finevo Properties Ltd, Mazima Properties Ltd, Nigora Properties Ltd, Riveland Properties Ltd, Rosalica Properties Ltd, Secretsky Properties Ltd, Senadaco Properties Ltd, Tasabo Properties Ltd, Venetolio Properties Ltd, Zandexo Properties Ltd, Odolo Properties Ltd, Calandomo Properties Ltd, Molemo Properties Ltd, Samilo Properties Ltd, Sendilo Properties Ltd, Baleland Properties Ltd, Alezia Properties Ltd, Zenoplus Properties Ltd, Alepar Properties Ltd, Enelo Properties Ltd, Monata Properties Ltd, Vertilia Properties Ltd, Amary Properties Ltd, Aparno Properties Ltd, Lomenia Properties Ltd, Midelox Properties Ltd, Montira Properties Ltd, Orilema Properties Ltd and Philiki Ltd.

Romania: Otherland Properties Dorobanti SRL, Green Hills Properties SRL, Imoreth Properties SRL, Inroda Properties SRL, Zunimar Properties SRL, Allioma Properties SRL and Nikaba Properties SRL.

Further, at 30 June 2023 BOC PCL had 100% shareholding in Obafemi Holdings Ltd, Stamoland Properties Ltd, Unoplan Properties Ltd, Petrassimo Properties Ltd and Gosman Properties Ltd.

The main activities of the above companies are the holding of shares and other investments and the provision of services.

At 30 June 2023 BOC PCL had 100% shareholding in BOC Terra AIF V.C.I Plc which is a real estate alternative investment fund, currently inactive.

At 30 June 2023 BOC PCL had 100% shareholding in the companies listed below which are reserved to accept property:

Cyprus: Holstone Properties Ltd, Cramonco Properties Ltd, Carilo Properties Ltd, Gelimo Properties Ltd, Rifelo Properties Ltd, Avaleto Properties Ltd, Larizemo Properties Ltd and Olisto Properties Ltd.

In addition, BOC PCL holds 100% of the following intermediate holding companies:

Cyprus: Otherland Properties Ltd, Battersee Properties Ltd, Bonayia Properties Ltd, Janoland Properties Ltd, Imoreth Properties Ltd, Inroda Properties Ltd, Zunimar Properties Ltd, Nikaba Properties Ltd, Allioma Properties Ltd, Landanafield Properties Ltd and Hydrobius Ltd.

BOC PCL also holds 100% of the following companies which are inactive:

Cyprus: Laiki Bank (Nominees) Ltd, Paneuropean Ltd, Nelcon Transport Co. Ltd, Iperi Properties Ltd, CYCMC IV Ltd, Prodino Properties Ltd, Thryan Properties Ltd, Canosa Properties Ltd, Ensolo Properties Ltd, Hοmirova Properties Ltd and Settle Cyprus Ltd.

Greece: Kyprou Zois (branch of EuroLife Ltd), Kyprou Asfalistiki (branch of General Insurance of Cyprus Ltd), Kyprou Commercial SA and Kyprou Properties SA.

All Group companies are accounted for as subsidiaries using the full consolidation method. All companies listed above have share capital consisting of ordinary shares.

Acquisitions of subsidiaries

During the six months ended 30 June 2023 and during the year ended 31 December 2022 there were no acquisitions of subsidiaries.

Dissolution and disposal of subsidiaries

There were no material disposals of subsidiaries during the six months ended 30 June 2023. Salecom Ltd, Romaland Properties Ltd, Trecoda Properties Ltd, Weinco Properties Ltd and Cyprialife Ltd were dissolved during the six months ended 30 June 2023. Thelemic Properties Ltd, Arlona Properties Ltd, Tebane Properties Ltd and Nivamo Properties Ltd were disposed of during the six months ended 30 June 2023.

As at 30 June 2023, the following subsidiaries were in the process of dissolution or in the process of being struck off: Fantasio Properties Ltd, Demoro Properties Ltd, Bramwell Properties Ltd, Blindingqueen Properties Ltd, Fairford Properties Ltd, Sylvesta Properties Ltd, Battersee Real Estate SRL, Aktilo Properties Ltd, Stormino Properties Ltd, Tavoni Properties Ltd, Ameleto Properties Ltd, Birkdale Properties Ltd, Folimo Properties Ltd, Steparco Ltd, Thames Properties Ltd and Finerose Properties Ltd.

36.         Investments in associates and joint venture

	Percentage holding
Investments in associates	(%)
Aris Capital Management LLC	30.0
Rosequeens Properties Limited	33.3
Fairways Automotive Holdings Ltd	45.0
The carrying values of the investments in associates are considered to be fully impaired and their value has been restricted to zero.
Rosequeens Properties SRL
During the year ended 31 December 2022 the Group disposed of its 33.3% holding in associate company Rosequeens Properties SRL.

	Percentage holding
Investment in joint venture	(%)
Tsiros (Agios Tychon) Ltd	50.0
The carrying value of the investment in the joint venture is considered to be fully impaired and its value has been restricted to zero.

37.         Events after the reporting period

In July 2023, BOC PCL issued a €350 million senior preferred note (the 'Notes') under the EMTN Programme. The Notes were priced at par with a fixed coupon of 7.375% per annum, payable annually in arrear, until the Optional Redemption Date (i.e., 25 July 2027). The maturity date of the Notes is 25 July 2028; however, BOC PCL may, at its discretion, redeem the Notes on the Optional Redemption Date subject to meeting certain conditions (including applicable regulatory consents) as specified in the terms and conditions of the Notes. If the Notes are not redeemed by BOC PCL, the coupon payable from the Optional Redemption Date until the Maturity Date will convert from a fixed rate to a floating rate and will be equal to 3‑month Euribor plus 409.5 basis points, payable quarterly in arrears. The Notes are listed on the Luxembourg Stock Exchange's Euro MTF market. The Notes comply with the criteria for the minimum requirement for own funds and eligible liabilities (MREL) and contribute towards BOC PCL's MREL requirements.

No other significant non‑adjusting events have taken place since 30 June 2023.

 

END